Etsy Stock Sale

After Monday’s resistance at $13.00, I decided to close out my long position on Etsy and take home 3.2%. My gut feeling is Etsy will retest, retake, but settle in somewhere in the low $13s. The reason to invest in Etsy is Etsy has a unique and almost unchallenged position in a niche market, however that niche is also has limited growth. As Etsy continues to pursue a path of spreading traffic and sales across all shops, I am convinced we will see defectors jumping overboard or perhaps just a quiet resistance migrate their efforts to other platforms. Much like the airlines attempt to pack extra seats in a 737 for those thinly covered routes where raising fares is not an option, there is only so much profit to be squeezed out of the handmade art market and as elbow room begins to demand premiums through the Promoted Listings an equilibrium between new sign-ups and those exiting the emergency doors is on the horizon.

The only possibility I foresee for a sizeable long-term return on investment would be through an acquisition from Amazon, Shopify, or similar platform looking for a side show and not relying as much on seller services to turn a profit. Even more remote would be someone like Warren Buffet rolling out of bed and just deciding he loves Etsy, thereby adding Etsy to the Berkshire Hathaway collection. All joking aside, Etsy remains an unlikely acquisition target marching to the beat of their own drummer. Although Etsy’s 3Q earnings came out ahead of expectations, CFO Kristina Salen’s departure next year, leaves a significant leadership void with one of their top voices of reason no longer sitting at the helm and leaving the controls in the hands of dreamers.

For the time being, Etsy drifts in and out of love it or leave it status in the Etsy Forums with very few sellers straddling the fence of neutrality as just observers. Besides a brief stint of entanglement in the Storm and Drang politics surrounding the Etsy Seller Advisory Board, our sales remain steady year over year.

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No business blog post is ever complete without a trite photo, of course.

With the arrival of the holiday orders, our Etsy Shop is smack in the middle of the herds heading to the watering hole and the competition this year has even more sellers vying harder than ever for a position.

 

The Holiday Rush has Started

Usually the holiday rush starts the Friday after Thanksgiving around midday and wave upon wave of orders leave us buried for those 4 weeks heading into Christmas and New Years. Much like trying to shovel snow in blizzard with a soup spoon, trying to get ahead is impossible, however we manage to keep up with short nights and long day. This year, the holiday rush started on Saturday the 19th, before I even had a spare moment to list our Christmas items.

This year we are adding a few handmade Christmas Tree ornaments in limited quantities:

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a merry Christmas Bronze Snowflake Christmas Tree Ornament for Custom Engraving available on Etsy and NiciArt

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and our classic Dad with Baby Feet now on a bronze Christmas Tree Ornament for new and expecting dads also available on Etsy and Niciart

Both snowflake designs were drawn on a sheet of bronze and sawed entirely by hand using a jewelry saw. Those readers familiar with Etsy would probably suggest we release more than just two designs in order to have any chance of competing in the Christmas Decor category, but time is such a precious resource at the moment with the holiday orders, so we’ll have to wait until summer 2017 to release a full line up of designs.

On the first Day of Christmas My True Love gave me Etsy Stock

Getting in the holiday spirit, we started working on that Christmas shopping list which now includes opening a long position on Etsy Stock @ $12.59 with an intended exit at $13.75 by the close of the year.

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While our sentiments regarding Etsy as a selling venue for NiciArt and Nici’s Picks would be perform down from outperform just a few months ago, the arguments for a stock run up to $13.75 and most likely well beyond include:

  • Oversold
  • Tech stock rebound from dip following the Trump win
  • Near $16.00 high last month
  • Holiday sales
  • Bullish social media pumpers out in force
  • Citi Bank target of $20.00
  • Investors primed for risk taking after DRYS went up 1500% in less than a week
  • Cash from shipping rally, AMD, WNR, and other huge gainers is in play
  • Bearish sentiments about a Trump economy may keep markets active as investors look for plays before 2017
  • Bullish sentiments about a Trump economy might convince some longs to increase their positions or new money to enter the markets
  • Etsy shaking off the “hipster only” reputation and focusing on being a marketplace for everyday gifts, housewares, vintage, decoration, and holiday gifts
  • No obvious negative set-ups or patterns on the charts as of Friday

After a long run of buy and hold with a portfolio overweight in REITs, future interest rate hikes, upward trends in 10 yr notes and a possible slowdown in real estate have us venturing into swing trading, short term holds, options, and 1-3 year longs with the potential for significant upsides.

Another particularly interesting buy this week will be Horizon Technical Finance HRZN with an attractive 11% dividend. Completely underfollowed and off the radar, Horizon’s technical analysis is enough to send most investors running for the hills before even investigating further, however their customer portfolio of private emerging technology and life sciences is a rather unique market for providing capitalization services with enough upside to convince me to consider a 1-2 year long position at the current price of $10.77.

Whenever the question about investing or Etsy stock emerges in the Etsy forums, I am always surprised by the strong sense of risk aversion and the view that investing is synonymous with gambling or taking a trip to Vegas.

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I certainly do not want to negate the risks, however bad decisions often mean being forced to hold or taking a small loss that is most often negligible amongst the gains. Choosing to sell the same product year over year, seeking forum sympathy when the sales are slow, and avoiding risk is far more dangerous in my opinion than taking calculated risks to get ahead.

 

 

Making Money is Easy, Doing Business is Expensive

Had someone even suggested making money in our jewelry and guitar picks business would be easy 5 years ago when we embarked on this journey, I would have baulked and dismissed such a claim as being absolutely disconnected with the obstacles facing small business. Since 2012, we have seen revenue increases year over year making our dream a reality, so we should be going out tonight to celebrate and crack open a bottle of wine? Not so fast.

Making money is easy, keeping it is the real challenge and 2016 is the year where that challenge has arrived neatly packaged in our mailbox from Blue Cross Blue Shield. Essentially with the 2017 premiums and other related costs, our healthcare costs will be 180% higher than 2014 and 400% higher than 2012. Adding to the fun, Google, Facebook, Etsy Promoted Listings, Pinterest, Wanelo, Reddit, and Twitter just to name a few also have their hands on a slice of our pie. While we are even more embolden to soldier on in 2017 and take those challenges head on, I think many smaller start-ups and Etsy shops will be forced to close, cut back, or rethink the return on investment for a small business vs a 9 to 5 job.  As Art is form of human expression and communication, the most talented artists would never consider abandoning their passion for creating and will either accept the title “starving artist” with a sense of indignation or perhaps even pride.

On the other hand, consumers may actually benefit from the culling of the herds as “easy money” has fuelled a sort of glue gun and felt revolution, where the next millionaire is just one trip away from filling their cart at Hobby Lobby or Michaels and when the transactions go awry, customer service need not apply. My sentiments from reading through threads on the Etsy forums, the majority of sellers posting are leaning towards closing their Amazon Handmade Shops, when Amazon institutes their pricey fee structure next year. From our prospective, increased fees are rarely comforting, but less competition could prove to be an excellent opportunity to grow our customer base.

The next step forward will be carefully considering the returns on investments in listings, new products, venues, social media, and advertising to identifying the winning vs the loosing strategies. We are now forced to hire and start a payroll in order to have group insurance. With a new hire, comes fresh ideas, creativity, and talent. No one can ever count on making money being easy, but counting on change is a certainty in business and in life.

 

 

 

The strategy for managing dips…

The strategy for managing dips in Etsy is really not much different than if you had a 9-5 job:

1. Keep as many oars in the water as possible. For us, that means a multi-platform approach: Amazon Handmade, Etsy, Ebay, Shopify, Pinterest, Wanelo…

2. Maximize revenue on the ups. Really play hard during the holidays, V-Day, Father’s Day… That might mean long days and nights that cut into leisure time or sacrificing sleep.

3. Create a business and personal budget with plenty of rainy day funds to hold you over.

4. Unless you are lucky to be in the 1%, hard work rarely gets you ahead. Invest and be creative with financing. Consider going long and holding some reliable dividend aristocrats stocks such as PG. Diversify and pick up a few REITs, some high risk players, and of course some of those trendy sympathy plays like yesterdays Bull Run on DRYS

5. Live below your means. Skip the new car, upgrading to a larger house, or taking an equity loan to remodel your kitchen.

6. Get an accountant to deal with the taxes. It’s amazing how many folks making less than 100k pay the most taxes, while billionaires walk away owing almost zero. Learn as much as possible about HSAs, DRIPs, SEPs….

7. Think small as well. If you have choice between .01% interest with fees at a major bank or 1% with no fees using an account like Capital One 360, HSBC… you could end up saving quite a bit. Factor in Cash Back rewards cards that you pay in full every month, the 2-3% adds up fast.

8. Always shop around for the best deals on supplies, business services, or even household products.

9. Always question advice along the way. Your portfolio manager probably receives payment per client and not a percent of your returns. Rarely do they truly care about you, unless you bring big bucks to the table. Slick sales-peoples, bankers, insurance brokers… are not your friends or friends of the family. The days of profit and trust are long over. Today’s word is “me.” It’s all about “me” and only “me.”

10. How do you manage sales declines on Etsy alone? You don’t

Silver Thumbs – The making of our new sterling silver thumb pick

To complete our new thumb pick collection, we are happy to list our sterling silver version of our latest thumb pick in Nici’s Picks :

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Unlike our classic guitar picks which are pressed one at a time from the various metals using a handmade custom pancake die, these new thumb picks take handmade to entirely new dimension as they are sawed one at a time using a fine fret saw.

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While handmade guitar picks really hype up the crowd, the 52 tpi saw blade creates a rather rough edge that needs considerable filing by hand in order to actually be used for playing a guitar pick.

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We are always horrified by what passes as a guitar pick these days on Etsy. Many of the sellers are focused purely on aesthetics or just copying our designs rather than producing picks for playing. There’s nothing wrong with novelty picks, but please call them novelty guitar picks and not “gifts for musicians.”

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Our example pick was hand stamped with I plucking love u, however the picks can be ordered with any engraving/stamping with the only limitation being space available for those longer messages.

Finally each pick is formed over a ring mandrel and tumbled to perfection in a vibratory tumbler with walnut shell to polish the surfaces. Unlike our flat guitar picks which require a quick push through our polishing wheel, the walnut shell actually finishes curved surfaces far better than any hand process. To be effective, the wheel has to hit the metal at exactly 90 degrees which is not really an option for finishing these thumb picks.

Our next project this week is rolling out our guitar picks in bracelets, keychains, and necklaces from a small company called PickBandz. If you have a moment, check out their site. We met their reps at the summer NAMM in Nashville and fell in love with their product line. Many customers ask for guitar pick bracelets and bands in leather without realizing most of those leather products release tannins which tarnish metal picks. Even worse, the majority of the leather pick holders come from factories abroad where the leather tanning business has little oversight and is one dirty messy job with considerable environmental damage. After 4 weeks in a PickBandz bracelet, none of our test picks tarnished. I am totally sold on the idea and stoked to list them in our shop.

Nici’s Picks Markets to your Thumbs

With our Nici’s Picks site ready to celebrate its first Birthday, we have decided to expand the line-up to include: more guitar pick jewelry, slides, and thumb picks. Our first thumb pick: You Rock My World Bronze Thumb Pick with Music Note

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rocks out in bronze and features both a music note and you rock my world. For the guitar pick, we decided on 3/4 in by 3/4 in and 20 gauge bronze to offer the best flexibility as well as allowing for easy adjustment of the band.

The second pick in the new collection is the classic: I Pick you in Bronze Thumb Pick

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Here, we took one of our most popular phrases and metals and combined them with our latest design.

Of course, no collection is complete without a You Rock

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in brass. All our thumb picks are available in brass, bronze, copper, aluminum, and sterling silver. Stainless steel ends up being too sharp, uncomfortable, and doesn’t hold the shape nearly as well as the other metals. As you can probably tell, we really don’t have any fond feelings towards stainless steel or steel guitar picks, although I am a huge fan of steel guitar especially in the hands of a master such as Steve Howe from Yes. Steel pick though do not capture any elements of that steel guitar sound and always sound muted to my ears. My test guitar is a Tanglewood with Darkstar Pick Ups, Tremolo, and sounds a bit like a Judas Priest cover band, covering early 90’s Ride or perhaps Swervedriver after a few hits and a gallon of foam, so perhaps I need to give

The final pick in the collection is our other classic phrase You Tune Me On

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For the new collection, I created a featured collection in the Shopify Supply Theme:

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Having tested 20 stock Shopify themes as well as purchasing several paid “professional” add-on themes, I can safely say at this point, there is no better theme I like more for Nici’s Picks than the Supply Theme. As an online shopper, I can’t stand Flash Videos, endless featured product pop-ups, pop-up menus where you mouse over and have to carefully coordinate you clicks, or any other website acrobatics. Etsy considers their website “an experience” while my philosophy is direct and to the point; shoppers want to find their products, check out, and receive their “shit” in the most timely uncomplicated manner possible.

With these new picks, comes perhaps new inspiration to attend the NAMM Show in Los Angeles, CA in Jan 2017. Hopefully by the end of the weekend, we will be able to announce our intention to attend if there is still space available.