Latest / Small Business Success with Fexingo: Local Companies, Main Street Stories, and Community Commerce / How a Local Soap Maker Used a Community Shop to Beat Etsy
Transcript
- Lucas: You know how Etsy pitches itself as the platform where anyone can turn a hobby into a business? Well, I found a case study where that pitch actually backfired — and the business got way more successful by walking away. Luna: Ooh, I love a 'quit the platform' story. Who are we talking about? Lucas: Jenna Park. She runs The Suds Studio in Portland, Oregon. Small-batch soap, bath bombs, lotion bars — all made in her kitchen at first. She started on Etsy in 2019, was making about $12,000 a year. Not nothing, but not a living wage in Portland. Luna: That's about a thousand bucks a month. After Etsy fees and materials, she's probably taking home six hundred. Lucas: Exactly. So she's stuck. She can't raise prices because Etsy is full of cheaper soap, she can't differentiate because the algorithm rewards whatever sells most, and she's competing with drop-shippers who are just reselling generic stuff. Luna: The classic Etsy squeeze. So what did she do? Lucas: In 2021, she took a leap. She found a 600-square-foot storefront on a side street off Alberta Street — a pretty walkable neighborhood in Portland. Rent was $1,800 a month. That's more than her entire Etsy revenue in a month at that point. But she had a hunch that people in her community wanted to smell the soap before buying it. Luna: And she was right? Or did she almost go under? Lucas: She was right. First year in the shop, she did $68,000. By year three — that's 2024 — she hit $340,000. And the interesting part is how she did it. She didn't just open a store and hope people walked in. She built what she calls a 'community shop' model. Luna: Okay, define 'community shop.' Is that different from just a nice independent store? Lucas: It is. Here's the breakdown. She kept selling online — but on her own website, not Etsy — for shipping. That's about 20 percent of revenue. Another 30 percent is retail walk-in. But the big chunk — 50 percent — is wholesale to local businesses. Luna: Wholesale to local businesses? Like other shops carrying her soap? Lucas: Yes, but not just retail shops. She got her soap into 14 local hotels and cafes. Ace Hotel Portland carries her bar soap in their rooms. A few coffee shops sell her hand soap in their bathrooms — and also sell the bars at the counter. She's not paying for ads; the hotels are essentially showing her product to hundreds of guests a week. Luna: That's smart. But how do you even get the Ace Hotel to say yes? Lucas: She hosted a free workshop at her shop — 'Make Your Own Lavender Soap' — and the Ace Hotel's manager happened to attend. That's the community piece. She was already doing these workshops every Saturday, charging $25 per person. The margin on those is about 70 percent, because she's just using bulk oils and a few drops of fragrance. She builds relationships with customers who then become her wholesale buyers. Luna: So the workshops are both profit center and sales pipeline. That's elegant. Lucas: It is. And here's the number that stuck with me. Her Etsy revenue peaked at about $14,000 in 2020. Last year, her wholesale revenue alone was $170,000. She replaced an algorithm with actual human relationships. And the lease — which seemed terrifying at $1,800 a month — now represents less than 7 percent of revenue. Luna: I want to push back a little, because not every maker can pull this off. Portland has a pretty strong local-first culture, and Alberta Street is a high-traffic neighborhood. If you're in a strip mall in suburban Ohio, does this still work? Lucas: Fair point. But I think the principle travels. You don't have to open a storefront. You could partner with an existing local business — a coffee shop, a hair salon — to carry your product on consignment. The workshop model also works in a rented community space. Jenna's first workshop was actually in her living room. She only rented the storefront after she had 40 regular attendees. Luna: So she proved demand before signing the lease. That's smart. Lucas: Right. And she also did something many Etsy sellers don't: she tracked her customer acquisition cost. On Etsy, she was paying about 15 percent in fees, plus the opportunity cost of competing in a race to the bottom. In her own shop, her acquisition cost is essentially zero for walk-ins, and the workshops cost her maybe $7 per attendee in materials. She gets $25, and the person leaves with a product and a connection. Luna: Yeah, if today was worth a coffee to you — we keep this show ad-free, and listener support is what makes that possible. There's a link at buy me a coffee dot com slash fexingo. If your business moved forward because of something we talked about, that's the place. No pressure, just a way to keep these stories coming. Lucas: Appreciate that. So back to the community model. Jenna also started a 'soap club' — a subscription where members get a new bar every month for $15. About 80 members now, which is nearly $15,000 a year in predictable revenue. That's the kind of recurring income that makes a lease feel safe. Luna: And she probably got those members from the workshops, right? Lucas: Exactly. Turns out, if you teach someone to make soap, they become a customer for life. Because now they know what real soap feels like, and the stuff at Target doesn't compare. She's creating informed buyers. Luna: I wonder how many Etsy sellers could do this. The barrier is low — a $25 workshop, a Facebook event, a few pounds of coconut oil. But the mindset shift is huge. You have to stop thinking like a product seller and start thinking like a community builder. Lucas: It's funny you say that, because Jenna told me she never thought of herself as a 'business owner' until she opened the shop. On Etsy, she felt like a commodity. Now she feels like a local institution. And the numbers back that up: she's been profitable every month since month four of the lease. Luna: Month four. That's fast for a new retail spot. Lucas: It is. Part of that was because she launched with a built-in audience from the workshops. She had 60 people on her email list before she even signed the lease. She sent them a 'coming soon' note, and on opening day, 40 people showed up. That's a $0 marketing cost opening. Luna: That's the difference between 'I hope people come' and 'I know these 40 people will come.' She had demand certainty. Lucas: Right. And she kept that momentum. Every workshop attendee gets added to the email list. Every wholesale account gets a monthly check-in. She even started a loyalty program where every $100 spent gets you a free workshop. The retention numbers are strong: 60 percent of her retail customers return within three months. Luna: That's higher than the average for indie retail, which I think is around 30 percent. Lucas: It is. And it's because she's not just selling soap. She's selling the experience of knowing where it came from. People want to support the person who taught them to make lavender soap last Saturday. Etsy can't offer that. Luna: So what's the one takeaway you'd give to a maker listening who's still on Etsy and frustrated? Lucas: Start a workshop. Even if it's in your kitchen. Charge $20. See if anyone shows up. Then ask them what they'd want next. That feedback loop is worth more than any algorithm. And if you get 20 people coming regularly, you have proof that there's a local market for what you make. Luna: It's almost like the opposite of the 'go where the customers are' advice. Jenna went where the customers could become a community. Lucas: Exactly. And in doing so, she built something that can't be copied. Anyone can list a soap on Etsy. But no one can copy Jenna's relationship with the Ace Hotel manager who took her workshop. That's durable. Luna: Alright, I'm going to look up The Suds Studio. And maybe sign up for a workshop next time I'm in Portland. Lucas: I already did. I'm now the proud owner of a slightly lumpy bar of rosemary mint soap. But I made it myself, so it smells better. Luna: That's the brand loyalty right there. Thanks, Lucas. Lucas: Thanks, Luna. See you next time.