Etsy
Etsy has brought it to the point where small businesses can reach an increasingly large population of customers. Consequently, several forms of small business have proliferated as components of the global economy. Of special interest in this discussion are microenterprises, which employ fewer than five employees and deal in the sales and manufacture of highly custom-tailored or personalized products and services.
As estimated by the U.S. Small Business Administration, microenterprises constitute 88% of approximately 28 million U.S. companies and increased to 92% in 1 year. The growth of the microenterprise segment is due in part to the favor of websites specifically tailored to the specific needs of microenterprise firms. Specialty websites have facilitated the easy performance of electronic commerce by microenterprises, minimizing the need for technical know-how or costs typically associated with e-commerce.
Such specialty websites include Etsy, which is an e-commerce site started in 2005 and targeted at microenterprises dealing in handmade and customized products. It has allowed microenterprises to access a vast pool of potential customers, thus achieving a critical mass of customers to remain profitable and yet be confined to small niche areas of the economy. In this regard, Etsy and similar marketplaces have enabled microenterprises to trigger a veritable explosion in the availability and demand for personalized, made-to-order, and handmade products in e-commerce. According to Etsy.com, in 2015, Etsy enabled $2.39 billion in merchandise sales by enabling 1.7 million active sellers and 26.1 million active buyers.
Microenterprises are especially well adapted to the use of long-tail strategies and sustaining profitability while large organizations might not. Their small size affords them significant mobility in terms of their manufacturing and marketing processes. More importantly, their revenue needs make it possible for them to service market niches that may appear financially unattractive to larger firms in terms of production, distribution, and marketing costs. In this study, we analyze 1490 stores on Etsy to gain some sense of the nature of successful microenterprises.
Etsy provides researchers with a good time to study vast amounts of empirical data on organizational actions because Etsy is a socio-technical platform that holds up the handicraft market. We use a comprehensive dataset on these microenterprises, consisting of demographic, sales, and reputation data, as well as the extent to which they arrest in hyper-differentiation efforts. To guide our empirical analysis, we rely on concepts from long-tail marketing which highlight the value of focusing on specialized and differentiated services and products that generate high-value demand.
Additionally, zulily, ebay, amazon, onlinr store, online marketplace we examine the data from two perspectives item level and shop level. This allows a holistic view of transactions, not just from the result level, but also from the organizational level. We tease out the nuanced understanding of the knock of long-tail marketing behavior and examine its implications for microenterprises operating within skilled online marketplaces.
Microenterprise in e‑commerce
Microenterprises resource-limited businesses with five or fewer employees have embraced Internet strategies and have become a driving force for the U.S. economy. Historically, smaller organizations struggle to gain the same benefits from implementing IT in the same way that their larger counterparts experience, and technology adoptions carry increased risks for small organizations. Researchers have found that the costs of acquiring, operating, and maintaining e-commerce infrastructure and facilities can be significant and debilitating for a small business. However, utilizing an established online marketplace platform has its benefits for microenterprises.
Many microenterprises are entrepreneurs looking to take advantage of the chance for increased income and organizational growth. Perren states that the key growth drivers of microenterprise growth in e-commerce are the owner’s motivation for growth, the owner’s expertise in managing growth, the owner’s access to resources, and demand for the owner’s products. Typically, sellers pay a listing fee for each item they sell and/or pay a percentage of sales.
The Internet has allowed microenterprises to capitalize on massive scaling opportunities. Rather than requiring heavy investments in IT, online marketplaces have as long as microenterprises access to a wide audience focused on purchasing a variety of niche products, such as craft goods. Understanding how these organizations plan and compete in this egalitarian online environment is of great research interest.
Microenterprises focus on niche markets
Niche markets have benefited from the rise of technology as it creates new opportunities for reaching beyond local populations. Organizations have gradually come to realize the value in niche markets, especially in handmade goods. The handmade marketplace has long proved to be a lucrative outlet, as evidenced by Etsy successfully collecting $2 billion in sales every year since 2005. Accessing a wide number of customers seeking unique, quirky, and custom-made products has enabled microenterprises to flourish.
Etsy sellers pride themselves as a part of a community of creators and crafters that focus on artisanal products rather than simply using Etsy as an e-commerce tool. Additionally, zulily, ebay, amazon, onlinr store, online marketplace when examining niche market consumers, research has appeared that the niche market of craft goods is filled with people who have considerable wealth. These types of consumers are interested in using products that can express their unique creativity. The Internet has enabled consumers to find any type of product or service that they are looking for and these consumers are willing and able, to pay to dollar for their desired artifact.
Handmade products
Etsy microenterprises specialize in creating niche products that are not mass-produced items. This strategic approach is beneficial to microenterprises as they are at once creating unique products and creating a customer base that is interested in purchasing these products. The concept of handmade products can be controversial because, in today’s technologically advanced and industrialized society, few purely handmade items exist. Some level of machine work may be involved in the core components of a product, such as beaded jewelry made by hand where the beads were created by a machine.
However, we adopt the definition of a handmade product as those that are presented to the user as being made by hand or a hand process and not by a machine or a machinal process. Consumers get a sense of the emotional investment that handmade producers put into their production process and their product and are willing to place additional value on the product on top of its core production value. Research has shown in particular that customers indicate stronger purchase goals and are willing to pay more for handmade gifts. Within Etsy, many microenterprises have made a joint effort to capitalize on the plan to focus on high-value sales, rather than high-volume sales.
Conclusion
Etsy is important to note that, like any research, our study has several limitations. First, some of the impact of our handmade and made-to-order product variables could be inherent like the Etsy marketplace itself. To check if this is the case, a future study could compare microenterprises operating in other platforms like Amazon Handmade, or compare the performance of handmade goods within Etsy to other e-commerce outlets like eBay.
A second limitation of the study concerns the lack of item category information. Although our sample comprises a very wide variety of goods across many product categories, we did not control for product type in our analysis. A future research study could examine the economic impact of various types of handmade products, identifying the varying clash of hyper-differentiation strategies on product type. Such results would be interesting and would further increase our understanding of this growing area of research.
Although considerable research has investigated the role of hyper-differentiation for a variety of different market segments and types of organizations, empirical proof for hyper-differentiation strategies in online marketplaces is still elusive, with concerns such as data collection issues and the maturity of platforms for handmade commerce significant challenges. Thus, while the economic value of handmade products has been theorized for some time, this study makes an important donation by providing some of the first quantitative proof for the benefit of hyper-differentiation in an online commerce setting.
In this area, future research can examine the application of hyper-differentiation plans in a variety of other online niche marketplace settings. Third-party sellers in online commerce market spaces have dominated them with questionable issues. Therefore, people have recently started to search for niche markets that specialize in verified quality items.
For instance, SpoonFlower.com is an online market where designers make patterns for textiles, wallpapers, and gift covers, among others, and get to create items using their handmade designs. Researchers can collect data on the items sold through this niche online marketplace and examine the hyper-differentiation tactics that sellers engage in. A study of another niche online marketplace would strengthen the findings of our study and give a more nuanced understanding of the differences between handmade units and made-to-order items from a designer’s perspective.
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