What handmade business model is best for you?

Sep 13, 2016 | Handmade Business Tips

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Once you have decided to turn your hobby into a business, the next thing you have to do is decide what type of business you want to be running. There are different handmade business models you can choose from, depending on your personal preferences, the products you plan on selling, and the customers you want to reach. Let’s take a look at your options.

handmade business model

There are 3 main handmade business models that we are going to consider today:
– The Online Shop
– The Market Seller
– The Wholesaler

Each of these models is an opportunity to reach customers through a unique sale channel. Please keep in mind that nothing is set in stone here and that most businesses will end up being a mix of these. It’s all about finding the right balance.

Selling your products at live events: the market seller

Another way to sell your products is to focus on craft fairs, markets, and live events. Before the internet, this was the one and only way to sell and showcase handmade products to potential customers. Today, it still remains a very popular choice in the handmade industry.

Handmade buyers like to meet and talk to the seller, and craft fairs and markets offer the best way to interact with customers and introduce yourself. Although a great option, it can be difficult to scale. Having your own online shop on the side or selling your products on an online marketplace (such as Etsy) is a must if you want to generate more sales and have more room to grow.

If you don’t mind working on the weekends, this is a great option with a low entry cost to get started. Most markets charge a fixed stall cost so you know exactly what your expenses will be.  

Good for you if…

  • You don’t mind making stock in advance
  • You are ok with working on the weekends
  • Your products are easy to transport and store
  • You have a car and a system in place to set up a pretty stall efficiently (packing boxes, table, decoration for the stall, marquee/gazebo, etc.)
  • You know your revenue can vary greatly between weekends due to the weather and other ‘out-of-your-own-control’ factors

Not so good if…

  • Getting prepared every week (set up, packing up, stocking up, etc.) stresses you out and/or you’re not organized enough
  • You don’t plan on doing markets every weekend (your revenue will be much lower on those months)
  • You’re a bit shy or introverted and don’t feel comfortable talking to people all day
  • You live in an area where there aren’t enough markets around for it to be a sustainable business model

Selling your products online: the online shop

Selling your products online is the easiest way to reach a large number of customers, from the comfort of your own home.  And nowadays, it’s kind of a must have too. Most handmade business owners selling their products at craft fairs and markets or through retail shops also have a website these days. But you can decide to focus solely on selling online if you want to and there’s different ways you can do so.

Handmade Marketplaces

The first is to sell your products on handmade marketplaces (such as Etsy, MadeIt, Folksy, Artfire, etc.). This is a good option to test out the waters as the set up cost is very low. You don’t need to invest in your own website and can be up and running in no time. Your products are also showcased to all the visitors of this marketplace, without you having to bring traffic to your page. Careful though, this means that you are in direct competition with thousands of other sellers selling on this marketplace, and you don’t “own” your space. This is problematic because you can’t create a strong relationship with your visitors or customers (through an email list for example), you are vulnerable to fee increases, and your shop could be closed without notice (although unlikely, it has happen to a fair few handmade sellers on Etsy! Simple type in “my etsy shop got closed” on google and see for yourself!)

Your own website

The best way to sell your products online is through your own website. You can set up a shop really easily with no design skills thanks to the beautiful templates that both Woocommerce (wordpress) and Shopify provide and be up and running in no time. This requires more work and investment (in time or money) upfront but is by-far the best long-term plan as you are in control of every aspect of your sales channel and customer interactions.

Mix and Match

For the sake of writing this article, I had to categorize the different handmade business models that exist and put things into boxes. Truth is, most successful handmade businesses mix and match these models to come up with what works best for them.

Eg.: If there’s a big craft market in your city the first sunday of each month, you could decide to sell your handmade soaps there for exposure and extra income but still have your products available online through Etsy and on your own website.
Eg.: You could sell handmade knitted socks for kids to a few kids clothing stores in your town and also have a online shop on your own website.

The possibilities are endless, and the only way to figure out what will work best for your is to:

1 – Ask yourself if the model you’re creating for your business is sustainable from a personal point of view (eg.: “Do I want to be working every weekend?” “Will I mind having to create in bulk when I receive a large order?” etc.);
2 – Ask yourself where your ideal customers hang out and buy (online or offline? Which shops? Which websites? etc.) and be where they are;
3 – Ask yourself if this model will work for the type of products you are making (if you’re selling items that have a low profit margin, you need to consider a model that will allow you to scale and sell in larger quantities: selling on markets only might not be suitable in this case).

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Welcome! Want to learn how to build a profitable and successful handmade business and sell your handmade products to the world? You're in the right place! Read more ...
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Crafting a Kickass Brand
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