Why Suppliers and Consumers Should Support Shops with Strong, Sustainable Business Models

on January 21 | in Etc..., Small Business Ideas | by | with 59 Comments

As many of you probably know, Sew Mama Sew used to be an online fabric shop as well as a blog. About a year and a half ago we liquidated our inventory and began to focus exclusively on growing the blog. I was motivated to close the fabric store for many reasons, but I won’t lie–if I had been earning a good living with money left to invest in growth, I would have stayed open forever. I’m not going to blame anyone but myself for my mistakes and my decisions. I don’t have a background in business and there are many shop owners who are far more skilled at marketing than I ever was. I will, however, say that it used to be easier when I was one of only a handful of online shops (#duh).  Even though there is great demand for sewing supplies ($3.76 billion annually in the quilting industry alone according to some research) there is incredible competition for those dollars. In addition to excellent brick & mortar stores and well-run, unique online shops, there are many non-traditional sellers jumping into the market all the time. Unfortunately, many of these sellers are diverting business from the shops with solid business models, making it very difficult to compete and maintain healthy profit margins. Some of these non-traditional models of selling fabric are:

  • fabric co-ops: A group of people get together to buy fabric by the bolt at a wholesale price, then split the bolt. Usually one person is the administrator and is responsible for ordering, cutting, and shipping, so they take a fee from the other members.
  • shops with prices that are significantly below MSRP*: The platform isn’t as important as the pricing strategy. (edited for clarification)
  • Facebook groups: See this post by Abby Glassenberg. In it she takes a look at two models for Facebook fabric selling groups. One is printing knit fabric based on demand (a unique business model), but the other is simply undercutting prices on quilt-weight cotton.
  • group buying clubs: Massdrop, for example

(*MSRP in the sewing and quilting industry is typically keystone, or 100% markup {except for high-end items like sewing machines.} Keystone is considered the standard for maintaining healthy profit margins.)

My personal belief is that because this is a sector in which so many people are very passionate about their hobby, a few people (certainly not most) are willing to take great risks without great business plans in order to follow their dreams. This is especially true of shops with prices well below MSRP for fabric and patterns. When profit margins are very slim, that business is not in a position to grow or contribute to the industry or the economy, yet they are a significant threat to the livelihood of shops with passion as well strong, sustainable business models. (And by sustainable, I mean that they are in it for the long-haul, not Green.)

Whether or not there are more non-traditional (some would say “gray market”) sellers than there used to be I can not prove, but my perception is that there are. (How could there not be with so many new channels through which to sell?) I’m lucky to have many fabric shop owners as sponsors, partners, and friends and one thing I can say with certainty is that many of them feel that some manufacturers and distributors have become complacent about their wholesale terms, and are dismissive when confronted with complaints about co-ops, predatory pricing, or buying clubs. In some cases all it takes is a Tax ID to open a wholesale account–beyond that many manufacturers don’t care how a seller does business.

Obviously, the supply side isn’t the only problem. Clearly, consumers are setting up co-ops, joining fabric groups, and participating in club buys. Most of these shoppers are simply after a great deal–who can blame them? And really, why should we care whether or not a seller is financially solvent or operating legally and responsibly? I do understand these points of view but I’d like to take a look at why they are short-sighted. I think the best way to do that is to look at all the ways the economy, the industry, and consumers benefit from shops with strong, sustainable business models:

A Strong, Sustainable Business is Legal, Protected, and Financially Responsible

  • they hold a tax ID
  • they are licensed by city and state
  • they carry liability insurance, property insurance, and workers comp insurance
  • they keep accurate books
  • they file quarterly and yearly forms with the state and federal government
  • they have a written business plan

Of course you can’t verify most of these things as a consumer, but if you see a site with it’s own domain, a carefully considered and organized website, a phone number, a mailing address, and realistic prices, you should feel better about giving them your money than paying a Paypal invoice from someone who could be here today and gone tomorrow. A business is a commitment and I’d personally much rather patronize shops that appear to understand what needs to be done and how to make it work. For suppliers, it is a huge risk to take orders from people that may not even be in business when their products are ready to ship three to six month down the road, and who may or may not be able to pay their invoice.

A Strong, Sustainable Business Contributes to a Healthy Economy

  • they pay taxes
  • they hire employees
  • they participate in events that promote and advance the local economy and other small businesses

Businesses that rock are bringing the economy back! They’re out there participating in First Friday events, they’re taking part in Shop Hops, they’re sponsoring bloggers, promoting designers, setting up booths at trade shows, and partnering with charities. It takes a healthy profit margin to do all of these things, so we may have to pay a bit more as consumers but we get so much in return!

A Strong, Sustainable Business Pays a Living Wage

  • to the owners
  • to employees
  • to service providers (graphic designers, contract sewists, carpenters, IT professionals, painters, sign makers, printers, accountants, lawyers, etc.)

When a business maintains healthy margins and becomes profitable, the owners get paid, they hire more employees, and they outsource other tasks they can’t or don’t have time to do themselves. All of this leads to happier humans and a healthier economy. Low-margin sellers are squeaking out a tiny profit for themselves and making do when it comes to the dozens of things business owners with higher margins can hire or contract someone else to do.

Edited to clarify: I completely understand that not all businesses start off this way. Of course many people don’t have employees for years. It often takes a while before the business can even pay the owner. The question though is whether or not the business model can support growth that will get it to the point of actually supporting people.

A Strong, Sustainable Business Takes Care of Customers

  • they are easy to reach via phone, email, mail, or in person
  • they ship products in a timely manner
  • they protect customers’ information
  • they use sophisticated software to receive, process, and track orders

The truth is, good customer service costs money. Once you get beyond a few orders per day, it takes qualified people and sophisticated software to maintain efficiency and keep track of products and orders. When businesses with low margins get busy, customer service tanks, orders are delayed, and mistakes are made.

A Strong, Sustainable Business Contributes to a Robust Industry

  • they promote products and create demand
  • they advance sewing as a craft and hobby
  • they sponsor blogs, contests, organizations, and trade events
  • they educate and train consumers

To me, this is the most compelling reason why wholesalers and manufacturers should be supporting shops with healthy business models–THEY ARE GROWING THE INDUSTRY! Great fabric stores have blogs, classrooms, and You Tube  channels. They’re working every day to CREATE DEMAND! That isn’t cheap, so the business needs to be profitable. When dozens of short-sighted sellers without good business plans come in, create competition and drive prices way down, smart, passionate, creative entrepreneurs  go out of business. We’ve seen that with multiple innovative shop and studio closures in the past few years. The industry is worse off without them.

Distributors, fabric manufacturers, notions companies, pattern designers, please hear this as a call to action. The industry needs you to take a stand and implement policies that support businesses that are doing the right thing. They need you to refuse to sell wholesale products to sellers without a solid business model. How you do this is obviously up to you, but some suggestions would be:

  • require tax IDs and state business licenses in order to open accounts
  • explicitly ask if the business is a co-op
  • enforce a minimum retail price restriction (I’ve heard the arguments. I’m not a lawyer. There is this.)
  • require a stand-alone domain or brick & mortar location (Todd Gibson of Oliver + S shared their policy with me, which has been in place since 2009. He states, “Our policy is really very simple. To receive wholesale pricing, an individual must have a bricks-and-mortar store or a proprietary e-commerce site.”)
  • sell only to businesses that carry inventory (thus weeding out co-ops and businesses who make no investment in products and can therefore significantly under-cut prices)
  • make sure both in-house and contracted reps understand and enforce the policies

(Edited to clarify: I don’t necessarily think all wholesalers need to do all these things, and I can’t say which will work best for each one. I’m just suggesting a few requirements that some manufacturers have put in place before someone can qualify for a wholesale account. Often fabric suppliers have different applications for retail accounts and manufacturing accounts.

Also, I’m not saying I don’t support Etsy shops, because I do. I’m just using the Oliver + S model as one example. I do, however, think that if a shop has their own domain with a blog, an “About” page, and a redirect to an Etsy shop, it demonstrates more of a commitment to long-term growth than a site without their own domain. This could be one way to think about the requirement of a stand-alone domain.)

Consumers, please hear this as a call to action.  As tempting as it may be to shop for fabric at a really great price, try to look at the big picture. By supporting shops, co-ops, clubs and private buying groups that significantly undercut prices, you are taking business away from shops that have so much to give–to the economy, to the industry, to their employees, and to their customers.

Finally, please understand that I use the term “non-traditional” seller because I think “gray market” doesn’t always apply, mainly because many of them are sanctioned by the manufacturers. I do, however, recognize that not that long ago online shops would have been considered “non-traditional.” I am sure we’ll see great new ways to buy and sell in the future, so manufacturers as well as consumers will have to be flexible. I just hope we can all buy and sell with a critical eye toward whether or not the business can contribute in positive ways to the industry and the economy while serving customers effectively.

What do you think? Is it all about supply and demand? Do you have any experience with non-traditional sellers? Do you have any experience opening a wholesale account? If so, was it easier or harder than you thought? Many small-scale manufacturers use co-ops to keep their costs low. Is there another way to accommodate their needs?

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59 Responses to Why Suppliers and Consumers Should Support Shops with Strong, Sustainable Business Models

  1. Dennis says:

    Hi Kristin, great post!

    My wife and I run Fashionable Fabrics, which has been selling fabric online going on 11 years now, and we have struggled with this topic for many of those years. We are finally at a point where our focus is much less on worrying about what others are doing and instead on how best to serve our customers. It is hard to ignore the Etsy shop that pops up and offers unsustainable pricing, but I would guess that in many cases, behind that Etsy shop is a maker at heart who loves fabric and enjoys the process. It is always fun in the beginning and I do not blame them for wanting to sell something they love at super low prices. They likely just made a purchase of more fabric than they ever have before, and now have to move it. Eventually they will learn that their time was not compensated, and soon after that they will see that listing fabric, answering emails, taking orders, cutting and shipping fabric gets old, especially when your not making any money. So eventually many close their Etsy shop and move on. The problem is, now that it is so easy to setup a shop, that 2 more people who love fabric will just replace them and the cycle continues.

    This used to really bother me and it was hard because I felt it was taking business away from us. I now realize that this segment will always be there and will likely continue to grow if manufacturers are not concerned about sustainability.

    I don’t blame these new Etsy shop owners and I certainly don’t blame the consumers. I know you don’t as well. I read your point to be that suppliers should be concerned about this and care about sustainability and consumers should be aware of the threat to sustainable shops. As a consumer I look for the best deal I can find online, it is what makes the risk of buying online worth it. So consumers will naturally gravitate to the lowest price and I don’t blame them for that.

    So while it is important for consumers to be educated, the real risk to sustainable fabric shops are the suppliers. If more manufactures were like Todd Gibson form oliver + s this would not be as big of an issue. Our shop supports Todd and those like him but with so many suppliers either too busy or who just don’t care I think sustainable shops will always be at risk.

    Running a business is challenging in and of itself, but adding thin margins and lots of unsustainable shops to choose from, makes it that much harder to make it work. We are 11 years in and still finding our voice and I do hope we make it, but as more and more shops fold up and close around us I continue to wonder if we may eventually follow.

  2. Anna says:

    I used to patronize a new, local shop. They had a $5 club (if anyone remember what that is) but were always doing a hard sell of the newest products during it. That was okay. Then they changed their club to make more money and changed again and it could be also be purchased online from them. It was nice to go there for the club and to meet fellow quilters and exchange ideas.
    Their prices kept going up and up. Now they’re only online for the club. I see them as greedy as they were the first around here to charge $12 a yard for fabric and still are a pricey place to shop. They would bad-mouth another long time and very successful shop and claim to be “not your mother’s quilt shop”. Well, I no longer go there and purchase most of my supplies online. I don’t feel bad about doing that as I seldom shop at Joann’s and refuse to shop at Hobby Lobby due to their stand on women’s’ issues. The one nice shop is far away so I really have little choice. It’s up to each of us to do what we feel is best in this world. I won’t support greed or religious fanatics.

  3. MarleneC says:

    I have no problem buying online when I can get the same fabrics for 1/2 the cost of the local LQS even paying shipping. The local LQS gives a 10% discount on goods bought if you are taking a class–the local tax is 6%–not such a great savings. There is never a sale and a yard of fabric is $11 or $12. There are a lot of us who cannot afford paying hundreds of $$ to make a large quilt. I use my coupons at the chain store to get my notions, etc. which helps the budget and living in Alaska I refuse to buy something online where the shipping is as much or more than the item.

  4. Todd Gibson says:

    Oh, ditto on what Kristin says. Most people have no understanding of what overhead costs online businesses have! You always need space to store your inventory. Bricks and mortar retailers store their inventory in a place where people can walk through and see it. (Your local fabric retailer isn’t going to have more stock in a back room somewhere.) Online stores need exactly the same amount of square feet to store their goods. And their storage space costs are probably close to the same costs per square foot as a physical store pays for space in a strip mall. And orders don’t magically get cut, packaged, and shipped. People have to do that, just as they do when you purchase fabric in a store. And to have people there are salaries, benefits, insurance costs, and on and on that need to be paid.

    And something consumers don’t understand is that there is no such thing as “free” shipping when you purchase from an online retailer. You are always paying for shipping costs one way or another. Whether you see them on your invoice or not is just a marketing decision the retailer has made. Free shipping promotions tend to be effective because consumers don’t realize that when they get “free” shipping they are paying for the cost of shipping in other ways that just aren’t as readily apparent to them.

    Another big misconception people have, that hasn’t been mentioned hear but that we hear all the time, is that there’s no cost for an online store to sell digital patterns. That’s so not the case. There’s a large cost to produce the files in multiple formats for digital sales. Server, ecommerce, and bandwidth costs add up quickly when you start selling digital goods. And the customer service costs to support digital product sales are so, so, so much higher than those to support physical goods. We spend a huge amount of time dealing with “My download won’t work,” “My printer isn’t printing at the right scale,” “Why can’t I print from my Kindle,” sorts of questions that have nothing to do with the product but are focused completely on issues with the technology or knowledge of how to use it on the purchaser’s end.

  5. Sandra says:

    I want quality and competitive prices–especially from online shops who don’t have the overhead costs. And I especially want good shipping costs with free shipping incentives. I often will not purchase based on shipping costs. When cotton was in short-supply world wide, prices went up. When cotton went down in price, fabric prices didn’t. How come?
    Massdrop can offer good prices–it depends. But often they only have a very small number of units to sell–sometimes as few as 30. For the most part, shipping costs are good (especially to Canada!). I don’t see Massdrop as a real competitor. They are mainly a novelty at this point. They mostly sell electronics. But they do sponsor several blogs–good for them.
    I find that shipping costs are often cheaper from Japan and Australia–go figure. UPS is a disaster for Canadians–service charges, duty, taxes, etc.
    I buy a lot online–fabric shops in my city are few and far between. Both of my local shops also sell online–so I often choose this as opposed to driving and parking costs. My favorite Canadian online shops off $5.95 shipping, $7,95 shipping, and $9.95 shipping. Guess where I buy the most! And she has great customer service–it’s a no-brainer.

    • Kristin says:

      I think the idea that online shops don’t have overhead is a huge misconception. When I had my shop I had rent for a 1200 ft office/shop space, 5 employees, insurance for my inventory, for my business, for my employees, and I had a hacker rider. Because everyone does factor shipping into their decision, I would venture to guess that most shops lose money on shipping. We had packaging, postcards, labels, paper, and a tremendous amount of ink. It is very expensive, yet I think most people just charge the amount the post office charges them. Plus, I had $800–$1000/month in server fees for my website and all the associated IT and graphic design expenses. The cost of running a successful blog with high traffic is more than most people imagine.

  6. Barbara says:

    Thanks for sharing that is new to you too Cheryl! I was feeling completely out of the loop. I still don’t think I know what a fabric co-op is so I guess I haven’t bought from them?! I buy mostly from several LQS but buy a fair amount from online retailers that I think are legit like Hawthorne, Missouri Quilt Star, Westwood.etc. But…I’ve also purchased fabric from Etsy sellers more than a few times. I generally do that when I am looking for a fabric that is out of production or is just harder to find (Liberty of London). How on earth would I know what the Etsy shops business model is?

    I am intrigued by this initial essay but need more information. Perhaps a prequel essay to explain the terms more and how to know who you are buying from. 🙂

  7. Kristen,
    Awesome post! I always like a good price for fabric, but I have to admit I worry if the legit online site I like is hurting others because their mark-up is low, but it is a proven business. Its gives me food for thought because I want to support good businesses that are honest, therefore help out industry, not help ruin it…..Thanks again for the insightfulness .

  8. Jennifer says:

    Some of your commentators sound a mite defensive. A close reading clearly indicates that you are talking about legitimate small businesses who deserve our support, whether online or brick and mortar.

    I think that while Etsy is great to start out on line, a good product with a great following will migrate over to an established e commerce site pretty seamlessly.

    As a pure consumer of such dry goods (I do not sell what I make), I balance price point, service, ease, and quality. I am always on the look out for great online retailers, as my local shops don’t always have what I want or need.

    EG: I have a local shop I refuse to patronize unless I am in a super dire emergency. Not because of the price point, but because the owner is snooty and seems to resent giving her advice. She would rather you always take a class. When I feel like I am being pressured with an upsell, I tend to feel uncomfortable. She jumps on our FB sewing group page and whens someone asks for advice from the group generally, her first response is, I can do a class on that.

    Yesterday, I was asking if any one remembered two lovely but long gone shops. She posted tersely… “closed decades ago. Support other locals instead.” She views even your memories of lovely old shops as competition, and doesn’t recognize the need to row together and help hobbyists become obsessed with their hobby.

    Contrast it with this local experience… a shop out of the way- a 30 minute drive in the wrong direction from my office, and 50 minutes from home. I make a detour when in the general area one day because I need a fabric to go with another fabric. The woman spends 30 minutes trying to find just the right thing for me. A light goes on, she goes in the back and says… “in our rag bag was this 1/4 yard. Nothing is wrong with it, but it is left over.” It was perfect. I said, “how much?” She said, “no charge.”

    Guess what? I went back. I just spent $50 on supplies for a coat for my daughter. They remembered me when I walked in. That free scrap means I will remember and return. I can pretty much guarantee that the first local shop would have charged me 4$ for that rag bag scrap.

    The value added services of legitimate businesses are what keep me coming back. For the online, the value add of the simple pattern, or a forum for discussion, or suggestions for thread and coordinating fabrics are what keep me coming back.

  9. Alison says:

    Are you talking about fabric and notions shops specifically, or all online businesses? I agree with you about supporting businesses with sustainable business practices, but some handmade businesses are very small scale, and they may not meet all of those qualifications. I don’t believe in excluding people from the handmade crafting community/ blogosphere because they don’t have their own domain name, or they don’t hire employees, or offer a “living wage”. Many small businesses simply can’t afford to. I think this article is very exclusive to hugely successful companies, and implies that people should reject smaller start-ups because they impose a threat, and dare to compete with more successful people. That is unethical!

    • Kristin says:

      I am referring to fabric shops, but I think you miss my point that a shop needs to have a sustainable MODEL that will support growth. A co-op is not a sustainable business model. A shop that sells at 20% markup is not a sustainable model. A seller can be a sole proprietor and not even pay themselves yet, but if they have a sustainable business model then they are at least working toward profitability and all these other great things about businesses that work. And as I mentioned, I’m not saying everyone has to have their own domain–I’m just listing some of the requirements that some manufacturers use before someone can set up a wholesale account. They are options. Look again–I mention all of your concerns.

  10. Your article really misleads readers to believe that saving money on fabric and supplies is an unethical and irresponsible decision. This is a great disservice to both price-sensitive consumers and to legitimate purveyors of well-priced fabric and sewing related merchandise who work very hard to keep prices sharp and quality high.

    I work for and help manage Fabric Place Basement, a bona fide, tax-paying, brick-and-mortar fabric store (providing paychecks every week to 18 or so employees) which meets all of your criteria for a viable, legal and community-spirited business – except that our prices on most items are well below other retail sources. Our business model, which was carefully planned, is based on the idea that if we buy the right stuff at the right price (all first quality), we can offer our customers better prices than they will find elsewhere. Matched with great customer service, this formula is proving to be very successful.

    This is not easy to do. Instead of just picking up a phone or a new catalog, our buyers cultivate relationships with manufacturers, designers and suppliers across the country to obtain merchandise at prices we believe our customers will appreciate. We pay these vendors fair prices on terms they offer. We search zealously for the best deals and quality goods based on years of experience evaluating fabrics and we keep abreast of trends and fashion to keep our assortment current and on target. And when a great opportunity is available, we take a position – that is, we buy A LOT to keep the prices low. If our competition can’t keep up, it might be because they haven’t got the expertise or experience.

    We offer free knitting groups, informative and entertaining special events, and we offer meeting space for no charge to sewing and quilting groups. We promote sewing-related charities and we often offer fabric at a discount to worthy community groups doing charity projects. We support quilt guilds. We offer a generous educational discount to students enrolled in fashion, design and costume design courses, and we offer professional discounts to decorators and fabricators who use fabric for resale – further fueling the design and sewing economy.

    I encourage you to visit Fabric Place Basement when you are in the Boston area, or to check out our Facebook page (www.facebook/fabricplacebasement) and read the reviews from our many customers. I hope that if you do, you may modify your thinking to realize that good prices might just mean there’s a very smart buyer and good management at the helm of the enterprise.

    • Kristin says:

      I think you have a great model that works really well for you. I’m sorry that you took my post to mean that shopping based on price is unethical. I clearly say that you should buy from a shop with a good business model that allows them to contribute to the economy, the industry, and pay a living wage. You are clearly doing that, and I think that’s great.

  11. Gina pina says:

    Thank you for the thought provoking post.
    I wanted to comment on this because I have worked in many types of fabric stores (big box, online, brick and mortar) and think about the money side of this industry a lot especially since starting a longarm quilting business a year ago.

    If I sell fabric to someone it should not be my responsibility to say what they can or can not do with it. I think the same could be said about wholesale supply.

    I don’t think this cheap pop up shop is as much competition to the LQS as the Big Box store. At least these mini shops (and fabric dot com) are selling new designer “quilt shop quality” fabrics for the most part (and they are giving business to wholesale suppliers). There IS a definite difference in quality, not just in looks but in the actual cloth quality which you learn after sewing and washing your projects. The cheap fabric is cheap, but if you are new to sewing you may not even know about your LQS or you might think we are just snobs for the Designer Name and spending less per yard at Joanncocks seems smarter. It is frustrating that they have such a grip on the sewing world because they are able to sell loss leaders and have 40% coupons for every single visit all while turning a blind eye to quality, customer experience and employees.

    I have seen misguided competitiveness often when I was doing craft shows; “This seller sells her XYZ so cheap! What a B..” Meanwhile the shoppers are likely wearing clothes from the mall and their bags were a $8 deal at Target. You have a much better craft fair if you view your neighbors as a peer rather than a threat.

    There are plenty of fabric shoppers to go around! More everyday. LQS need to hold their head high and adapt as needed whilst working together with other owners. Feeling so competitive may help if you play sports, but in retail it is isolating and often a race to the bottom price or buying products you don’t even like. Etsy is just a terrible platform for selling AND shopping anyway and often brings out the worst in this spirit, but the shops and buyers using the platform are not the problem. Focus on your product / brand point of view and customer experience instead. If you don’t enjoy it don’t do it because from all sides of the industry this is not really a get rich quick business. As a shopper you should just be aware of who you are giving your money to and that often you “get what you pay for”.

    • Kristin says:

      Thank you, Gina. Great insight and perspective.

  12. Melissa says:

    I think one reason people start on Etsy is for traffic. I’ve seen a number of businesses start on Etsy and, after they’ve gained a sufficient following, move to an ecommerce platform on their own website.

  13. Jody says:

    We are an etsy shop. http://www.Fabricshoppe.etsy.com And have been serving our loyal customers from etsy for going on 7 years. We pay employees, we pay our have accountants to do our taxes, we support LOTS of bloggers, designers, graphic designers, computer programers, etc.. in our 7 years and we have some very happy and loyal customers. We do have a regular online site but have backed off of using it as my goal for the business is to not be big bigger biggest. I use our business to support my family and the families of my employees. My goal is to work from home and I couldn’t manage both sites in the time I have right now. Etsy is just is a good fit for us right now. So please don’t discount honest etsy shops who have maintained honest prices even when everyone else was price gouging. We have a viable business plan put together by pros! I have a business degree and we are highly aware of our margins. Instead of deep discounts our customers tell me they come back because we have the best bundles which make shopping for their projects fun, fast and easy. WE top that off with excellent customer service and it works great! I like to think of us as a fabric boutique. We put a lot of time and love into selecting the best bundles for projects. Most people recognize the value in that:)

  14. Lisa E says:

    Lots to think about in your very well-written post. As a consumer, I feel much better informed about how I spend my dollars. Thank you!

  15. Todd Gibson says:

    Thanks, Kristin, for bringing this to people’s attention and for laying out the issue so clearly.

    This is something that we first ran into early in the existence of Oliver + S. At that time we were doing over 80% of our sales volume through independent fabric stores, and when we discovered how much of our product was reaching the market through co-op buying groups we decided we needed to do something to stand up to support our retailers.

    It ended up hurting our bottom line significantly. We turned away a lot of orders in those days, and we ended up terminating the relationship with our largest distributor at the time because they would not stop selling our product to co-op groups. And this was at a time when we were a new business and neither Liesl nor I were making a salary from the work we were doing.

    We got a lot of pats on the back from retailers who appreciated what we were doing, but we never really got the industry support to go with it. Many shop owners, we found, said they appreciated what we were doing but they wouldn’t vote with their dollars or floor space to show their appreciation. It took us quite a while to grow the business back to the point where we were before we took that stand. What you say about doing business with suppliers who care about their customers’ best interest and are in it for the long-term applies to store buyers as well as to consumers.

    People have asked why we won’t sell to Etsy store operators at wholesale price. They are running the same sort of operation as other online retailers, they argue. I think it’s worth explaining our thinking.

    We decided to draw a line in the sand in our definition of a viable wholesale business by saying that the store had to have either a physical presence in its community or a proprietary e-commerce site. We wouldn’t sell at wholesale to individuals reselling on third-party marketplaces like Amazon, eBay, or Etsy.

    Just as taking out a lease on a storefront and stocking your shelves with goods implies a level of commitment to a physical retail business, setting up your own website shows a level of commitment to your online business. I’m all for entrepreneurs starting their own businesses, and I’m all for testing the market by doing something quickly and cheaply. That’s how I’ve arrived at the place I am today!

    But launching a business to sell commodity goods like yardage or sewing patterns (I’m not talking here about unique, value add goods like individual objects handmade by artisans; that’s a completely different thing) on a marketplace platform does not show that the would-be retailer is committed to the business for the long term. There’s no investment made in marketing the store or the products sold, and there is no value add that this retailer is providing. In marketplace commodity sales situations like this, there is only one thing that distinguishes one retailer from another–lowest price. And what we’ve continually seen is that people who sell commodity goods on platforms like Etsy end up engaging in a pricing race to the bottom to get people to buy from them rather than from someone else.

    These days it’s not really any more difficult, time consuming, or expensive to launch your own e-commerce store than it is to start selling on Etsy. Buy a domain name, set up an account with an entry-level e-commerce solution like Volusion, Big Cartel, Shopify, or even Yahoo Stores, and you’re off to the races.

    It’s taking that one step of separating yourself from the crowd and committing to your own brand, your own domain, and to creating a unique market niche that (in my mind, at least) separates an internet retailer who is making a commitment to the industry from a hobbyist seller who is here today but almost certainly gone tomorrow.

    • Kristin says:

      Thank you for clarifying your position, Todd.

  16. Kristin says:

    I fear that I confused the issue in my post about shopping from businesses with strong models. To be clear, I am 100% in favor of internet businesses, including Etsy shops. I am 100% in favor of Brick & Mortars too. I am opposed to sellers without a realistic business model. As an analogy, I wouldn’t buy a quilt for $80 because it devalues quilting and sets up unrealistic expectations from consumers. That makes it harder for quilters who have done the math, value their own work, and are trying to make a living by selling quilts that take both materials AND labor into consideration. Likewise, I won’t buy fabric from a shop that has a base price of $8 for quilting cotton. I would rather pay $10.50 a yard to a business owner who understands that in order to pay themselves, pay their employees, and thrive in the industry, they need to maintain healthy margins. That’s not to say I wouldn’t buy a yard of fabric on sale–I definitely will, but I’ll do it from a business with an overall realistic pricing model.

  17. Lynne says:

    I agree with Margaret. Surely any sensible brick and mortar store now has an internet presence to take advantage of the trend to shop online? The cork will not go back in the bottle now and Internet shopping and social media are here to stay. You are in America where the quilting industry is immense and the population is thus perhaps well provided with local shops and fabric at good prices. The nearest brick and mortar fabric shop, that has the choice I am looking for, is one and a half hours drive away. Or I suppose I could drive for four hours to Paris – hardly environmentally friendly! Fabric here costs from 18 euros to 22 euros a metre (that’s 20-25 dollars in your money) and I am not prepared (or rich enough) to pay that on a regular basis. (I think that is why many French patchworkers tend to stick to small projects and may even explain to some extent why they prefer to stitch by hand as that makes a project take longer and they can buy less fabric.) The important thing to me is to encourage people to carry on being able to sew and make quilts. I want to see young people being able to afford to take up the hobby I love and love it too. If that means shopping online – so be it. I do not in any way condone illegal businesses and of course people should pay their taxes – but there is room for a wide range of legitimate businesses in the world. Sew Mama Sew may not sell fabrics any more but the blog is still a business. I love blogs but, playing devil’s advocate, perhaps it could be said that all those lovely free tutorials etc undermine sales of patterns, magazines and books – you might respond that patchworkers are more likely to see and be inspired by publicity about those same patterns, magazines and books thanks to the online community and therefore more will be sold – who knows? People remain free to shop where they choose and can afford to buy and should not be made to feel guilty or be looked down on for doing that online.

    • Kristin says:

      I am 100% in favor of internet shops. I think you misunderstand me. Do you think that anyone should be able to qualify to get wholesale terms with a manufacturer?

  18. Kim S says:

    I shopped Fabric.com once and never will do it again. Just their sloppy packaging alone says they don’t care about you, just your money. I have shopped on Etsy a couple of times to find what I need because it’s slim picking with my local quilt shops.

  19. my preference to not shop at fabric.com is not for the same reason as not shopping at wal-mart. I apologize, I should have been clearer! they are just both examples of what I consider voting for my dollar. I have been incredibly unhappy in the past with their customer service and quality, so I choose to not shop there. sometimes I need something basic and it means I have to pay more for it, but that’s a choice I make b/c it is important to me. I definitely agree that there is (and should be) room in the market for different types of shops. personally, I love Jo-Ann! that’s where I learned how to sew and I think that they make sewing and crafting approachable and affordable for a lot of people, and I think that is important.

  20. Krista says:

    And I have shopped from imagine gnats too! Love the double gauze.

  21. Krista says:

    Rachel I am confused about your comment about fabric.com. I don’t shop at Walmart because of the way their company does business with suppliers overseas, treats their employees, and the quality of their products. Are you saying fabric.com has predatory manufacturing contracts and treats employees badly?

    I suspect your concern may be due to the fact that their fabric is discounted, but honestly its only discounted about 5-10% off MRSP. Similar to Hancocks of Paducah or even Rosie’s Calico Cupboard in San Diego. My understanding is that these large stores end up getting different wholesale prices and that is why they end up pricing slightly lower. My customer service experience with all of them has been excellent. I shop a lot (cringe) and unfortunately all of it is online because my LQS pretty much only stocks batiks. I really do try to support the online shops that are bringing in the types of products that I love, and often shop from Hawthorn Threads, Superbuzzy, Pink Castle, and Westwood Acres. But when I need some orange canvas, or I notice my stash is low on blacks or shirtings, I turn to fabric.com or H of P because it’s the only place I can find them at all, or in the quantity/selection I need. They do not carry the selection of modern fabric designers that I often want so I buy it elsewhere.

    I feel that there’s going to be a lot of jostling over the next few years and some shops will come and go, but eventually most will carve out their niche and their customer base. I am hoping there is room in the market for lots of different types of shops.

  22. I think that these are really really important things to say, and I’m glad that you have 😉

    your shop was the FIRST online fabric store where I ever shopped!! I can remember some of the fabrics in my first order, actually, b/c I got one wrong and when I emailed you were so sweet and sent the right fabric super fast and I was so impressed.

    in general, and especially in relation to fabric, customer service is SO important to me!! and I feel like I’ve worked hard to hold that standard for my customers. it meant that I did have to change up how I run my site and I was able to add some contributors to my blog to help me share projects made with my fabrics so that I could focus more time on shop stuff, but I definitely couldn’t do it myself. there’s just too much to keep track of!!

    I absolutely agree about wholesale accounts. I really thought it was some holy grail or hoops to jump through kind of thing, and it has turned out in most cases that an email with your name is enough to “open” an account. which seems insane to me, as I collect more information than that for my wholesale accounts!

    I haven’t been able to build up as big of a selection as I would like to, but I’m getting there and I do feel like growing at a speed that I can maintain with current sales is important to me, as well as selling a collection of fabrics that I know are high quality and worth the money. with a small shop, I can’t afford to order in the quantity that some other shops can and in many cases this means I pay more. so it can be hard to compete on just cost b/c either I make a little less or I sell my products for more than some of the “big guys”. but I think that goes back to customer service and quality and I know that I have a base of customers who come back again and again and who are happy with my shop.

    like anything else, we have to vote with our dollars. the reason I don’t shop at fabric.com is the same reason I don’t shop at walmart. I’d rather vote with my dollars elsewhere. and I know that not everyone is in a position to be able to do that financially, so I am glad that I have the ability to make some of those choices b/c it’s hard to choose when money is tight.

    • Kristin says:

      Rachael, thanks for your comments, I appreciate it. I agree that customer service is really import, and so is making a connection with the shop owner! Luckily this is easier than it used to be with social media. And I absolutely agree about voting with your dollars. Your shop has a unique selection that you can’t find anywhere else–that is really important in this market. I hope you can continue to grow it and make it work for you.

  23. Noel says:

    Agree. I am a retired person, a quilter of more than 35 years and a former quilt shop owner. I only buy first quality fabric and I am very sensitive as to price. Quality is my first criteria. I do shop my LQS first but they can’t carry everything I want and when I go to buy online I look at prices and consider shipping costs. I realize that if the etsy shop isn’t in my state, no tax is earned for the local economy. I read quilting blogs, follow several etsy shops, but don’t buy in co-ops. If I am buying a fat quarter bundle and it is net $5 less one place vs another, I will choose the less expensive shop. I have no way to know if that shop is going to be there in five years or not. I read the reviews and make my decision. I’m a careful consumer, I support the quilting community by donating to my guilds and teaching and I don’t like to feel “scolded” for where I choose to shop. When I buy online I am taking a risk, too. Sometimes the fabric does not look like what I saw on the computer. I can’t send it back. At my LQS I can see it before I buy so I’m not often “surprised.” I don’t buy from the famous big box store, the quality is not what I want. I’ve had good luck with etsy and reading blogs, this is the new way fabric is sold now. We have to get with the program.

  24. Jeanell says:

    Very interesting and thoughtful. Thomas Knauer also had an interesting post on Jan 14th.

  25. margaret miller says:

    Hello,
    I have just read this post and several thoughts are racing through my mind. I am speaking from a quilting consumers point of view. As such I have an extremely limited amount of money to indulge in my passion and therefore I search for the best possible price I can find. Quilting is a very expensive hobby as you all know. I would love to support only my local shops or the online stores that you suggest are the only ‘green’ ones but price point, for me, is everything or I would not be able to continue. Where I live all fabrics range from $14 to $22 per meter. At an average of 15 yards per quilt not counting batting and thread, you can see that I would be priced out of the hobby very quickly-or only be able to make a few quilts. Therefore I do use online and sale/discount purchases. I do support my local store when i can. I use everything there is on the internet to be able to continue with my hobby.

    My take on this discussion is that because of the ease of doing business through sites like etsy and online auction places there has been a huge burst of competition in the market. The internet has opened up all manner of selling possibilities to anyone who wants to participate. Etsy has been the best thing for artisans and crafters as a world wide site to sell the things they make and now the supplies they choose to carry. I believe your idea of a business model would put most of these crafters and small shop businesses out of business-I suppose to the benefit of the ‘bricks and mortar’ shops. I feel that there is a place for all kinds of businesses from the very small to the large and including the ‘discount’ stores.

    Maybe the blog world is more lucrative than the online fabric store. Maybe for small store owners this is the future, where at little or no cost , a blogger can advertise and promote the fabrics and designers thus earning income( as I am sure these shops pay for advertising as they do on web sites) in this way. Maybe this is the future for small businesses such as yours. I read many of the blogs and have noticed this trend.

    I hope my comments are not construed as being totally negative towards your ideas. Just felt as a person made to feel guilty for shopping in the very places you condemn that I should voice my feelings. This discussion is not new to me and has come up with my fellow guild members who do own a brick and mortar shop. I am also tired of feeling I cant take classes because I did not buy all the fabric from the shop owner. Therefore I use online classes. Too bad as I think shop owners want to promote the shops with classes-but I digress and this is another discussion I think.

    Regards and best wishes
    Marg

  26. Kristy says:

    This is a fabulous post!!! While I love-love-love that people have ambition to do their own thing, at some point they need to realize that you have to follow the proper channels, and when you start making money you need to start paying taxes. A lot of what you are saying can be said about independent pattern designers as well, as a one-women entrepreuner I do have an EIN, send invoices, pay my taxes on sales and commission work, etc. Yet, I remember being a part of a guild program once and when I was describing how I run a business and what is required, several people in the audience said “you don’t need to do that”. If I wasn’t on the panel I think I would have had a face-palm moment.

    Thanks for keeping things real, I’m going to share this article with my quilt guild.

  27. waterworks says:

    Thank you for a well written, researched, and contemplative article! I am very careful about where I spend my fabric dollars (and my crafting dollars, in general) for many of the reasons you listed. I am a mother that has chosen to work outside of my home as an engineer. I, therefore, have my pay adjusted for taxes, etc. I am picky about where I spend my dollars because many gray market (your words) sellers are dodging those same tax laws I am subjected to. I feel that my spending should support those in this for the long haul, not for a quick fix dollar.

    Thanks again for your thoughts.

  28. Jen says:

    Several years ago I participated in a fabric co-op via a private group (not a Facebook group, I think people have missed the fact that there are many private groups outside of Facebook.) The fabric was sold at wholesale cost with a very small markup. I spent thousands of dollars. The fabric co-op no longer exists but it has become a very popular online shop with a bricks and mortar presence as well. The owner of this business used the co-op as a way to do market research (asking the co-op members what they wanted to buy was a great way to find out what fabrics she should carry in her newly opened online shop) and a way to fund inventory purchases (buying bolts of an entire line of fabric is a massive investment but co-op members would cover a significant part of it.) I also am wary of condoning Etsy shops — so many online shops (some hugely popular) that are not on Etsy now began as small Etsy shops.

    I support shops that carry the fabrics and items I want to buy. Prices are not that important to me. The online shop I buy from the most is a well-run business with multiple employees, they have the most user-friendly website I have seen among fabric shops, the largest selection of fabrics that are in stock (and frequently restocked) and that I want to buy, a newsletter that tells me whenever they get a new fabric line in, fast shipping (usually everything goes out within 24 hours,) a useful social media presence, etc… All of these are the reasons why I go to them first when I want to buy something (and I do 100% of my fabric buying online.) That seems to hit all of your points about what to look for in a “strong sustainable business.” However, this shop happens to have prices that are noticeably lower (by 10-20% or more) than almost all other online shops and they offer further discounts based on quantities purchased. They also aren’t even in my country. I would be happy to pay more at another online shop that was just as well run as this one but such a thing does not exist.

    Always enjoy your blog — even when I don’t agree it gives me things to think about.

  29. Mary says:

    A local yarn shop offers a wide variety of classes. They are very specific that the yarn is to be purchased at their shop. I am not sure how they enforce that but the classes are small and the teachers are experienced in both knitting/crocheting and retail.
    I value what they sell me- the knowledge, the right product and the community they created.

  30. This was an interesting read! I didn’t even know there were coops, group buying clubs, or Facebook groups that were selling fabric. I support local shops and shop from online sources and am always looking for a particular fabric…not a particular price. Whenever we travel, we find all the quilt stores….and stop and shop. Thanks for sharing this information!!

  31. Sue says:

    Stacey

    Great article. I started an online shop in Australia and didn’t realise quite how many people were shopping online in the US as they could get significant savings.

    What they don’t understand is that by setting up a business and buying from Australian wholesalers, we are actually paying the same price as they are getting retail in the US. When you add our own costs – it makes it impossible to compete. They seem to think that we are gauging and making huge profit margins – but it is simply not true. We rely on people buying local. I often despair that I will ever turn a profit – but I am in it because I truly love my business and want it to be successful.

    I try to offer exceptional service and I hope that will keep customers coming back.

  32. Kelly says:

    thank you!

    I run a military craft store, so We don’t have everything you suggested as requirements, but we are a brick and mortar store with a business plan and growth and lots of happy employees and customers. I am constantly frustrated by comments like why don’t you sell at (x)’s prices. My answer is always because that’s not how much it costs to do business. Some people get it and appreciate that we carry high quality products that we will use ourselves. And some people truly can’t afford the good stuff. I understand. I’ve chosen over the years to stand my ground and do what I felt was sustainable. Posts like this are becoming more frequent and it is a great reinforcement that we’re doing the right thing. Our store is over 20 years old and going strong!

  33. Camille says:

    I love this post!! I have thought a lot about this topic as I closed my business down just a year after I started it. I had a little Etsy shop with no real business plan. I just love fabric and wanted to sell it! I did keep decent books, have a business license and pay my taxes as well as offer fair pricing on most of my fabrics. However, I was not prepared to run a business once I started to get 5+ orders a day! I also started to quickly see that if I wanted to keep growing my business I was going to need to add value to my shop with a blog, tutorials, videos and so on. The amount of time and passion that takes is incredible! I was not prepared to offer that as just filling orders & customer service were all I had time for.
    I think you are spot on, there are so many sellers like me out there. There will be some that start on etsy or EBay that do have sustainable buisness practices and will grow into something great, but there are many many more that are not adding value to the community and actually hurting small local and online business. I am now in the process of selling off my stock. I am glad to be closed, more time with my little ones, lesson learned and moving forward. Thank you for your insight!!!

  34. Paula says:

    Very well written post. I could substitute my business (not sewing related in the least) and the same would hold true. Sometimes it is just so difficult to get it across to consumers that there are intangible benefits to supporting these types of business. Just because business A sells the product for $10 and B for $12, does not mean business B is gauging.

  35. --ginger. says:

    Love to hear these big picture insights, Kristin. Lead us! I was nodding as I read. Yes and yes and yes.

  36. Wendy says:

    Excellent article! Thanks for the thought and time you put into it–much to consider and think about.

  37. Kate McIvor says:

    Thank you!!! I’m getting ready to open up a brick-and-mortar shop. I am writing what I hope is a great business plan, I plan to teach and hire more teachers, and my basement is filling up with awesome fabrics. One of the many challenges is to figure out how much is enough fabric without over-buying and not being able to sell everything. I am going to post this blog post next to my computer to remind me of how to do it right!

  38. I really admire these calls to action. We have to come together a community and make some common decisions about what’s most important to us. These are great.

  39. Heidi says:

    Looking back on my buying habits of the past year, I seem to buy from everybody: Etsy shops, established online shops, and my local quilt shop. It’s a personal rule for me that I never visit the local shop without buying SOMETHING. The owner has told me how shoppers will sometimes look in her shop and buy online, which has led to her to change some of her purchasing decisions (fewer books in her store, sadly, for one thing). By making a purchase each time I go, it’s my own little way of saying thanks for all she does to keep that shop open for us in the area.

  40. Ginger says:

    Great post. I for one was so sad when you closed. You were my favorite online shop. And this past summer my second favorite online shop closed. I don’t have all these great local shops people on blogs go on and on about. We have one quilt shop that caters to old ladies who like 30’s repo fabrics. I have been burned one too many times in co-ops and group buys, so those are of no interest to me. I’ll shop etsy from time to time, but it’s usually from an individual (or who I think is just a 1 person show).

    • Kristin says:

      Thanks, Ginger. It was sad for us too, but it was a good decision. It was really hard to see so many other shops close this year too. I have tried to learn from my experience, and when I can, share that with other shop owners. I feel like I need to go back in and re-edit the posts to clarify that it really isn’t Etsy shops that are the problem. Most of them are maintaining healthy margins. It is just the shops that significantly undercut prices tend to use Etsy or eBay as a platform. So it’s really the business model, not the ecommerce platform that is significant.

  41. I wholeheartedly agree. I am very hesitant to purchase fabric on Etsy for this exact reason, and can count on one hand the number of times I actually have done so! You wrote this very well too – passionately, but well-articulated! Thank you.

  42. Jenna Hilb says:

    I have owned a small brick & mortar shop in Colorado Springs for the last year or so and this post is right on the mark! We work hard to help build the sewing community and are the only shop in town carrying independent patterns, printed apparel knits, specialty purse hardware, etc. I have seen customers come in and peruse our fabrics, leave without buying anything, and they will return to take a class with a similar fabric they purchased online. It’s frustrating!

    When setting up wholesale accounts I was amazed by how easy se were to get started, and how difficult others were! Notions distributors especially- they really made me work hard for it! At the time I was annoyed but after reading your post I am now quite thankful they made me jump through some hoops! 🙂

    • Kristin says:

      Good points, Jenna. I always thought it would be hard to work in a brick & mortar and not get emotional about some of these things in front of customers. It’s easier as an online seller to at least have some physical distance between yourself and consumers. And I agree–some wholesalers take the application process very seriously and will verify information, while others have low minimums and very few requirements.

  43. Stephanie says:

    Great post. This issue has come up in my local area over cloth diaper co-ops vs. a brick & mortar store and I don’t think many people think about WHY stuff is so cheap and what you’re sacrificing.Thanks for putting it all in one spot and making people think!

  44. Well done article! Because of where I live I do most of my fabric shopping online. I have several smaller online shops that I like to buy from, and,occasionally, I order from one or another of the ‘big’ online vendors (like EQuilter, Hancocks-Pafucah,Fabric.com etc). Every once in awhile, when I need a specific fabric I may go to an Esty vendor.y

    I do have a UBI number, and I am required to file tax reports with our state, but I don’t use it to buy fabric because it just somehow feels wrong to do so when I can’t buy in quantity.

    I wholeheartedly agree that a business should be a viable part of the community, but I think that small sole proprietors also have something to contribute to their communities, although not, perhaps, in the way of jobs. Many “smalls” who manage to have wholesale accounts contribute by making things that are offered for sale etc. I don’t believe that a business plan for that sort of endeavor is very important.

    You have supplied great food for thought- as always, well presented and well considered!

  45. Theresa says:

    Great post. Sharing on social to reach more eyes.

  46. Phoebe says:

    Thank you!

  47. Daryl says:

    Hi Kristin,
    Thanks for writing this. As an online fabric shop owner and fellow fabric lover, I couldn’t agree more. We’ve seen several shops close in the last 6 months and I understand why. I would add one more argument for supporting your favourite sustainable shops. A strong sustainable business model means that consumers have lots of choice. Having a great choice in fabrics means that the shop owner has brought in a number of collections, investing in the fabrics they believe in, and believe will make beautiful sewing projects for their customers. The buying co-ops and Massdrop are price driven – they’ll feature whatever they have been able to get the best price on (sometimes to the horror of the designer!). If you like to have options, and you want your favourite designers to keep creating their beautiful collections, then support your favourite fabric stores.

    • Kristin says:

      Great point, Daryl! Selection is a another great benefit to customers.

  48. Stacey Brown says:

    This is an EPIC post. It’s very well written and offers many point to ponder, as a consumer.

    Thank you!

    • Kristin says:

      hahaha, thank you Stacey. It felt epic to write it. 😉 It’s hard to “have a sense” of something, then try to put it into words.

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