Etsy is going high tech, it seems, in a crowdfunding way, to help reach its goals. Etsy unveiled a crowdfunding strategy on Tuesday that it projects will help to grow its business. Etsy is a web-based marketplace for hand-crafted, artsy, and antique items that has a peer-to-peer structure. Users upload the items and sell them to other users; it has a global market. Etsy gets a percentage of sales from each transaction made through the online shops on its platform.
The crowdfunding service has been enabled for users selected by Etsy as a test group. The testing will run through the middle of August. Only these select sellers can begin a crowdfunding movement. As well, purchased items will only ship within the United States. Anyone, however, can fund the crowdfunding projects.
The campaigns provide a means for Etsy to try to increase the number and type of items selling on the online platform. While Etsy is a popular platform, and its revenues are growing, it has been reporting huge net losses. For example, Etsy grew 56% in revenue in 2014, but its losses that year were upwards of $15 million.
For sellers, the crowdfunding tool will be ways to get funds to create new lines of products; funds could pay for the purchase of materials for new items to sell in their online shops, for example.
If a person wishes to back a particular campaign, he or she will only be charged the money put up if the campaign’s monetary goal is reached. In other words, the funding of a campaign is between the seller and the backer.
Should the test phase be successful, Etsy is likely to continue with the crowdfunding campaign and open it up to more sellers. The result would likely be an increase in the number of products sold on the site, but it could be to the detriment of the intimate feel that the site currently has to it.