Big box retailers are increasingly opening third-party marketplaces, and this week craft supply retailer Michaels joined the fray. The new Michaels marketplace allows craft supply sellers to list their products on Michaels.com. Orders are processed, warehoused, packed, and shipped by the third-party seller.
The marketplace allows Michaels.com to more than quadruple its product assortment, going from 250,000 to more than 1 million SKUs, without the investment an expansion like this would otherwise typically entail. Michaels is accepting applications from sellers in categories including arts and crafts supplies, candle and soap making, leather and woodwork, baking, tools and tech, yarn, stitchery, kids, toys, education, journaling, and seasonal products with the hope that Michaels.com becomes a premier destination for consumers looking for craft supplies.
The marketplace trend
Opening a marketplace is a current ecommerce trend for large retailers. Over the last few years Land’s End, Hudson’s Bay, Macy’s, Target, 1-800-Flowers.com, and Anthropologie have all added marketplaces to their ecommerce sites, joining massive marketplace players Amazon and Walmart. Marketplaces are attractive because in addition to cheaply and rapidly increasing assortment, they improve an ecommerce site’s placement in search by enabling it to rank for many more search terms items and they can be a hedge against supply chain disruptions.
“The marketplace business model is almost too good to be true,” Ashley Milns head of UK sports equipment retailer Decathalon, told ComputerWeekly recently. “You can massively increase your product range, and third parties deal with stock, pricing, content, storage and fulfillment, the returns, and aftersales, and they’ll pay you for it.” The Michaels marketplace is charging selling a 15% transaction fee on all sales.
According to Sohini Pramanick, partner at consultancy OC&C, a goal is to launch the marketplace in such a way that the consumer hardly notices anything has changed. Michaels has integrated its third-party sellers seamlessly into its ecommerce site so that their storefronts are not easily noticeable. Entering the name of a specific third-party shop into the search bar doesn’t bring that shop up, for example, so the average consumer wouldn’t necessarily realize they were shopping from anyone other than Michaels directly.
Advantages and limitations for sellers
For sellers, the Michaels marketplace gives them access to the tens of millions of visitors that come to Michaels.com each month. It’s important to note, however, that sellers don’t get access to their customer’s information and aren’t able to market to them directly. “Protecting our customers’ privacy is extremely important to Michaels,” says Rachel Petersen, Head of Corporate and Product Communications. “Our third-party sellers can only access the customer information necessary to fulfill an order. Per our Seller Agreement, they are not permitted to market to Michaels.com customers directly or to include marketing materials in shipments to divert customers from Michaels.com.”
The company revamped its customer rewards program and, last month launched a Michaels credit card. Customers who shop in stores and online, including from marketplace vendors, can 9% back in rewards on purchases at the retailer. Michaels has also been working to reorganize and modernize its 1,300 stores in the US and Canada by creating less crowded aisles, and experiential inspiration hubs throughout the store.
The path to opening a marketplace
The Michaels marketplace was originally scheduled to open in August, but as sellers began the process of uploading products, it became clear that the system was clunky and difficult to use. At that time, one seller said, “Import is a mess. I can’t copy a listing or delete it, only archive it. Adding a listing requires information that is irrelevant.” Sellers were supposed to be able to sync their Shopify listings with the Michaels storefront, but that function was not working. The launch was pushed out from August to late February, by which time many of these hiccups had been corrected.
Sellers are given a support email address and must also list a phone number for buyers to contact them, and sellers can set their own hours of availability. Some sellers on the marketplace at launch have just two items, like SpeedSew, while others have hundreds or even thousands of products listed. If Michaels carries a selection of a brand’s top products in its stores, such as Fiskars scissors, there’s an opportunity to for that brand to now sell the rest of their relevant assortment on Michaels.com via the new marketplace.
According to Petersen, there are plans to allow Michaels.com marketplace sellers to pay for advertising on the platform for better placement in search, a further method of monetization for the craft chain.
Interested sellers can apply here: https://www.michaels.com/marketplace
Abby Glassenberg
Co-founder
Abby co-founded Craft Industry Alliance and now serves as its president. She’s a sewing pattern designer, teacher, and journalist. She’s dedicated to creating an outstanding trade association for the crafts industry. Abby lives in Wellesley, Massachusetts.
If the new marketplace has been launched, it is invisible to customers. There is no indication that it exists on Michaels.com, and an online search is fruitless. Has it only launched for sellers?
No, it’s available to everyone. But like the third-party sellers on Amazon, it’s difficult to discern for consumers. If you click the links to the sellers we mention you’ll see how their listings look. They are not very differentiated from the Micheals in-house products.
I see – thank you. I didn’t realize the products were integrated with Michaels’ own.
Maybe I will try again. I was in the first batch for launch, but the interface was ridiculous. I have been ecommerce for more than 20 years, and have assisted in building out the merchandising structure for four websites. I should not have had any problems understanding how to upload listings. I had a 45 minute session with my contact at Michael’s Marketplace plus two IT people, and we never got it to work. Maybe the kinks are worked out now.
I love the idea, and the opportunity for sellers to essentially make a double markup on their products. It takes the tiny sting out of the fees, commission and the fact that you don’t own your customer. That’s what your Brand Website it for. Thanks for the updates, Abby. I look forward to a post about the success or failure Third Party Sellers on Michael’s Marketplace once some time has past, and sales can be examined.
At 15% the profit margins become pretty low for the sellers. Again big box stores taking over. Buy local buy direct , let’s keep the little guy in biz.
More competition is good for a free and sustainable society.
Don, you are absolutely correct, this is another way to put independent shops out of business. To me it is a complete outrage and I do not believe the CIA.org should be promoting this. And yes, I am a paying member (for the time being that is).
Hi Laurel, Thank you for your comment. We cover craft industry news for our website and the launch of Michaels supplies marketplace is an important piece of craft industry news.
Also, the chain stores more generally play an important role in our industry. The vast majority of consumers who become interested n a craft begin buy visiting a chain store to buy supplies. If their interest develops, they will begin shopping at independent retailers and seek out designers, etc., but that’s where the journey begins.
Abby, I still disagree with your argument.
1) Michael’s is a HOBBY retailer: it is not part of the “craft industry.” There is a big difference.
2) The launch of this big-box marketplace is only important to Michaels and their plans to cash in on the consolidation of craft businesses and elimination of competition. This is also a way for these stores to get around the restrictions of manufacturers who refuse to sell to other than independent retailers, especially when they “fold in” the specialty inventory under their banner. This method of doing business is basically dishonest, as they are leading consumers to believe that Michaels takes any responsibility at all for the products. They will not. This will eventually result in the “dumbing down” of creativity, and the suppression of new products for the consumer.
3) I would very much like to know what evidence you have for the claim that the “vast majority” of new crafters begin at big box stores, and that they will eventually begin shopping elsewhere. Whose data are you citing here? That may be true for a few hobbies that use only mass produced branded products such as painting on pre-made items or scrapbooking, but it is certainly not the case for most handcrafts. When was the last time you had a fiber artist tell you that he learned to knit at Michaels? Certainly not fiber artists, or quilters, or dressmakers/designers, or woodworkers, or dyers, or artists of any medium. I challenge you to survey the CIA membership and see if they agree with your claim.
Good morning, this is to ask if I design my own posters but I have to them printed by someone else, do I qualify to be a seller on your marketplace?
Thank you….Maria Lorenzi
Please reach out to Michaels directly for an answer to your question. Thank you!