A funny thing I’ve found to be true: Your level of talent and your ability to leverage that talent for profit are two completely separate things.
It’s not enough to be able to solve complex problems. To profit you need to solve the right problems for the right people!
For example I’m confident I could build a functional Roomba from scratch and yet I’m also confident that doing so would be a financially fruitless endeavor!
Similarly, I could offer generic services but few people encounter problems they’d consider directly hiring me to resolve. My time is expensive & most don’t need automation or CAD work done around the house 🙂
At first I thought the difficulty in leveraging talent for profit was caused by over specialization, but not exactly. A dentist or women’s-only hair dresser can easily find customers anywhere on earth who will happily pay for their time.
The real challenge is finding alignment between your skillset & some market demand.
I call this the Skill Transference Problem, and it became a personal issue in 2018 when I was laid off!
For months I actively job hunted and it was difficult to find the right combination of:
- Work I want to do. (I’m picky!)
- Work I’m qualified to do (without training)
- Work that a company/person would pay me to do.
Between job applications I used the extra free time for random entrepreneurial experiments to find other ways to convert my skills into cash.
The most successful experiment was selling handmade crafts on Etsy. Though it was extremely hit-or-miss in the beginning.
Most products I offered never sold anything while a lucky few sold consistently.
For the entire gig to be worth my time the winning products had to pay for themselves and the losers too!
Product development is costly, so I realized the most important question to ask is:
How do you figure out what’s going to win before spending time to develop it?
Data driven strategies and shoplifting from the marketplace of ideas
Ever seen the 2011 movie Moneyball? I’m not a baseball fan but the idea is fascinating.
Based on a true story, in 2002 a baseball team manager & an economist revolutionized the game by successfully devising a new system of statistical metrics to determine which players were the most valuable & could be hired for the least money. (They ended up with a record-breaking winning streak!)
In the same vein, I realized data-driven marketplace research could tip the scale in my favor.
Manually seeking out ideas is extremely cumbersome, and the numerous Etsy product research tools out there were surprisingly unhelpful.
Those tools can tell you that CaitlynMinimalist has more sales than anyone else, but that’s not useful by itself.
So I built my own dang tool! A webscraper to aggregate a ton of information on Etsy products & save it into excel.
I came up with a new system of statistical metrics & built a database that revolutionized my crafting-for-profit strategy.
I wanted my tool to quantify the opportunity value of any given listing, so that I could filter out the losing bets & just find winners.
Etsy hides certain key info needed to do this, but I found a way to use publicly available info to derive it!
For instance, the sales volume of individual listings is hidden.
But you can closely estimate it by using the proportion of that ‘items-reviews’ to ‘all of that shops item-reviews’, multiplied by that shops total number of sales.
I could then estimate the gross lifetime revenue of a listing by multiplying sales volume by its listed price.
Woo-hoo! I now had unconcealable hard metric to tell me exactly where money is being spent, which is what I truly care about (not which shop has the most sales).
Not only did this tell me which listings were most effective; But by filtering my database by keywords and tallying up statistics about the highest grossing listings, I could quantify & compare product markets & categories.
In this example I compare the market for ‘cat’ vs ‘dog’ products and found them to be roughly equal. What I expected!
Then I compared ‘cat’ vs ‘book’ products and found cat to be the winning market. (All things being equal to you, appeal to cat people rather than book people on Etsy!)
On Etsy you can ‘favorite’ items that you like. A seemingly meaningless gesture…
However, experience told me that most Etsy shoppers are cash-burdened impulse buyers so I theorized that people favorite things when the deal wasn’t sweet enough to immediately bite on.
I realized shoppers can only interact with a listing in 2 relevant ways: Buy-it vs Not-buy-it. & Favorite-it vs Do-nothing.
In aggregate the chance that a shopper will interact in any given way is completely random, which means that ‘favorites’ could be an indicator of missed impulse-buy.
If that’s true then for any given listing the expected ratio of Favorites to Sales should be approximately one!
I used my database to look at the median Favorites to Sales ratio across thousands of listings and I filtered by product categories to ensure the data sets were random.
The median was ~1.6 every time! (In aggregate, people tend to favorite only slightly more often than impulse buy.)
And on I went, this was fun! I found a total of 6 distinct valuation metrics that can act as filters to show me the best opportunities.
This includes the ability to search for non-physical ‘digital downloads’ (a simple filter Etsy itself lacks). A filter for ‘one hit wonders’ to find products that violate the 80/20 pareto distribution & bring in the majority of a shop’s sales. And a filter for ‘fresh bestsellers’, meaning that a product is proven to be in demand but still lacks established competition.
It worked so well I had to come up with selection criteria to help me choose which ones to pursue.
Eventually I realized this was something special so I packaged all my tools and experience into a course!
High Leverage Crafting: A Data Driven Strategy Guide to Making More for Less. (How I Earned $88/hr in 2022 Selling Handmade on Etsy)
Its a video course, so if you want to get an idea of my style I did my best to explain the big idea succinctly in this 6 minute video. (This video was scripted to make sure I didn’t ramble & keep it short at the cost of sounding a bit flat. In the course I let my enthusiasm for this topic loose which ended up running about 3 hours.)
I work full time so its best to think of this as a cash flow positive hobby. Though it is comforting to know I have the tools to resolve my own skill transference problem available when I need them.
You might think selling handmade goods sounds like a trite endeavor with little upside potential, but that’s definitely not the case if you know what you’re doing.
My working wage last year was quite good because the shop is established and my operating costs are low. The cool thing is my process is easily scalable & replicable with (insert your skillset).
I posted four free craft business resources at the link below, including a pdf with the top 500 highest revenue generating listings on Etsy. https://highleveragecrafting.gumroad.com
Give it a look and see how often you say “I could do that” & “I wouldn’t have guessed there’s that much money in X product market”.
Well enough shilling already 🙂 I have more awesome and weird articles in progress that have nothing to do with selling things. This is just another experiment.
Looking forward to sharing more!
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