Craft supplies are a $44 billion industry and two big players in the market, Etsy and Michaels, have made recent moves to capitalize on that potential.
In mid-February Etsy announced that it in April it will launch a new marketplace, Etsy Studio. Dedicated exclusively to supplies, Etsy Studio will offer 8 million unique items at launch.
One of the areas Etsy Studio aims to address is how consumers get inspired to make a new project and source the supplies they need to get started.
“When we began exploring this area, we discovered that something very important was missing: joy,” Etsy CEO Chad Dickerson, told Forbes. “For a category that’s meant to bring people so much happiness and connection, we think we can do a lot better.”
To infuse a sense of joy into the process Etsy Studio will couple supplies listings with inspiring DIY tutorials that show consumers exactly what to do and what to buy to make projects. Etsy hasn’t yet revealed who will create that DIY content and how it will be integrated with the ecommerce listings.
Chief craft supplies competitor, Michaels, which owns and operates 1,368 stores in 49 states and Canada, currently has 33,000 SKUs in comparison.
The company is also making a strategic move to help customers discover projects. In a March 6 announcement Michaels revealed they’ll be partnering with the online learning platform Craftsy.com. The partnership will begin later this spring and is an effort both to appeal to new customers and expand their relationship with core customers.
“We believe online will be an important complement to the brick and mortar experience,” Michaels CEO Chuck Rubin said in the fourth quarter 2016 earnings call last week. “Given our very small sales penetration today, this is an attractive sales growth opportunity for us.”
Like the Etsy Studio pairing of content with ecommerce, Rubin sees online projects and education as “important enablers to give new customers more confidence to move from inspiration to action.” Through the partnership Michaels customers will get Craftsy classes at a discount. Supply lists and project kits for Craftsy courses will include Michaels products.
This isn’t the first time that Craftsy has worked with big box craft supply retailers. In the summer of 2013 Michaels and Craftsy did some cross promotions. And as recently as June of 2016 Craftsy had a partnership with JoAnn in which Craftsy classes were available for purchase on the JoAnn site and JoAnn customers received coupons to try a Craftsy class for free. The JoAnn relationship appears to have now ended now as the partnership with Michaels ramps up.
Founded in 2010, Craftsy’s roots are as online learning platform, but in recent years the ecommerce side of the business has grown substantially. The company has raised $103 million in venture capital to date and later stage investors appear to be pushing harder for profitability. That pressure seems to have led to the company to focus more on selling craft supplies and Craftsy has developed its own in-house brands of fabric and yarn. In October Craftsy CEO John Levisay told the Denver Post that the company’s ecommerce business makes up about 40% of total revenues.
The possibility of ecommerce revenue overtaking online class revenue at some point in the not too distant future is a real possibility and is reflected in the site’s October redesign which places equal emphasis on both. For Craftsy partnering with Michaels will likely mean increased brand awareness. It will also broaden the types of craft supplies Craftsy offers especially in art, jewelry, and paper crafts.
Michaels already offers in-store classes, some free and some paid, but until now hasn’t had online class offerings. A recent change in pay scale for Michaels in-store instructors revealed that classes are not strongly promoted by the company and are often under-enrolled. Will offering online courses further erode in-person sign-ups? And will Michaels-based supply lists bring Craftsy customers into the store to shop? The answers to both remain to be seen.
Etsy’s and Craftsy’s recent moves do make two things clear. First, the craft supplies market has growth potential and there’s room for creative reinvention there. And second, the coupling of DIY content with kits and supply lists is a strong way to acquire new customers and keep them coming back for more.
This is my favorite takeaway from this article: “the coupling of DIY content with kits and supply lists is a strong way to acquire new customers and keep them coming back for more.” Something to think about for my pattern business. The print patterns that go to quilt stores can be bundled and cross promoted by the shop that purchases them. I should be at least using affiliate links on my supply lists in my patterns to tap into that market! Great thought provoking article- thank you!