Crafting a new industrial revolution

When Bethany Farrar decided last year to expand her custom wreath-making business, Sweet Georgia Sweet, she opened a shop on Etsy.com—the go-to website for handmade products.

Started in 2005 by a painter and carpenter, Etsy brought the craft bazaar into the Internet Age and created a burgeoning marketplace. According to its website, Etsy has 42 million unique monthly visitors and 800,000 shops. The company made $895 million in sales last year.

Etsy’s rapid success not only created a reliable source for artisanal products, it also provided a new way for stay-at-home wives and mothers, like Farrar, to supplement their household income. The new cottage industry model, which allows anyone to sell handmade goods around the world, is sparking a renewed interest in simple manufacturing—the same trend that launched the Industrial Revolution.

Farrar estimates she earned between $1,500 and $2,000 in profit last quarter. Etsy charges a $0.20 listing fee per item and keeps between 2 percent and 2.5 percent of each sale, Farrar said. Company representatives refused to verify those numbers or provide further details for this story.

Although the company takes part of the artists’ profit, it’s a small price to pay for the exposure and networking opportunities, Farrar said. Customers can come to her online shop from anywhere in the world.

Women used to turn to direct sales companies like Mary Kay or Scentsy to supplement their budget, but some, like Orange County, Calif., mom Kristin Murphy, wasn’t satisfied with that model.

“When my husband and I were first married, I was in direct sales with a skin and body care company,” she said. “All of the direct sales companies will tell you you’re your own boss, but you answer to someone. In my craft business I’m my own boss.”

Murphy opened her Etsy shop, Vessel Handmade, in November 2012. When she first started selling Disney princess aprons and leather clutches, Murphy just broke even. Now she and her husband calculate her time and labor costs to ensure she turns a profit. The business paid the family’s Christmas expenses last year.

“With direct sales, I had to leave my kids if I did a party,” Murphy said. “With an Etsy shop, I can sew when they sleep. Being able to be home with my kids while I do my work was a big selling point for me.”

Despite Etsy’s rise, tiered sales model businesses remain popular. Stacy Carnow, a Scentsy distributor in Southern California, decided against Etsy because she didn’t want to be bothered with a lot of details and needed a quick and reliable home-based business after her husband received a layoff notice.

At first, she worked long hours just to make $500 a month selling wickless candle products. Two years later, she has a successful business and earns income from her sales as well as commission from people who signed up under her. Companies like Scentsy, Pampered Chef and Mary Kay tout their sales associates’ potential to earn a sustainable income. But that’s not the norm, and startup costs can be higher than advertised.

Interest in sites like Etsy, and more traditional craft fairs, follows a resurgence in handmade goods. In his book Makers, Chris Anderson, former editor at Wired magazine, believes this trend is part of the “The Maker Movement”—an economic shift towards customized products made in small batches by tinkers, inventors and crafters, marketing their creations online.

Just as cottage industries were key to the first Industrial Revolution, Anderson believes today’s cottage industries, showcased by sites like Etsy, are the door to the next Industrial Revolution.

“The Maker Movement is beginning to change the face of industry, as entrepreneurial instincts kick in and hobbies become small companies,” Anderson wrote. “The web was just the proof-of-concept of what an open, bottom-up, collaborative industrial model could look like. Now the revolution hits the real world.”