CafePress, the world’s leading print-on-demand service, announced a major change yesterday that will have a huge negative impact on its huge community shopkeepers that manage over 6 million shops.
Since 1999, people can upload their designs on CafePress and sell them on t-shirts, stickers, buttons and many other products. The designer determines the price of the product and thus the commission they will earn when the product sells. When someone orders one of your products, CafePress will kick into gear by printing your design and sending it to the customer. The shopkeeper gets the commission. CafePress also has a marketplace where everyone’s designs can be found (if opted in). For many shopkeepers most of their sales come through the marketplace, as CafePress spends a lot of money on advertising and their pages rank very high in search engines.
What CafePress announced yesterday that is making everyone very mad is that they will fix all prices in their marketplace and give shopkeepers only 10% of the final retail price. 10% is very low, as some shopkeepers have markups of as high as 30% to 40% to make a living. If in the past a t-shirt had a base price of $15 and the shopkeeper decided to have a $5 markup the t-shirt will sell for $20 and the shopkeeper will get $5. In the new scheme CafePress will be able to determine the retail price of all products in their marketplace and give the shopkeeper only 10%. So if they decide to sell the t-shirt for $18, the shopkeeper will get only $1.80. That is a huge cut in earnings.
In the summer of 2008, CafePress already made some unpopular changes to their volume bonus scheme that resulted in shopkeepers’ income to drop 20% to 30%. As a result of that change some shopkeepers already left CafePress and moved their designs to other print-on-demand sites, like Zazzle or Skreened. This week’s announced change will cut another 50% to 80% off people’s income. This has hundreds of people enraged on CafePress’ forums.
Many shopkeepers have built up a business on CafePress that allowed them to quit their day jobs and work on CafePress full-time. A lot of these people will now be forced to find other jobs in a time when jobs are scarce. There are also people who have managed to make a living off CafePress because their illness prevented them from working out of the house. They are also screwed. Others were laid off from their job and are using CafePress to make some extra money. Thousands of others are relying on CafePress to supplement their income besides their other job(s). For all these people their CafePress income pays for their mortgage, bills and children’s educations. A sudden cute of 50% to 80% in income is outrageous.
There are countless charity shops on CafePress run by people that donate some of their earnings to charity. For instance someone may sell a $2 bumper sticker for $15 and donate $13 to a cancer charity. In this new scheme CafePress may only sell the bumper sticker for $3 and the shopkeeper gets $0.30. This will result in charities getting a lot less money.
It is not only an immoral and greedy business decision, it also doesn’t make any sense from every other perspective. CafePress’ entire community is built on the premise that shopkeepers own their own designs and can determine the markup. Some people just put simple text on their t-shirts and sell them with a low markup. Other designers get expensive graphics software, buy fonts and spend hours or days to make an elaborate design. It makes no sense whatsoever to fix prices on all these designs and to lower people’s markup to 10%.
CafePress argues that shopkeepers can still determine pricing in their own stores, but how can shopkeepers compete with lower prices in the CafePress marketplace, which ranks much higher in Google. CafePress argues that “the traffic in the CafePress Marketplace is a different from the traffic Shopkeepers drive to their shops and buyers rarely jump from one to the other,” but buyers will soon figure out that if they see something they want to buy in a CafePress shop all they have to do is go to the CafePress marketplace and get it cheaper.
Even affiliates make 15% on every sale they send to CafePress. What this means is that the person who created the design and owns the copyright and spent time making the design with his own software and wrote the SEO description and keywords will now get only 10% for a sale, while an affiliate who only made a link to the design from his site will get 15%.
If CP is smart they will revert this planned change. Many big shopkeepers, who work on CafePress full-time and depend on the income to pay their bills cannot afford the 50% to 80% pay cut. CafePress’ announcement yesterday was the equivalent of laying off thousands of people. Many of these successful shopkeepers have already announced that they will close their CP stores and move to other PODs like Zazzle. If CP goes ahead with this change it will be the end of CafePress.