Etsy Sellers Push Congress to Defend Tiny Businesses

Special interests run capitol hill, and most people agree that's a bad thing. But what if those special interests are knitting and decoupage?

We all know that special interests run Capitol Hill, and most people agree that's a bad thing. But what if those special interests are knitting and decoupage?

This week, Etsy sellers are heading to Washington to talk with members of Congress about the unique issues that affect so-called "micro-businesses" like their own. These are businesses which, like most Etsy stores, are often run by sole proprietors or have a handful of employees. Etsy's public policy director Althea Erickson, and the 14 sellers making the trip to Washington with her, hope to make Congress understand why these tiny businesses should be regulated differently than their small and mid-sized counterparts.

"We see the Etsy community as a really important force, and our voices need to be amplified in D.C., so rather than hiring an army of Washington lobbyists, we’re devoting our resources toward getting our sellers to speak for themselves," Erickson said.

The trip to Washington coincides with the release of Etsy's second annual report on its seller community, which was released today. Based on a survey of more than 4,000 Etsy sellers, it paints a picture of who they are and how much of their income depends on Etsy. The report also makes some policy recommendations intended to ease the biggest pain points these sellers face. In sharp contrast to recent accusations that Etsy has alienated small crafters in favor of mass manufactured items, the the report indicates that around 30 percent of sellers (the majority of whom are women) say that Etsy is their sole occupation, and around 88 percent of them run their shops alone. About 17 percent of them reported annual household income of less than $25,000. To start their businesses, only 1 percent of Etsy sellers take out a loan.

For Erickson, these results are a clear sign that micro-businesses face a markedly different set of challenges than other businesses do. "The economy is shifting toward self-employment, and there are more micro-businesses in the world, but many don't have the infrastructure to advocate for themselves in Congress," she says. "We see an exciting role for Etsy to play in bringing those people together." It's clear from Erickson that Etsy is trying to position itself less as a lobbyist for its own company and more as the collective bargainer for the group it represents.

Etsy has a number of policy recommendations to make in its meetings with Congress this week. The sellers will address tax issues, for starters, and voice their objection to the proposed Remote Transaction Parity Act, which would require online sellers to pay taxes in every state where their goods are sold, not only the states where they have a presence. The group will also ask lawmakers to place a so-called Micro-Advocate in government agencies, who can help walk these tiny businesses through the thorny regulatory space.

On the trade front, Etsy is asking Congress to increase the value under which U.S. goods sold overseas are exempt from customs and duties. Today, this de minimis customs exemption, as it's called, sits at $200, but Etsy wants it raised to $800. Meanwhile, the company is also asking lawmakers who negotiate trade agreements with other countries to push for a universal customs exemption rate, which would streamline the process for business owners.

"Many of our sellers are selling to buyers all around the world," Erickson says. "It’s about how do you facilitate peer-to-peer trade across borders when you're shipping one good from one person to another?"

Etsy's final order of business in D.C. is one that both giant businesses and micro-businesses are pushing for: net neutrality. In particular, Etsy wants to see the FCC's Open Internet Order preserved. The company is also advocating against so-called zero-rating, in which Internet providers offer users free data plans when they access certain apps, a practice which venture capitalist Fred Wilson has also denounced as detrimental to small businesses.

"We think that the Internet has really democratized access to entrepreneurship, and it has allowed our sellers to compete with much bigger companies based on the quality of their products, not the size of their pockets," Erickson says. "For us, this is an issue of protecting the internet as a platform that enables micro-businesses to start and grow."