Marketing (part 3)

When marketing people talk about placement they aren’t just talking about where you place your item to sell. They’re also talking about where you place your product within the market. Let’s talk about the actual selling spot first. When I started selling things online, Ebay was pretty much the only option. At the time, I used it like many people do, as a global garage sale for collectibles and such things. When I started selling handmade items, a few went on Ebay, but not many.

When I got ready to really sell handmade, Etsy was it. The end-all be-all of handmade online marketplaces. I don’t think I even knew about any alternatives. They are still the 800 pound gorilla, but they’ve run into some trouble lately (to put it mildly) that is off putting to many sellers. Ask your average consumer where they’d look for handmade goods on the internet and they’re still most likely to say Etsy.

Handmade – but maybe not so much anymore.

Most of my sales to date have been through Etsy, save a few Facebook initiated customs. I’ve tried other venues, but nothing’s come close to the amount of traffic and sales Etsy generates. That doesn’t mean I’m 100%  happy with them as a seller, but my current customer base is using this venue to look at similar items and it would be silly for me not to have Ruggles there.

Of course there is a veritable ocean of other handmade marketplaces out there, with more appearing every day. What you’re selling might also help determine where you should sell. If you’re selling cloth diapers (for instance) you better be on Hyenacart. If your item doesn’t dictate placement, then it’s up to you. Choose Etsy or one of the others. And although you might get a few views or even a sale just by being on Etsy, no matter what venue you choose you’ll have to do your own promotion work to really make your shop thrive.

Have a serious business plan in mind? Go straight for your own website with an integrated shop. Every seller should work toward this, and I’m currently in the process of redesigning my website to include a shop. Even if you use it as a backup, it’s there should you need it.

Other venues to check out:

There are also venues whose main market are Canadians (iCraft.ca) or Europeans (Folksy and Dawanda) although they’re open to everyone worldwide.

What about selling on consignment or at craft fairs? I can’t really speak to those. As a Mom of two young, active boys doing craft fairs is out of my scope. I like the idea, and know several sellers who do quite well at them. If you’re personable and a good salesman event selling might make sense for you. There’s a wealth of information on the net about setting up your booth and finding local shows. As for consignment, I’ve never tried it and never will. I don’t like the idea of putting my product in someone else’s hands to sell. I’d rather do the selling myself. I’ve also never heard of a seller who just loved consignment or had great success with it.

I’m going to touch a little bit on placement within the market. This is where factors like competition come into play. Actually, this stuff is pretty interconnected if y’all haven’t noticed already. I should go into target markets at this point, but that’s a whole ‘nother kettle of fish I’ll cover as part of promotions.

So let’s pretend the market as a whole for your type of item is a vertical line. You should narrow your focus market as much as possible. So for Ruggles it looks something like this: Toys> Blankets> Security Blankets> Animal Security Blankets. So Animal Security Blankets is my vertical line. I’m positioning myself at the top of that market. I do that with pricing, quality and branding Ruggles as a boutique item. I’d put things like Pillow Pets at the bottom of the same market. If you’re in a highly competitive market, your positioning becomes more important and is one way to help your product stand out. Mine isn’t really a highly competitive market. If I broaden the definition to include things like Taggies then it become a little more so, but nothing like the more saturated categories.

When you search “security blanket” on Etsy you get 7,015 items. Search “animal security blanket” and the field narrows to just 911. I actually don’t have to do much to make sure I stand out in that kind of crowd. I’m not going to lose a lot of business to a competitor because I have no direct competitors. Search for “jewelry” and you get 3,184,739 items. If you’re in one of those highly competitive markets, either your product, or your positioning, or preferably both will have to make it stand out.  I decided to do a search for “stamped jewelry” since I like those necklaces and that narrowed the field to 61,289. In a market that large, positioning yourself in line with your competitors is going to be a factor. Unless you have something super special that adds actual or perceived value, like your necklaces being sterling silver or a special shape.

You might think undercutting your competitors and placing yourself at the bottom of the market would be good, but that can backfire. If everybody else is selling their widget for $40, and you sell yours for $5, you may get some sales but you’ll lose a lot because your item will be perceived as cheap. Unless of course it actually is cheaper. It’s okay to occupy that position in the market. Just do it deliberately.

This is far more “wall of text” than I intended. As always questions and comments are welcome! Promotions is up next, and is what I’m best at. That might turn into more than one post…

Marketing (part 2)

Pricing a handmade item really shouldn’t be hard but it is. I’ve struggled with pricing, and judging from the amount of posts on the subject other sellers have as well. My struggles come from wanting to make Ruggles as affordable as possible. I’d like everyone to be able to afford one, but I know realistically that’s not possible, since I’d also like to afford to make them.

My first Ruggle sold for $25. That was too low, even given I was using Velboa fur (less expensive than Minky) and they were a tad smaller than the ones I make now. I’ll never know for sure because I didn’t do the math. I just looked at it, thought “$25 sounds pretty good” and went with it. Very scientific, I know. When I finally did do the math, I choked on my coke. At that point “doing the math” meant coming up with a loose materials cost. Then I used the standard formula that most blogs, businesses and even Etsy recommend – materials x 2 = wholesale; wholesale x 2 = retail.

My very first sold Ruggle.

That number really did make me choke. It was north of $120 for a standard Ruggle. I wondered if people would even pay the wholesale price that equation had given me, but I did slowly start to raise prices trying to get to the point where my materials would be covered.

I still wasn’t paying myself for my time. I think it’s utterly ridiculous now, but like many other handmade artisans I didn’t think my time was worth anything. Of course, your time is the most important part of the materials equation. You can have a bunch of materials lying around, but without your time and talent it won’t amount to anything other than a stack of stuff.

The second time I did the math, I got serious about it. I factored in (almost) everything. Not just the things I’d taken into account before (fabric, thread, batting, etc.) but all the things I hadn’t (my time, pins, printer ink, and a ton of other stuff). I choked again. Then I turned to the Attack of the Craft forums and got several gems of advice that really helped me in pricing.

First, I am selling a luxury item. It’s not food or shelter and it’s not going to negatively impact the life of anyone who can’t afford it. Second, I am not my target market. My target market exists in an income bracket above myself, so just because *I* can’t pay that much for it, doesn’t mean it’s not worth the amount. Third, you have to trust the math. If you aren’t making enough money to make the process worth your time you will come to resent it. This is supposed to be fun and rewarding, not a pain in the budgetary ass.

And last, but not least, wholesale makes absolutely no sense for handmade. To be profitable in wholesale, you need an economy of scale that you just aren’t going to get with handmade. It doesn’t matter if you’re selling 1 or 100, you’re still doing the same amount of work. There are no savings for handmade in wholesale because there’s no automation in handmade. This lesson actually took me a while to really sink in. I had to do a few wholesale orders (losing money on each piece) and kill myself in the process before it hit home. I think for the longest time I equated wholesale with success. But it’s just not.

Wholesale orders were good for introducing new animals like this wombat.

I try to review my costs once a quarter, or whenever I know something I use is going up in price (like postage or fabric or what have you). My materials include fabric, thread, batting, stuffing, labor, fleece, pins, tags (which includes fabric, thread and printer ink), shipping envelopes (I pay a bit more for compostable/recyclable, reusable eco enclose mailers), business cards, thank you cards, ribbon and postage. I don’t include the cost of shipping materials to me, photography costs, internet access and website costs, licenses, gas and other things like that.

I’m pretty happy with where my prices are right now. I make enough to cover my time and materials plus about $10 in profit (sometimes less) on each Ruggle I sell, but because of those other expenses I don’t factor into pricing I haven’t made a profit overall yet. I have hopes for this year, but we’ll see. I have never charged what that original formula told me to, not even the wholesale cost and I don’t really ever intend to use it as a real pricing tool again. It may make sense for others, but not for me.

Writing this made me realize that I don’t have pricing on my website. That’s one of my big pet peeves – not being able to find out how much something is going to cost. So here’s a quick breakdown with a more detailed pricing structure to come on the main site…

Standard Ruggles $50 + $5 shipping (most animals who are simple, i.e., have two ears and a tail.)

Horned Ruggles $55 + $5 shipping (animals with ears and horns and maybe a fleece muzzle like this moose.)

Involved Ruggles $60 + $5 shipping (anything that is more involved than horns and ears. Critters with ridges down the back or wings fall into this category)

Pieced Ruggles $65 + $5 shipping (any animal with two or more colors of fur pieced together, like this fox.)

Mini Ruggles $25 + $5 shipping (I only do animals that fall into the “standard ruggle” category as minis, and they are always ready to ship. No customs.)

Giant Ruggles $135 and up + $20 shipping (final cost dependent on the critter, but most “standard ruggle” animals will be $135 as giants.)

Even though it should be simple math, and easy, pricing just isn’t. There’s always an emotional component when you put a price on something you’ve made, as well as other factors that make it more difficult. But starting with the math is a smart way to go. As always, questions and comments welcome! Next up in the marketing series: placement.

More challenging things

Time is obviously still my biggest challenge since I told myself I’d carve out time to post regularly and I’m not doing so hot on that front. But I’ve had others of course. Some anticipated, some not so much. I knew cash flow would be a problem. There’s never as much money as there are things to spend it on. I’ve had a couple difficult customers but I don’t feel like I can complain. My two weren’t really THAT bad and I know people who have the most assinine customers in the world. One in particular should write a book. They’re that bad. I’ve had issues with equipment failure though thankfully not that often. Most of the time if my sewing machine breaks I can take it to my repair guy and he has it back to me the same day.

The most irksome challenge I’ve had is a recent one and something I never imagined. Getting supplies. I needed plain white minky for a recent custom sheep.

The sheep in question

I went to my main supplier. Out of stock. Ummm… okay. That’s never happened before. Go to backup #1, and the website says they have it – yay! Only they call me two days later to say that no, they really don’t. That was pretty frustrating. Finally with the backup for my backup I found it and had it shipped. That process took a week, and thus made me a week late with the custom. Something that gives me stress hives.

But like everything, at least I learned something. Keeping basic supplies in stock at all times is an excellent idea. I’m going to have to get even more organized so when I use the last of something I’ll reorder immediately. I also found a better backup supplier, and the one I ordered from who called two days later has lost my business for the most part. They still have specific fabrics I can’t get anywhere else, but they messed up beyond just waiting two days to call me. I had two other fabrics in the order and they failed to ship them until seven days later after I called to complain. I’m actually still waiting on them to show up.

The silver lining of all this is that my customer was super awesome and patient. Also, I now have that new backup supplier that is fast with the shipping and has great customer service. I’m considering buying fabric wholesale, but the issue there is storage. Faux furs are bulky. I could pack 10 yard bolts of cotton in my dining room all day long, but a 10 yard bolt of minky is a whole different beast. If I come up with a way to store it without sending my husband into apoplexy, I’m going to do it. Just so I never again experience the panic of not being able to get what I need when I need it.

All in all I’ve been pretty lucky in that my challenges have turned a hair or two gray, but nothing overly serious. I haven’t had to track down buttheads using my pictures in their shops, deal with people who say hateful things just for the hell of it or had scammers who say the package was destroyed or lost in the mail or what have you – all things my circle of craft businesspeople friends have dealt with. Let me take a pause to knock on wood.

Hmmm… I’ve just noticed a trend. The challenges I think are the worst all deal with other people. I guess that’s because if it’s equipment or supplies or something like that, you just get it fixed or find another source. If it’s a person, then you have no idea what sort of crazy can happen.

Which makes me really, really grateful for my {totally and completely awesome} customers.

Changes…

Since there’s a man painting the window on the other side of my sewing machine, and if I worked I’d be about a foot from his crotch I’ve decided to write a blog post instead.

The first thing any crafter struggles with is what to make and I’m no different. I can walk into a craft store and spend hours, coming up with a thousand different projects that would be really cool. I’ve done it, and have the materials of hundreds of cool projects lying fallow in my supplies to prove it. (Plus another couple hundred pages of magazines with inspiration or things I want to make on top of that, and let’s not even talk about my Pinterest account.) Starting a crafting business was like that for me. I had a lot of ideas and little direction. Now, when I look at business sites and they talk about formulating a business plan and 5 year goals and whatnot I just have to laugh. I don’t know a single handmade business owner who did it that way. We all just started making stuff, thought “hey, somebody might buy this” and opened shop.

Aren't these blown egg geodes cool?

Which is a good a way to do it as any I guess. Especially when you’re working on this kind of scale. If we were talking about a big corporation, or hell even a small brick and mortar business, that would be different. But when you’re talking about a business whose greatest investment capital is probably already sitting in the craft room then it’s a different story. I didn’t have to go to a bank and take out a loan to get started, I just made stuff with what I already had. Even though it’s not a bad way to do it, I would have done it differently had I gone into this thinking “business” instead of “make a little money, might be fun!”

For one thing, I would have nailed down my product to begin with. That would have saved me a little money on supplies that never got used (in the case of the pet items idea) and a lot of time and effort (in the case of the diaper idea). Arriving at my one true thing wasn’t a long process, but it was long enough. I think that’s one of the beauties of the micro scale handmade business. You can fail without going bankrupt. You can try new things without a great deal of expense. Research and development is natural and fluid. Feedback is pretty instant. Change is a good thing, and doesn’t feel like such a huge risk. Because it isn’t.

Of course there have been changes to my shop even after I settled on Ruggles. I’m constantly trying to improve my items and my customer’s shopping experience. Being online, I have to keep updating my product and my shop to stay viable and current.

Some of the changes I’ve made have been to make my Ruggles bigger. Create a permanent pattern base that I can work from so they are all consistent in size. Went from using Velboa furs to Minky. I switched from using safety eyes to embroidered eyes. Made my tags double sided and filled the back with everything I need to be CPSIA compliant. I’ve changed my picture background (several times), orientation and size. I streamlined my item description and moved a lot of useful but not critical information from there to the policies section. I created a stand alone website. I’ve tried and discarded a dozen different marketing ideas (I’ll save the specifics on that for another post).

I still like this background, but it didn't do anything to showcase my Ruggles.

And that doesn’t even begin to touch all the changes I’ve made in suppliers, supplies, logo design, tags, and on and on. To sum up: change is good. When you’re running something this small $10 spent on new business cards can make it feel like a whole new business. So you can change quickly and respond to customer input, competition and innovation.

It only took me about 7 hours to write this post! I’ll have to talk about the unbalanced balancing act of Mom, wife, housekeeper and business owner. Later.

Oh Hai Thar!

So I was laying in bed with my 13 month old as he fell asleep pondering (as one does) and it hit me. Well, not literally of course. Actually, my internal dialogue went something like this: “Dentist appointment tomorrow means I should probably shower tonight or in the morning. I should really journal about the business and how I’m struggling with various things. Hey, I have that totally neglected blog for Bewhiskered. HEY I KNOW. I’ll write about all the things I’m going through as a newbie business owner. That might be fun.”

So there ya go. I guess I should start at the beginning so if that sort of recap thing bores you to tears you can skip to the end now.

I worked for 10 years as a marketing professional. Then I got pregnant. I’d always wanted to be a stay at home Mom. But I also love making things. And writing. But it was pretty obvious early on that writing was going to be more difficult for me than making things. I just couldn’t get the time and space I needed to get into another world in my head which is what I need to do in order to write. Making things it was!

And boy, did I make things. They started to pile up. So I figured I could open an Etsy store and make a little extra spending money. The initial concept behind Bewhiskered was to make things for pets. It just never clicked. I have a ton of books on making pet toys and even some materials for things like catfish shaped kitty beds, but nothing ever got made. Then I finished my son’s cloth diaper stash and had a ton of material left over, so I made some extra cloth diapers and opened shop. That didn’t click either. I sold a few, but I wasn’t really into making them and the competition was fierce.

They were pretty cute though.

Third time’s the charm, right? I had this tiger rug my Mom latch hooked for me as a baby. With Jake’s six month pictures getting close, I decided I wanted to recreate that rug. I looked for a latch hook kit, and no dice. So I picked up this great book of stuffed animal patterns, enlarged the pattern for a tiger’s head about 300% and whipped up a vaguely tiger skin shaped body for it.

It was terrible. But it looks okay in his pictures.

You'll notice the photographer wisely cropped out the head.

Other Mom friends of mine were talking up these tag blankets so I looked up a few on Etsy. I didn’t like them. They were all small, for one thing. And boring. Cue the lightbulb. I chopped the head off that first tiger rug and used the body material to make the first Ruggle. It belongs to Jake. It’s pretty bad. Thankfully they got better.

So anyway, all of that is to say the process that formed this business was a slow one. It’s actually only been very recently that I started calling it a business. Before I’d say that I sold things online or I made these blankets or some variation of the sort. It was more a hobby. An outlet for my creativity and a way to make a little extra money that was flexible enough to fit into my Mommy life.

The first decision I faced was whether to keep it more of a hobby, or transition to a proper business. I was making only enough money to pay for more supplies really, but I got a big order that let me buy annual passes to the Georgia Aquarium. That was actually really cool. That had me thinking that Bewhiskered could fund other cool things for me and my boys. So now it’s a business. Which means it has to be profitable. And I have to keep good records to ensure that it’s profitable. And there’s all these licenses and taxes and stuff that have to be dealt with.

My record keeping is a dollar spot plastic accordion folder from Target with the sections marked by quarter. I put any receipts for things I don’t buy with my Paypal card in there. I use Outright.com to keep track of everything else, and manually enter the non-Paypal receipts about twice a year. I have an Excel spreadsheet for figuring out my product cost. I made it up so I’m pretty sure it’s lacking in a hundred different ways, but it works. I use free templates for just about everything and make up the rest myself.

I’m hoping 2012 will be the year I turn an actual profit. I’m going to end this post here, since it’s late and my kids still haven’t adjusted to daylight savings time which means I’ll be up at the ass crack of dawn.

I’ve got loads of topics for future posts, and I’m going to do my damndest to put them up on a regular basis. What do you want to know? I’ll be happy to answer with the perspective of a newly minted (bumbling through it) business person.