Images courtesy of Michaels Stores, Inc.
Michaels is launching a handmade marketplace that will compete with Etsy. The craft store chain, which has 1,165 stores in the US, has been working to strengthen its ecommerce offerings since private equity firm, Apollo Global Management, acquired it in a deal valued at $5 billion in 2021 taking the company private.
Senior Vice President for Digital and Omnichannel, Kerry McGuire, said in an interview on Wednesday that the new handmade marketplace, to be called Michaels MakerPlace, is the third leg of a three-part ecommerce expansion strategy. The first was an upgrade to the Michaels ecommerce platform that occurred last year. Then, in March, the company added a third-party marketplace for craft supply sellers, more than quadrupling its product assortment from 250,000 to more than 1 million SKUs.
The third leg, which is slated to launch later this year, is the new MakerPlace marketplace where crafters will be able to sell handmade goods, DIY tutorials, and live online classes. “The market right now is fragmented,” McGuire said. “We want to bring it all together, from concept to classes.” Interested sellers can now join a waitlist and are being invited to set up their shops on MakerPlace in waves, including many who were accepted this week.
The similarity in names between Michaels Marketplace and Michaels MakerPlace has caused confusion among potential sellers, leading some to assume that they are one and the same. McGuire said the fact that the names are so close in sound won’t matter in the long run because consumers will not be aware of Michaels Marketplace since its third-party products are blended into Michaels’ overall ecommerce assortment. Marketplace doesn’t have its own branding, whereas MakerPlace will be a consumer-facing brand. Still, from the seller perspective, with rollouts only months apart, there has been confusion between the two.
Sellers will be able to earn commissions on shoppable supply lists. Overall marketplace fees will be 1.5% lower than Etsy fees in the US.
Michaels MakerPlace is advertising itself as a low-fee marketplace. McGuire said that in focus groups conducted last year, crafters said that low transaction fees were a compelling factor when it came to considering signing up for a new marketplace.
MakerPlace is also just for handmade goods. The terms and conditions agreement sellers sign when agreeing to set up a shop state: “You will provide documentation of your handmade process, and all parties involved in making your handmade Products, promptly upon our request.” McGuire said there will be a trust and safety team in place to monitor for intellectual property violations, reselling, and other violations. Despite rumors that were circulating online this week claiming otherwise, the terms also clearly state that sellers retain full rights to their intellectual property. “You retain sole ownership rights to everything you post on the MakerPlace Site,” the terms read.
The fees for Michaels MakerPlace add up to 7.5% of gross sales + .20. In comparison, Etsy fees in the US add up to 9% + .45, so sellers can save 1.5% + .25 per transaction if they choose MakerPlace. The payment terms, however, are less favorable than Etsy. Michaels will pay sellers “no later than nine days following the close of each fourteen-day period,” so if you make a sale on the first of the month, you’ll get paid on the 23rd, whereas on Etsy you can schedule payments for the next day if you’d like.
Like Etsy and other marketplaces, sellers can include links in their shops to their social media accounts but are prohibited from marketing to their MakerPlace customers via email.
Why is a craft supplies chain store launching a marketplace for handmade goods?
One possible goal of Michaels MakerPlace could be to recruit and retain makers who will work on behalf of Michaels to market and sell Michaels products online. MakerPlace sellers will be able to sell how-to instructions with shoppable supply lists, as well as tickets for live Zoom classes. Sellers will receive a 3% commission for any products customers purchase from the shoppable lists. It’s important to note that commissions are paid 69 days after the sale goes through. Interestingly, if sellers were to instead join the Michaels Affiliate program, they could earn 10% on each sale they refer plus a $100 signing bonus which certainly seems like a better deal.
Sellers on MakerPlace have the option to pay for a “professional” membership for an additional $110/year in order to reduce their transaction fees to 5.5%, increase their commissions on product sales to 6%, and list more than two classes per month. The payment schedule, though, stays the same.
Makers interested in selling classes are expected to host the classes on their own Zoom accounts. A free Zoom account is time-limited to 40 minutes, though, and the cheapest paid plan is $149/year, an additional cost for sellers to take on. (For each class sale, Michaels will take 20% and the seller will get 80%.) It would seem, also, that Michaels is assuming some risk regarding exactly what will go on during the live classes, especially since the company isn’t hosting the classes themselves and there will be no representative from the company on the Zoom sessions. The possibility for shenanigans is reminiscent of the short-lived Michaels website chat platform back in September 2020 that quickly spiraled into hilarious chaos.
A second potential goal for the launch of a handmade marketplace is to encourage sellers to buy more supplies from Michaels themselves. As soon as you sign up for a MakerPlace shop, Michaels asks you to join its Rewards program to earn points and save on future purchases.
Many craft business owners felt let down by Michaels for shutting down a major source of wholesale craft supplies they relied on. In 2016, Michaels bought Darice, a 60-year-old family-owned business. In June 2020, Michaels shut Darice down. To replace it, Michaels launched its own bulk shopping site, Michaels Pro, although the pricing and product selection is not at all on par with Darice’s offerings (and the site doesn’t seem to have been updated since 2021).
If the path of Michaels Marketplace, which has been live now for several months, is any indication, sellers may have mixed results with the tech side of the new MakerPlace. One supplies seller we spoke to said that despite promising a free, seamless integration with Shopify, Michels is now charging an integration fee. Marketplace sellers also report that sales have been slow given the size and scope of the Michaels audience. “It seems like marketplace listings get lost in all of the other Michaels listings on their website,” said one. “I’ve had 228 orders so far,” said another, noting that this is less than the number of sales she’s had in the same time period on Etsy.
While Michaels is known as a place to purchase craft supplies, it is not known as a place to purchase handmade goods. Explaining the new handmade MakerPlace to its customers will be a challenge, although this isn’t the first time a large craft chain has attempted to launch a handmade marketplace. Craft chain AC Moore launched the AC Moore Marketplace for handmade goods in June 2019, only to go out of business entirely in November of that year.
Introducing handmade goods into the mix also has the potential to cause other problems. McGuire says the company is aware that some customers will attempt to return handmade items they purchase on Michaels MakerPlace to Michaels stores. When this happens, store associates will be instructed to help customers generate a return label for the buyer, with the shipping cost being charged to the seller. On the Michaels employees subreddit several employees expressed already being overtaxed and not having the bandwidth to deal with this added task. “We can’t even process an online order return/refund correctly because the system is not up to date or up to speed let alone this! No way! I am not interested! Sounds like a big ol’ mess of a headache,” said one.
Some current Etsy sellers we spoke with were excited by the idea of a new marketplace for handmade. “I was looking at how bad my sales have dropped this year on Etsy and I believe a lot of it is because the marketplace is so flooded. With Michaels being a national chain, I’m hoping that maybe my products will get out there more and the marketplace isn’t quite as crowded,” said one.
Others are more wary. “I’ve been selling on Etsy for 16 years and on Amazon Handmade successfully. Over the years I’ve wasted quite a bit of time on new start-ups without getting sales,” said another. “I am only considering it because it is Michaels with a built-in following but not sure whether I’ll just wait and see if it takes off. So much work involved.”
Update, June 17, 2023: Michaels public relations would like to clarify that the marketplace is currently in beta and is officially called “MakerPlace by Michaels.”
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.