Here’s an email I received from a retailer selling through Cafepress. I’ll let you read the letter but then I’ll add my comments. Is what they’re doing a good or bad thing for the retailer?
In June 2009, CafePress began competing with the artists for whom it acts as printer and shipper.
CafePress rents web shops to its artists. The artist creates a website page and manually loads the desired blank products. The artist imports his image onto each product, arranges the products on the page, describes the products, titles the products and tags the images.
Initially, the artist would set a markup and received the markup for each product sold.
However, recently CafePress began competing with its artists, using the artists’ own images. CafePress created a marketplace where a customer can search a keyword. That search brings up artist products. When the customer buys from the marketplace CafePress pays the artist 10% of the price CafePress set. Both the customer and the artist lose money. If the artist’s shop sells a t-shirt for $21, the artist makes $3.01. If the marketplace sells the same shirt for $25, the artist gets $2.50. The customer pays $4 more, and the artist gets $0.51 less.
CafePress tells artists to “promote your own shop,” but CafePress buys Google adwords using the very image tags the artist provided.
CafePress justifies this bait and switch of service terms by telling artists they can opt out if they don’t like the new terms; however, many have spent as much as 7 or 8 years creating as many as 88000 images.
It seems to me that Cafepress is actually HELPING shop keepers because 1) Most don’t know how to effectively market online and 2) most don’t have the money to really give it a good attempt.
While the shopowner is earning LESS, it strikes me that they are gaining customers they’d never have otherwise. In other words they are getting extra sales with no out of pocket expense. To me, that sounds GOOD… maximizing the return on the artists’ work in creating a store.
It would be NICE to be able to follow up with the customer and cross sell other items, but in reality, most shop owners probably aren’t doing much or any cross selling anyway! In that case, they still aren’t losing out.
If YOU are bringing the customer to the shop and Cafepress takes them AWAY, that’s bad. But it sounds like they’re bringing in NEW customers you’d never otherwise see and selling your products for you. Sounds like a deal to me.
Andy Loverock on June 25th, 2009 at 3:18 pm
Although some of the methods being used by CafePress appear questionable! Sounds like a deal to me too Chuck. Nothing wrong with additional customers.
Demetrius on June 30th, 2009 at 7:23 pm
The important thing to know is that with these *new* changes, while shopkeepers can add whatever markups they want to items sold directly from their shops (often $5 -$15 profit per item), CafePress limits shopkeeper profits to just 10% of a retail price that CafePress sets for Marketplace sales (around $2 shopkeeper profit for the same items). For many shopkeepers this means that Marketplace sales volume would have to increase at least threefold in order for profits to remain the same. That threefold increase in sales volume has yet to materialize. At the same time, CafePress makes a lot more money on every sale.
Demetrius on June 30th, 2009 at 8:06 pm
To be clear – the power of the CafePress Marketplace is competing with shopkeepers’ ability to draw customers directly to their shops. There are not links from the Marketplace to the shops. Marketplace customers *remain* marketplace customers (at 10% profit.) Opting out of the Marketplace altogether or accepting the 10% are the shopkeepers’ only options.
D Wolff on July 2nd, 2009 at 10:16 am
Unfortunately, it has not resulted in increased sales, and we make about 1/3 of what we made before due to the changes. One reason is because they also took away direct links to shops from within marketplace so even though we have a large shop that caters to a particular interest, customers are unable to view our carefully laid out & categorized designs from the marketplace. It’s been a disappointing month.