As an aspiring small business owner, you may be tempted to take the easy route by relying on vertically integrated platforms like Etsy for your e-commerce sales. These platforms provide a quick and convenient way to reach a large audience of potential customers, and they offer built-in payment processing and marketing tools. However, recent events have shown that this strategy may not be the best approach for building a stable and sustainable business.
Delayed Payments
Over the weekend, Etsy started notifying some of its sellers that it was delaying payments due to issues related to its connection with Silicon Valley Bank (SVB). This caused frustration and inconvenience for many sellers who rely on Etsy for their income. If you are not familiar with SVB and what happened, Silicon Valley Bank was a commercial bank headquartered in Santa Clara, California. It was the largest bank by deposits in Silicon Valley and the 16th-largest bank in the United States up to March 10, 2023, when regulators shut down the bank due to its exposure to risky loans and investments. This has caused a technology companies and startups to run into issues accessing funds, much like what is apparently happening to Etsy.
The recent failure of SVB, which provided banking services to Etsy, has highlighted the risks of relying solely on a single platform for payment processing and other key services. While federal regulators have assured SVB account holders that their deposits are safe and that they will have full access to their funds starting today, the incident has raised concerns about whether this had been an even larger failure or delay, it could leave small businesses in a precarious financial situation.
Limited Control
In addition to the risk of payment deposit delays, small businesses that rely on these vertically integrated platforms also have limited control over their customers and how they advertise to them. When you sell on a platform like Etsy, you are subject to its rules and regulations, which can change at any time. You also have limited ability to customize your storefront or marketing, which can make it difficult to build a distinct brand and stand out from the competition. You are also beholden to seller fees and other “platform taxes” that these platforms place on sellers.
By contrast, building your own e-commerce website gives you complete control over your payment processing and customer relationships. You can choose from a variety of payment processing providers to ensure redundancy and mitigate risk. You can also design your own storefront and marketing messages to create a unique brand identity that resonates with your target audience.
Building a Business You Control
While building your own e-commerce website may require more effort and investment than selling on a platform like Etsy, it is ultimately a more stable and sustainable approach to building a successful small business. By owning your own platform, you can take control of your financial and marketing strategies, and build a loyal customer base that will support your business for years to come.
While vertically integrated platforms like Etsy may offer convenience and a large potential customer base, they also come with significant risks and limitations. Small businesses should consider building their own e-commerce websites to gain greater control over their payment processing and customer relationships, and to create a more stable and sustainable business. While it may require more effort and investment upfront, owning your own platform will ultimately give you the control and flexibility you need to build a successful business over the long term.
