We’re excited to announce today the launch of our first marketplace for authentic handmade goods as a Phase I Beta! As it’s a first beta, there are a lot of caveats. There are some things that this site already is, and some things that it isn’t quite yet. In this post, we’ll walk through the features we have in our new marketplace, and we’ll also look at the features that will be added in the next phases.
As discussed in our Marketplace Tech Plan, we are using a combination of Shopify + the app Multi-Vendor Marketplace (MVM). In our Marketplace Development Plan, we talked about rolling out the Marketplace in phases, from a small pilot, to a wider selection with Artisan Member shops, and finally, to an open enrollment that includes non-member artisans. Throughout the phases, we will be ramping up our marketing to grow the customer base alongside the supply of artisan shops.
Because we are developing on a rapid timeline and a shoestring budget using off-the-shelf technology, we are faced with initial technological limitations (which will get better over time). By design, This Phase I Beta Marketplace is very limited in scope. It is only hosting mutual-aid fundraiser items by participating Artisan Members. The fundraiser items are created by our artisans specifically with the Coop in mind: using our color scheme, mascot, logo, and/or branding. This keeps our experiment controlled and manageable as we set our systems up.
As this is a pilot test, we included a prominent link for “Website Feedback” in the Main Menu. Please share your thoughts and feedback on the user experience of the website! We will be making many improvements.
In Phase 2, we will be introducing goods of all kinds made by our Artisan Members, and in Phase 3 we will allow non-member artisans to list in the marketplace as well.
Top 10 Community Priorities
In our 2022 Marketplace Priorities Poll, the artisans and supporters in our community identified their top ten priorities. We’ll go through this list and talk about when we expect these features to roll out. Many of our Top 10 features are possible even in our pilot test, leaving us room to scale those features with our phased growth plan.
|Priority||Phase I||Phase 2||Phase 3||Beyond|
|A critical mass of artisans and supporters / shoppers||No: pilot testing||Marketing towards buyers begins||Upgraded marketing begins towards holiday shoppers||Building a critical mass will take time and consistent effort|
|Pricing that creates income security for artisans: simple and competitive||Yes||Yes||Yes||Yes: members decide on any fee changes in the future|
|Supportive integrations for artisan businesses: on-site analytics, the ability to “push” products to other channels, integrate with shipping carriers, and import data||No: simple product form instructions only in Store Set-up Guide||Improved integrations for product listings, CSV import, Shopify and Etsy integrations||Improve integrations for shipping carriers||Upgrade to Shopify Plus and/or Marketplace Dev when revenue supports the cost|
|Sales tax collection||Artisans Co-op collects and remits US state and local sales taxes||Artisans Co-op adds on EU VAT collection||Research additional sales tax requirements that Artisans Co-op can implement on its own, including Canada HST and Australia GST||Upgrade to Shopify Plus and Avalara AvaTax for a global, comprehensive sales tax solution when revenue supports the cost|
|Fraud protection||Yes: Shopify Fraud Alert on all orders||Yes||Yes||Yes|
|Secure internal messaging system||No: direct emails between artisans, customers, and Artisans Co-op||No||TBD||TBD|
|Standard UX interface and navigation for the frontend and backend||Yes: Backend is a little clunky due to off-the-shelf tech (MVM)||Yes: with some improvements to the backend navigation menus||Yes||Yes: constant improvement and optimization|
|Fast and easy on-site checkout process for multiple artisans at once using many payment methods||Yes||Yes||Yes||Yes|
|High quality search and browse||Decent automated search||Improved search with better product categories and tags||Looking into product search by artisan/shipping location||Continue to improve and enhance search with a dedicated committee|
|Education and transparency on fair product prices and Artisan Co-op’s social good||Basic education about co-ops and craft||Additional educational articles||Include “fair pricing guidance” on website||Continuing education|
|Robust review system||Yes: Product reviews and artisan feedback||Yes||Yes||Investigate app costs and options for two-way reviews|
During our pilot phase, we will be working through the order process, payment flow, and artisan payouts one-by-one through the sale of fundraiser items. Artisans set the donation amount in the product settings: we’re not asking for freebies.
In addition, we have a donation button for customers during guest checkout in the shopping cart.
We are not a 501(c)(3) non-profit organization and these donations may not be tax-deductible. Ask your accountant for advice. We are a cooperative corporation and will be filing as an S-Corp with the IRS during tax time. Funds will be used to pay for start-up costs — including marketing and website development — and eventually for staff, as we ramp up our revenue.
Payment Flow and Artisan Payouts
As we begin our Phase 1 Beta Marketplace, many of our systems are manual, and we appreciate your patience. Currently, Paypal is our only payout option for artisan sellers. We know it’s not universally beloved, and the fees and currency conversion rates are higher than other payment processors. We are working on an alternative for the next phase.
Customers can add products from multiple artisans into one shopping cart and check out using one of Shopify’s many payment methods, which include Paypal, major credit credit cards, some popular international cards, and express methods such as ApplePay, GooglePay, ShopPay, MetaPay, and Venmo.
Customer funds will go directly to Artisans Co-op as one order, and Artisans Co-op will then distribute artisans’ funds, less the artisan’s fundraiser commission and any additional donation from the customer, as a “payout.”
During Phase I, payouts are manually scheduled, so we are asking for seven days’ turnaround time (after order acceptance by the artisan). This is for two reasons:
- The technology allows us to set the commission by artisan, not by product. Each fundraiser product has a different donation amount, so a human has to look at each order, calculate, and schedule.
- Although Paypal Payouts are available with auto-pay, the current MVM technology limits this to artisans with a business Paypal account and is only available when an order is marked “delivered” (to the customer). Our artisans need their payout after purchase, not after delivery, so this will not work.
In the next phase, we will improve this process, either/both by transferring payouts to Stripe Connect (which has lower fees but requires artisans to set up a Stripe account) or by working on the Paypal autopay settings with MVM to trigger payment after order acceptance.
During Phase I, shipping labels and carriers are the choice and the responsibility of the artisan. The MVM technology provides a place for the artisan to set up free shipping or a simple flat rate, which they can vary by weight or price ranges and also by country (including limiting their shipping to specific certain countries).
We are looking at improving this in the next phase by enabling the artisan to set their own multiple shipping rates, such as an express rate. We are also looking at integrations with shipping carriers such as USPS and DHL.
Orders are simply emailed to the artisan for approval/confirmation.The backend allows artisans to print packing slips and invoices for customs. It also allows them to input the parcel’s tracking number; this will trigger an automatic email from Shopify to the customer letting them know that their order is on its way.
We cannot provide tax advice; ask your accountant for information on your situation.
Generally speaking, sales taxes are the responsibility of the customer on the receiving end, but artisans may also be on the hook for collecting or reporting in their taxing districts— even when Artisans Co-op is collecting and remitting the taxes on their behalf as a “marketplace facilitator.”
Most taxing districts have a micro-business exemption, when the amount and/or number of sales is below a certain threshold called the “economic nexus.” For example, the economic nexus in most US states is $100,000 of sales to customers within that state, and in Canada, the threshold is $30,000CAD. Most artisan businesses are in the micro-business category and do not have an economic nexus.
As a marketplace facilitator, Artisans Co-op is subject to additional laws, nicknamed “Amazon laws” even though we are very small and just a start-up. Some districts, such as Texas and Colorado, require all marketplaces, even those with only $1 in sales, to collect and remit sales taxes due to their status as a marketplace.
In the US, sales taxes are generally set by the state. In other countries and economic regions, notably the UK, EU, and Australia, sales taxes are set at the federal level. And in Canada, sales taxes are set by both the province and at the federal level.
When shipping to customers in a VAT / GST country from outside that country, the cost of these taxes may be an unwelcome surprise. For example, the post office may hold the customer’s order until they pay taxes. If the artisan uses a third party carrier such as DHL or UPS, that carrier may also charge handling fees.
Customers are advised that prices on our website do not currently include international customs duties and taxes such as VAT.
Artisans Co-op is collecting and remitting US state and local sales taxes from day one. Registering for these state sales taxes comes at a considerable cost and is a major service we are providing to artisans. This both keeps US artisans in compliance with their state / locality of residence without any work on their part and opens the US market to all our artisans worldwide.
As a matter of priority, Artisans Co-op is next registering with the EU to collect and remit EU VAT. VAT registration is considerably more complex than US sales taxes. As of this writing, we have one application pending and calls scheduled with additional specialists. In anticipation of this registration, we have asked all artisans to provide the first 6 digits of the HS code for each of their products in the product form. Instructions are in the Set-up Guide, and these links contain quick look-up references for finding product codes: https://uscensus.prod.3ceonline.com/ OR https://www.trade-tariff.service.gov.uk/browse.
Our third priority will be registering with UK VAT, Canada HST, Australia GST, and others, based on the locations of our membership.
During this early stage, to save on expenses, Artisans Co-op is relying on member hours to do the labor of all this bookkeeping and accounting, as well as a variety of apps to lighten the workload. As the Coop’s revenue grows and we can afford it, we will upgrade systems to Shopify Plus and AvaTax for a comprehensive worldwide sales-tax solution. However, the cost of these services is out of reach for Phase I.
Internationalization: Languages, Currencies, and Units
As a limitation of our software, and a casualty of being established in the United States, the language, currency, and measurement systems of our Shopify + MVM systems are American: English, US Dollars, and imperial measurements only, at this time.
A cross-border tech committee — including a Canadian, and someone from the UK living in France — worked together on testing and trying the systems to try to use the existing technology more inclusively, with metric options and listing products in local currencies. However, the committee concluded that due to limitations in the technology, it was more practical and less financially risky for artisans to stick with just one default unit/currency. The default was set by the cooperative’s business registration in the United States.
We would like to move towards more inclusive options as soon as we are able. But to get started, we had to decide on the best option available now. We have also identified members with translation experience and are working on translated landing pages in French and Spanish, and we aim to improve our translations along with our growth and capabilities.
But in the interim, we live with the compromises. We are a handmade marketplace, crafting a handmade solution as a start-up with limited funds and time. We will improve with every new phase of the marketplace. We’re so excited to announce the launch of our pilot, and we look forward to your feedback as we continue to make improvements for Phase 2.
What do you think about the new website? Let us know what you think in the website feedback form or the comments below.
About Artisans Cooperative
We are growing an online handmade marketplace for an inclusive network of creatives: a co-op alternative to Etsy.
Shop the marketplace!