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…

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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.