This March, we hosted our second Open House and it went wonderfully! We presented our Marketplace Tech Plan, our Handmade Policy, our Ownership Model, and what our next steps for the co-op are. We then asked for feedback and reactions from our community. The recording of the Open House (with captions) can be found on YouTube and written transcript.
Our first open house was in January and is on YouTube. It covered who we are, our history to date, and our 2023 work plan. This Open House was presented by Thera, Valerie, Erin, and Lizzy. You can learn more about the organizing team on our Who We Are page. The policies and systems presented in this Open House were advised by Shavon Prophet from the ICA Group, US Federation of Worker Co-ops, and Start.coop. The lovely illustrations were provided by Tired Fox Art.
Table of Contents
Marketplace Tech Plan
In order to make the best decision, we needed to identify the community’s needs, the co-op’s goals, and find a technology that best fulfills both. We conducted research that asked what kind of interest in the co-op there was, what marketplace features our community wanted to prioritize, and how the community wanted to define “handmade”. We then identified the co-op’s goals through interviewing experienced advisors, researching the history of co-ops, reading how-to guides, and learning from other co-ops. After understanding our needs and goals, we researched our options. Here is a more detailed report about the marketplace tech plan.
A marketplace is more than just a website. It is the front end, where customers go to shop, and the backend, where artisans create, maintain, and sell from their shops. We learned that there were three types of marketplace technologies to choose from: hosted e-commerce platforms, open source websites, or “instant marketplaces”:
- The first option was a hosted e-commerce platform, something like Shopify, Magneto, or BigCommerce. They provide all-in-one e-commerce, are hosted natively and updated behind-the-scenes, and are very flexible.
- The second option would be an open source website, like WordPress or Harmony Navigator. These are very flexible but require a dedicated technical team in order to code, update, and keep the website secure.
- The last option is an “Instant Marketplace” like ShareTribe or CS Cart. These are very fast and easy but not flexible: if a needed feature isn’t available, it would have to be coded.
We made a list of all the features our community wants and evaluated which best suits our needs. We came to the conclusion that Shopify is the e-commerce platform that best suits the goals of the co-op.
Shopify and Why
We like Shopify for many reasons. For one, it has its roots in small businesses. It specializes in e-commerce and has a large, growing library of apps that allow for flexibility and customization. It has best-in-show checkout technology and technology that makes compliance with important regulations like sales taxes and GDPR laws easier. It offers great tech support.
Importantly, it isn’t a “dead-end” marketplace. Shopify allows artisans to manage their shop and inventory from one place and publish their products to a wide variety of other marketplaces, social media shopping, point-of-sale transactions, and more. As far as we understand it, multi-vendor marketplaces (MVMs) offer multiple ways for artisans to upload products, including plugging in pre-existing Shopify stores or integrating Etsy shops. Artisans can also import their listings through a CSV spreadsheet or through a product upload form as with any other marketplace.
Optional Set-up Service
One of the most difficult things to do as a co-op is getting launched. We need early cash-flow, and in order to raise funds we are looking into offering an optional fee-based “set-up service”.
For a fee, the co-op could help artisans set-up their store on the marketplace or optionally sign-up for a Shopify website. In addition, the co-op could earn ongoing commissions from new Shopify websites, which would come from Shopify’s plan fees, not from artisans.
In this program, the co-op would assist with uploading products and CSV spreadsheets and/or assist in setting up stores for artisans who want a Shopify account. For interested artisans, this would help enhance their business. They would be able to manage their inventories and orders in one place and push their shops to other selling channels, along with publishing their Shopify stores to their own websites. By helping the artisans that choose to use this program grow their businesses with Shopify, we can divert money from Shopify back into the co-op, which will help all artisans grow their businesses.
There are some things that we are still working on in regards to the marketplace technology. We need to figure out if volunteers will build it or if we’ll be able to raise enough money to hire professionals. We need to find solutions to some unresolved features. We need to make sure that we are complying with marketplace regulations, which are an added layer above website regulations. Lastly, we need to start beta testing the technology. This will be early bird onboarding, which will help us to identify and resolve pain points during the summer so we can launch in October.
The goal of the Handmade Definition Policy is to answer the question, “What kind of products do we want on our handmade marketplace?”. This is a difficult question to answer. In order to come to the best answer possible, we researched various definitions of handmade, studied craft theory and history, surveyed our community, and interviewed artisans.
We then drafted a handmade policy that includes the definition of “handmade” and our verification and enforcement systems. The handmade policy has been written about in more detail in a separate blog post, which can be found here.
“Artisan” and “handmade” are defined as follows:
- “The definition of an artisan for the purposes of our marketplace is a person, micro-business, or collective that produces handmade goods for sale.
- Handmade goods are authentic original works produced with the care, dexterity / skill, and judgment of the artisan, under the workmanship of risk.
- The workmanship of risk is an original idea proposed by artisan David Pye. In essence, it means that at some point in the process, the artisan could ruin the work.”
The draft policy, which can be found here, goes into more detail and covers print-on-demand services and outsourcing policies.
In order to incentivize authentic artisans and communicate our handmade policy, we have created a verification system.
Every artisan will be labeled as either “verified” or “unverified”. Artisans are “unverified” by default. Every artisan can go through a voluntary process to become verified. The process involves peer review by people familiar with the craft in question. There will be two reviewers assigned to each verification. If the two reviewers agree, then the decision of whether the artisan is verified is made. If the two reviewers disagree, or if the artisan disagrees, there will be a further review process or an appeals process.
There will be an option for artisans who have demonstrated an establishment or a track record to go through a shortened verification process.
Enforcing the handmade policy will rely on community engagement.
A community reporting form will be available for community members to fill out if they think that a shop is not complying with the handmade policy. If a shop is reported three times, or gets “three strikes”, an Enforcement Review will be enacted.
An Enforcement Review will be a repeat of the peer verification process. There will be a limit to how many times an already-verified artisan can be reviewed per year and the enforcement data will be tracked to ensure that the system is not abused.
The verification and enforcement processes are explained in more detail in the handmade policy.
We developed a democratic, cooperative ownership model. The goal of this presentation is to answer the questions: “Who are our owners?”, “Who are not our owners?”, and “What are the benefits, rights, and responsibilities of these groups?”. A more detailed report of the ownership model can be found here.
Ownership Model Canvas
We used the Ownership Model Canvas to visually organize our ownership structure. It is a single page format that concisely displays the relevant information. We will be a hybrid / multi-stakeholder cooperative, which means that producers, consumers, and workers will all be stakeholders. There will be a Board of Directors that consists of representatives from each stakeholder class. The full ownership model canvas can be found here.
We have three membership classes:
- Artisans (Producers / Workers)
- Supporters (Consumers)
- Staff (Workers)
In addition to the member classes, there will be artisans and customers who can use the marketplace but are not members. These are our non-member stakeholders.
All member stakeholders will have buy-ins and profit sharing according to a special “points and tiers” system, which we’ll explain in a minute.
The artisan members are the primary beneficiaries: they have the greatest responsibilities and the greatest benefits. Artisans who are members of the co-op will have better marketing support and lower fees than non-members. In order to be an artisan member, artisans must meet the handmade policy and list products on the marketplace. There will be three representatives of artisan members on the Board of Directors.
The supporters, or customers, consist of anyone who wants to be a member of the co-op who is not an artisan or a staff member. They can join and get perks that are only available to members of the co-op. There will be two supporter representatives on the Board of Directors.
The staff, or workers, are employees of the co-op in good standing. Staff members will have two representatives on the Board of Directors.
The non-member stakeholders can use our marketplace as artisans and customers, but they will not have any governance or financial rights or responsibilities. There will be one non-voting “flex” seat on the Board of Directors for advisors, investors, etc.
There is also a section of the canvas that goes over investment for the co-op. Our ideal operating budget for year one is $300,000 to $500,000. During our start-up period, we will raise funds through early buy-ins, otherwise known as our capital campaign. Once we gather enough money through this campaign, we will use the money as leverage to get financing in the form of loans. In addition to this, we will continue to constantly apply for grants and incubator funds.
Once the co-op has launched, our revenue will come from a simple sales commission from each product sold on the marketplace in addition the optional co-op set-up service. Our costs, in order, will be hiring staff, marketing so we can reach enough supporters and artisans, and developing marketplace technology.
Points and Tiers System
While the control rights of the co-op will be determined via membership classes, the financial rights will be determined by a points and tiers system.
The basic structure of this system is that members who engage in different activities that help the co-op will earn them points. The amount of points that a member has will determine which tier they are in, and tier levels correspond to different levels of financial benefits.
The purpose of this system is to accommodate members who are in multiple member classes (e.g. an artisan who is also a customer), incentivize continued engagement in the co-op and community, and ensure that all kinds of contributions are valued appropriately and equitably.
This system is still in the conceptual phase. Actual legal details and financial specifics are yet to be written. The points and tiers policy is explained in more detail in the policy paper, which can be found here.
Points will be awarded when a member contributes to the co-op. There are many kinds of contributions and the number of points each action is worth will be valued based on the relative importance of the contribution. Some examples of what contributions would earn points would be:
- hours of labor
- years with the co-op
- staff paid hours
- handmade verification
Different contributions would be worth different amounts of points, but would all be valued in the same currency. An example of this would be that a sale of a product could be worth two points and a purchase of a product could be worth one point, in order to favor artisans. These numbers are examples because the specifics have not been decided yet.
Points and other qualifications will determine what tier a member is in. A member will be part of the highest tier for which they are eligible. The evaluation of a person’s points and tier levels could be done on a schedule that is easy for accounting, e.g. every year or quarter.
We want to incentivize and reward long term commitment and recent contributions to the co-op, so tier requirements would include both total amount of points accumulated over a member’s lifetime and points earned within the past year (or whatever time period we decide on after further development).
Movement between tiers can be fluid, which means that a member who is actively and continually contributing can move up and a member who is not contributing can move down.
What We’ve Accomplished
Since the last Open House, we have researched and decided on what marketplace technology we will use, developed a handmade policy and enforcement strategy, and created an ownership model.
There is still a lot to do! We have to hire an attorney, formally incorporate as a co-op, and finalize our business plan with our advisors at USFWC and start.coop. We need to start fundraising, which will include our capital campaign, creating incentives in the marketplace for people to sign up early, and onboarding as many artisans as possible. In addition to raising funds, we need to set up our accounting systems.
Most importantly of all, we need to continue to grow our community! We need to reach out to artisans, customers, and supporters and spread the word. We need to work hard to build up the needed technology and test the marketplace and systems over the summer so we can launch in October 2023.
Cooperatives are democratically owned and run businesses that rely on people power! If you’d like to help, there are lots of things you could do:
- Complete our volunteer survey
- Join one of our six teams: Business and Governance, Communications, Grassroots, Social Media, Tech, and Visual Design
- Join our discord server
- Subscribe to our newsletter
- Spread the word!
About Artisans Cooperative
We are crafting an online handmade marketplace for an inclusive network of creatives: a co-op alternative to Etsy.
Join the movement!