Heartsy is buzzing all over Etsy lately. A fairly new website that would maybe be comparable to groupon. They basically work with shop owners to offer amazing deals to their subscribers and traffic to small businesses like Etsy shops. As small business owners many of us are starving for traffic, and sales so when an opportunity presents itself with minimal investment we all want to jump but I am here to warn you to really think through what this will entail and if it will truly be a positive and beneficial experience. It seems like a MINIMAL investment because you pay NOTHING to be featured but think carefully about your deal!!
I pride myself in being business saavy. I have spent a lot of time researching and reading about every business topic you can imagine. One of the more important topics that should be thought through carefully is pricing before jumping into a site like Heartsy where huge discounts are involved. I have most of my items set for retail prices so that I can offer wholesale and cosignment. But I do not offer wholesale on my entire inventory and Heartsy does not offer coupons to specific groups of products (it is for your entire shop.) So unless your entire shop is priced at wholesale and you negotiate a low % for Heartsy you will not profit from using Heartsy.
Wholesale pricing means the person/business wanting to buy in bulk will expect 50% discount on the pricing. You make a lower profit but because they are buying so much product it is worth it. Heartsy is basically asking for wholesale OR MORE for individual sales. So it is a risky venture to take. Heartsy expects 50% off MINIMUM to be considered for a deal, and if you should only sell a handful of vouchers it probably wouldn't be worth it financially to do it.
If you want more information on how to price your items so that you ensure a profit, and you give yourself as many options as possible for selling check out this article:
http://www.etsy.com/storque/seller-handbook/etsy-success-reevaluating-your-prices-11033/
Here is the catch: They offer a large discount but based upon a limited amount of money. For instance, they will offer $16 for $36 which is a discount of 56% percent on a purchase of 36 dollars. Most of my items that sell are 30 dollars and 3 dollar shipping. So in this example, I sold 33 dollars to most for 16. (The Heartsy vouchers include shipping.) So this is just a little over 50% off. So that really wouldn’t be as bad as it seems. The customer feels they are getting a steal, but keeping it close to wholesale pricing, IF you are priced correctly for wholesale… it can be great to gain new customers.
You need to consider when negotiating your deal not just the percentage but think about those dollar amounts. If most of your items are around 10 dollars and you offer 10 for 30, you will be selling 3 of your items likely for that 10 dollars. Ideally set up a deal that will leave each customer with a credit to your shop. Don’t forget it includes shipping costs, so in my example above most of the customers I had ended up with a 3 dollar credit to my shop. That isn’t a huge amount, probably could have been a higher credit to entice more…. But try to consider that…. to promote the customers to come back!
So if you have considered the finances of this arrangement, here are all the other pitfalls and experiences I had during my deal with Heartsy. (Since my deal over a week ago their deals have already changed. They now want 70% off of my items for VIP’s and 65% off for others. They require one deal for all users and then a special deal for their VIP’s that is a minimum of $10 dollars more for VIP’s!)
I submitted my shop the 1st time, got the 30 votes required and waited about 5 weeks to get denied!! I submitted a 2nd time, they then required 60 votes. I acquired the 60 votes, waited about 4 weeks and finally got a positive response. Once you receive the required # of votes, Heartsy then sends your deal out to their VIP members and best buyers to do more market research. If they don’t receive a more positive response from their frequent buyers they do still deny your deal even after receiving the required votes. I know many people that got their minimum votes waited over a month just to be denied!!
It was indicated to me that I had a “high quality” shop and an unusually positive response from their VIP’s and so they would love to work with me. This is what they asked me in the initial contact to me:
1. What are your goals for this promotion?
>>> How many new customers would you like to attract? This will help me
understand how to help you best structure your deal.
>>> 2. Given your statistics and products, you are a perfect candidate for our VIP exclusive program. VIP Exclusives are deals that can only be purchased by our paying VIP members. This community of paying members on Heartsy is growing each day and currently represents 25% of the purchases made on the site. With a VIP exclusive deal your store receives the same amazing visibility and attention on Heartsy as all other deals, but it is targeted to a specific cohort of extremely dedicated buyers.
>>> 3. What are your thoughts on the terms of your deal?
Heartsy requires at least a 50% discount but many sellers have been achieving amazing results with better discounts. For instance, the average deal on Heartsy is between 55-65% off. After looking at your store I would suggest a "$14 for $36 in store credit" deal.
- I made it clear that my goal was to gain new customers, would love huge views for branding, and of course sales.
The initial offer to me was around 60% off and to be a VIP exclusive deal, which I replied that as a small business I am priced for the standard 50% wholesale rate but I really can’t go much higher. They came back to me with a 56% off offer. I really had to debate this heavily, and I said the only way I could do that high of a rate is if I could get a minimum of 50 sales but I would ideally want 100. I asked if this was a reasonable amount of sales or were my expectations to high, especially if this is ONLY for VIP’s. Their response wasn’t, “50 sales is reasonable”… but that it was very likely to get 100 sales. This conversation went back and forth for many days, I asked a lot of questions…
I asked about payments, and how the vouchers would be redeemed etc. and their response was this:
“Customers are typically given 1-3 months to redeem vouchers. They redeem on your site (our account managers will walk you through that).
> Payment works through Etsy (again, we will walk you through this aspect of the deal when it's time).”
I honestly don’t know who the account managers are, and never had a walkthrough. I was told I could call or they could call me the day the deal goes live to walk me through it but there wasn’t an official form or e-mail that would allow you to prep for this.
This could turn into a very long story but basically I thought I had a VIP only deal, I was told I could very likely get 100 sales, not just 50 sales but 100, so I agreed to VIP only if it meant 100 sales. Then the night before my deal went live I was told this, “The feature will be live for 48 hours (1 day for VIP early access and the second day for regular users). The VIP period starts at 12am PDT Friday morning and it will be available for all users on Saturday morning at 8am PDT. The feature will end on Saturday evening at 11:59pm.”
I thought this is great even MORE exposure if it opens up to everyone on Saturday. I posted this EXACT message to my blog and very excitedly I told the Heartsy staff that I had blogged about the event and promoted their VIP members. That if people wanted to make sure to get my deal they should sign up to be a VIP. She asked for a link to view my blog, she read it and replied back it was great.
I then blasted this to like 10 Etsy teams, facebook, twitter etc. I have almost 7000 twitter followers, over 600 facebook fan pages, probably a 1000 or more Etsy members on all the teams…. Basically I promoted their site and my deal to over 10,000 people!
Friday I get up and run to the computer and it is crickets. I go check the website the deal is up, but nothing is happening.
I was really upset, when I was told 100 sales were likely and I was told at one point that I could sell out and they wanted to know if they could extend my deal… but I tried to stay positive and wait for Saturday when ALL users could buy my vouchers!
Saturday I run to the computer and check for a flood of convos and sales, again crickets. I look at Heartsy and my deal is still VIP exclusive. It never turned over to all users! I immediately contacted the lady who told me it would go live Saturday morning to all, and she responded about an hour later… her response? That I originally signed up for VIP she was mistaken when she gave me that information she was sorry. If I wasn’t satisfied I could always submit a new deal. By the way their live chat wasn't available during this time and I called the number she gave me for during my deal for help and no one answered or returned my call. So I e-mailed and she responded an hour or so later with that non-chalant response.
Honestly, that is the worst customer service ever. I should submit a new deal and wait another month to have this issue resolved? I wrote her back asking if they could change my deal or offer a new deal that I was very unhappy. She wrote me back that they have SEVERAL hundred VIP members and so they had every reason to believe I would have 100 sales. And that they have a policy against changing a deal once it goes live. Although I am truly not happy with Heartsy as a whole, for the sake of being fair…. I understood the logic. If someone bought the VIP membership just to get my deal and then it goes live they would clearly be upset. But what I didn’t understand was why when this deal ended that they couldn’t offer my new deal. The exact deal we had agreed up, but open to ALL users.
If you have been in sales or marketing for any amount of time you have heard many times that sales is a numbers game. Statistics show you have to have your brand in front of a person 7 times before they will start to recognize your brand! So even if someone loved my deal it wouldn’t mean they will buy in that moment. So you have to get in front of as many people as you can, as often as you can. I have to ask: How on EARTH could I get 100 sales out of several hundred buyers? A couple is 2, several hundred is 3 or 4?? That would mean I would have at least a 3rd of people buying from me which is an UNREASONABLE expectations.
I truly feel mislead by the Heartsy staff, and used. I understand business, and if you help me I will help you. They were getting me in front of a new audience so I promoted their VIP program (how they make their money) to over 10,000 people!! And in the end it was pure confusion on the details of the deal, they definitely mislead me, and did NOT try to make it right. The last offer to fix this was they would extend my VIP exclusive deal through Sunday for a 3rd day. I can’t see how that will be beneficial at all, since the VIP’s have seen my deal now for 48 hours, that last 24 hours wasn’t going to really make a difference.
To top it all off, they are supposed to send out a newsletter to all their buyers/subscribers to tell them of the daily deals. The newsletter wasn’t received until 4pm the day of my deal, 8 hours into my deal!! I had a boatload of convo’s to field of people wanting my deal but couldn’t get it without signing up for a 7.99 a month fee to be a VIP. They were VERY upset with me, felt I had falsely advertised. They couldn’t get my deal for $16 dollars, they would actually have to spend almost 24 dollars, AND the 7.99 is a recurring monthly fee. So they weren’t actually getting a deal on my items. It was a nightmare for me personal and for my business. Ultimately I sold 19 vouchers, several of which were very good friends that were just trying to support me. THANK YOU
Clearly I didn’t even get the low goal of 50 and definitely didn’t reach the 100 sales they said I could get. Eventually the person I dealt with told me they have close to 1000 VIP members, not several hundred. I don’t know what to believe since everything changes so often with them. And if you go to their site it states, first 100 VIP’s get 7.99 per month, after that the fee goes to 14.99. That statement would lead me to believe they definitely don’t have 1000 VIP’s.
I eventually got in touch with Heartsy staff to complain about my experience and they finally offered to give me a NEW deal without having to re-submit my shop. But they want 70% off now! And they want me to give vouchers for over 40 dollars worth of merchandise. They now require that you offer at least $10 dollars more to VIP’s and then all users get a deal too but it is for a minimum of 10 dollars less.
Meaning I would offer $19 for $44 to VIP’s… and $19 for $33 to everyone else. When I explained that I can’t offer more than wholesale pricing, I was “taught” about marketing. And told I need to think about what it is worth to me to have new customers! I was then told that big businesses spend millions on marketing because they know it will result in new customers!
And to that I want to warn you all to NOT fall for this logic. Big Businesses have a VERY different business model from a small business and for that matter small businesses clearly have a MUCH smaller advertising budget. AND that the millions spent are on well researched ideas, and psychology to ensure results. It is a very poor comparison to put a million dollar campaign against a discount website.
Businesses are about PROFIT, making money… not about taking a loss.
THE BOTTOMLINE: Do your research. This is a coupon/discount site, so their target market is frugal shoppers. Not meant in a negative way, just that these are people truly looking for a deal… what does that mean for you? They are not big spenders. I have looked at the current deals and past deal, then I go into those Etsy shops and go through their sold items. You can get a very good idea of their sales. Many have HUGE sales, like 100 items sold. (Of course they had deals open to all users too.) BUT the BIG thing I noticed is that they are mostly low priced items that have these huge sales.
These shoppers are not spending large sums of money. They are taking the deals that are around $10 dollars or less for vouchers. Some of the shops that are bath and body had HUGE sales but for 10 or 12 dollars you can get 1-3 items so the sales look big but they aren’t spending much money. And for me personally out of my 19 vouchers sold NONE bought over the voucher amount. 2-3 owed me a dollar or two for the shipping cost, but no one bought over the 36 dollar voucher amount of merchandise!! NO ONE.
So basically 19 people spent 16 dollars. That was it, not a single one spent more actually all but like 3 have a 2-3 dollar store credit with me now! I know quite a few people that had Heartsy deals and they said many of their buyers spent over the voucher amounts, I can’t speak for them… but from my experience they did not.
And as you can tell it was not a smooth transaction.
Make sure you are pricing retail before offering discounts like this, and if you have higher priced items it is more unlikely to have a huge surge of sales.
Sellers beware :(
I hope this helps put some of the inner workings from Heartsy in perspective.
Thanks
Janet
http://www.galla15.etsy.com/
http://www.trinketsnwhatnots.com/
http://www.galla15whatnots.etsy.com/ - beading supplies
http://www.artisansbooklounge.etsy.com/ - Crafting and Business books/ebooks
