Craft retailer Michaels is offering sellers of handmade goods an alternative to Etsy with the launch today of MakerPlace by Michaels, an online marketplace for handmade goods, classes, and crafting supplies.
Michaels has been beta testing the platform since July. The retailer is aiming to address concerns by crafters and artisans about high commission fees and upfront costs, as well as competition from high-volume, mass-produced products, on other platforms such as Etsy and Amazon Handmade.
Michaels also is hoping to leverage an asset those sites don’t have – over 1,290 physical stores where online sellers potentially will be able to sell in-person, and where buyers can return handmade goods purchased on the marketplace.
And as a crafts retailer, it can sell creators the materials they then use to make products sold on MakerPlace. MakerPlace buyers and sellers also will be eligible for Michaels’ loyalty rewards program.
The U.S. market for hand-crafted goods has been estimated at over $268 billion and is projected to grow at an average annual rate of 9.8% over the next five years.
Creating a marketplace for creators was part of CEO Ashley Buchanan’s initial three-year plan for Michaels when he joined the company in 2020.
“Our customers were asking for it,” Buchanan said in an interview to discuss the launch. “They were begging for an alternative, frankly.”
“These were our customers and they were buying product from us and they were making it and selling it on other platforms,” he said.
“The premise was our customers who do this for a living should be able to make more money, and that it should be an artist, handmade-only marketplace, and for at least the foreseeable future, U.S. only,” Buchanan said.
The company first had to improve its e-commerce website. It then created a craft supply marketplace for third-party sellers to expand the number of products it sells to artisans and crafters to create handmade goods.
MakerPlace by Michaels, which can be accessed from the Michaels.com website, was created after seeking input from Michael’s customers who sell handmade products. Those creators were especially interested in being able to make money by offering classes on the site, Buchanan said. They also will be able to earn income through affiliate marketing links if their online students purchase materials from Michaels.
“Our whole idea was how do we participate and build up these small businesses and allow them different ways to make money, all using the Michaels brand,” Buchanan said.
MakerPlace will have two fee plans, basic and professional. The basic plan has no upfront costs, but sellers pay a 4% commission on sales and a transaction fee of 3% plus 20 cents.
On the professional plan, sellers pay $9.98 a month, or $110 annually, but the commission is only 2%, with the same transaction fee.
There are no listing fees for either plan.
Michaels isn’t disclosing how many sellers have signed up for MakerPlace thus far, but Buchanan said thousands have joined the platform during the beta period, with the number growing every week.
“I have been pleased at the rate of signups, considering we haven’t really told many people,” he said. “It’s mainly been word of mouth.”
The biggest player in the e-commerce artisan and creator space is Etsy, which was founded in 2005, and went public in 2015. Its sales and stock price soared during the pandemic, but sales have slowed over the past year.
According to the Etsy website the company had $13.3 billion in gross merchandise sales in 2022, and has 8.3 million active sellers on its platform, offering over 100 million product listings.
Read the full article here