146: The Fall of Jane.com - The Danger of Using an Online Marketplace

Have you heard of Jane.com? Their sudden shutdown has left small business owners scrambling. What happened? Will their sellers get paid? And how do you prevent being in a situation like this? We're going to talk about all of it on this episode. Come join me. Welcome to the Launch Your Box podcast with weekly tips, tricks, and strategies to start, launch, and grow your subscription box. And now here's your host, Sarah Williams. Welcome back to the Launch Your Box podcast. Today I want to talk about the fall of Jane.com and the danger that it poses on us using third-party marketplaces. So let me tell you what's happening. First of all, this story has been going on in the news for the last couple of weeks and maybe even months. and it's caught my attention. I've been seeing news articles about it, I've been seeing interviews about it, and I've really dug into what happened, and I want to talk about it because I really feel like this is something that affects all of us. This affects us as a small business owner, this affects us regarding what platform that we're using, this affects us in so many ways that I want to talk about what has happened and how it relates to us and what we need to do to safeguard ourselves in situations like this. So basically what I'm talking about is the fall of Jane.com. Now, if you don't know what Jane.com is, it's an online boutique-style marketplace. It connects buyers with sellers that offer boutique-style products. I'm talking about t-shirts, gift items, home decor, all that kind of gifty stuff. If you think about jane.com, I would relate it very heavily to my retail store, my e-commerce store, the things that I would sell, you would find on jane.com. Okay. It was founded in 2011 by a husband and wife, and it has gained popularity over the years for its daily deals and the variety of items that includes it. We're talking clothing, accessories, home decor, gifts, those kinds of things. The platform has been known to feature small businesses and independent sellers, allowing them to capitalize on Jane.com's audience and reach. Okay, so it was basically this selling platform that had a built-in audience for you, and if you got approved and you were— you created a daily deal, like, you could sell your goods on there and you could capitalize on their audience and their reach. Okay, it was, it was fabulous. Here's how it worked. Sellers would apply to be a vendor and they had to meet some requirements. Okay, so the requirements for them was you had to have an active website, you had to have proven sales for a minimum of like 3 months, you had to be a unique vendor, and you had to provide samples and pictures of your products. So you couldn't just be like everybody out there, you had to be unique. The other kicker was you have to have a minimum of 100 pieces on hand per item that you want to sell on Jane.com, or 50 pieces on hand if it was a handmade item. Now, sellers got to set their own shipping price, and they were expected to pack and deliver an item within 6 days of purchase. So that really meant that if I was a Jane.com seller and I wanted to sell, say, this tumbler that I have sitting next to me on my desk, I had to have a minimum of 100 pieces on hand ready to go. Now, I don't know if that would— if I would sell 100 or not, but in order to be on Jane, I had to have a minimum of 100. So I have an investment that I have to make. I have to have this product on hand because I have to package, ship, and deliver within 6 days. Of someone buying this product. Okay, so you can already see how this works. Now, Jane.com would collect payment from the customer for you, so it was all done on their platform, and they would keep 20 to 25% of your sales, and they would distribute the remaining funds to the seller. All right, Jane.com has tens of thousands of sellers, okay? They are not lacking in having sellers. That's what makes this website so popular is because there was already always a good variety of products because there were so many different sellers that had been approved as sellers for jane.com. So every 3 days, jane.com would have a 72-hour flash sale. So they would send out emails, they would do marketing promotions All of that would go out and vendors would sell hundreds of thousands of products in these 72 hours. I don't know if you've ever purchased anything from jane.com, but I did when my kids were little. I used to purchase some things on there, some kids' stuff. And so they would have like a flash deal. So it'd be a heavily discounted item. So if we're talking about, say, a t-shirt, it may have been like $25, now $12.99. So there's always these deals that you were buying in, and that's what made jane.com so popular is that it was like You got things for really good deals, and in your mind, you're supporting these small businesses across the country. And it was a great marketplace because there was a wide variety of items you could choose from every 3 days. Okay, so basically, if I was a Jane.com seller, I didn't have to build an audience. I could use Jane.com's audience, and all I really had to do was provide product at a great price and deliver it in the timeframe. So this, this feels like a win, especially for small businesses, because we know how hard it is to build an audience. And here you have somebody like Jane.com who had millions of followers. They had a giant email list. Like, all they had to— all I had to do was create the product, push it out there, and just fulfill. That's all I had to do. I didn't have to market my things. I didn't have to pay for ads. I didn't have to build my own audience. I didn't have to do any of that. So here's what happened. On November 17th, 2023, Jane.com website abruptly shut down. And when you pulled up the website, it said the site is down for maintenance. And at the time, on November 17th, that, that site went down, it owed sellers over $10 million in payouts. Thousands of sellers are not only owed money for selling and fulfilling their products on Jane.com, but they had also heavily stocked up on inventory for their Jane.com marketing promotions for the holiday season. This is November 17th when this happens. It's right before Black Friday weekend. So everything that they know, their entire business, if they were solely reliant on Jane.com, just got shut down the week before Black Friday. And here's the thing, there had been signs of trouble, but a company doing $250 million a year, nobody would have guessed that it would come to such an abrupt end. I read an NBC News article and it said that sellers started receiving payouts inconsistently. This was the kind of the first signs of trouble. Okay. They were receiving their payments every business day, kind of like if you're on Shopify or if you're on Stripe, like we get payouts every day, every business day we're getting a payout from what we sell. That's exactly how Jane.com was operating. They were getting a payout. Every business day, and then there was a period where it would be every 3 days, and then it went to like every 5 days, and then it went to once a week, and then it went to several weeks. And even when it got to several weeks, they weren't getting their full payout amount. And when some of these sellers questioned Jane.com about, hey, what's going on with my payouts? They're not come in consistently. I'm getting concerned. I need my money. Jane.com employees told them there's an issue with our payouts because we have an employee on leave. That seems implausible, right? Like, that seems impossible to me that a company doing $250 million in a year, their payouts are reliant on one person. One that should be automated, two, that should be a team of people doing payouts and auditing payouts. That was never, never probably was one person's job. So for that to be the answer, it started to question, you know, a lot of the sellers started to question things. And as weeks and months went by, some of the larger sellers, they started to pull their products off of jane.com. They're like, you know what, something weird is happening, I'm gonna pull my products off of jane.com. But those sellers that solely relied on its marketing channels, they had no choice but to stick it out. They didn't have an audience to sell to, they didn't have a following to sell to. They didn't have the platform to put their products somewhere else and sell them through their own website. They didn't have that. They were solely relying on Jane.com, and unfortunately now they may not ever get paid for their products or services at this point, and they have probably fulfilled hundreds, if not thousands, of orders that they may never get payment for. There were also a lot of orders that had been ordered and not shipped when this happened, so there's a dilemma now as the business owner. A customer of jane.com has purchased your items. What do you do? Do you go ahead and ship them? The customer has paid for them. Or do you not ship them? Because, you know, you may never get paid for them. So there was this limbo that was happening over that time period. They had also started letting employees go weeks before November 17th. So it was starting to implode and nobody knows the full truth about what was happening. But the speculation is that, you know, any of these marketplaces that are taking the money for you, It's their cash flow. Your money is their cash flow. They're just bankrolling their overhead, their employees, their wages, everything that they— they're bankrolling it with your money. When a business is strong and there's a lot of cash flow coming in, there's never an issue. They're bankrolling their overhead and they're also able to pay, you know, their sellers. So that's how it works. But what happens when their payroll their overhead, their salaries start outweighing how much the sellers are bringing in. Did they get too big for their britches? I read one article that I read said that someone was on salary for $350,000 a year and never stepped foot in their offices, never worked for Jane.com ever. He was on payroll. So were their expenses, was their overhead out of control? And at what point were they not able to meet their overhead expenses? So they got to pay their salaries, they got to pay their rent for their buildings. And the sellers are usually the last people to get paid. And that's why the payments started to slow down. And now, unfortunately, thousands of sellers, some are owed over $100,000 from Jane.com, may never get paid for the products that they purchased they packed, they shipped, they delivered their time, their service, their product. They may never get paid for those. I hope they do. I hope there's some asset liquidation, but who knows how much is owed to the IRS or to other entities before the sellers may ever get a piece of that. So why am I talking about this? I'm talking about it because any one of us could have been one of the Jane.com sellers. And maybe there's someone listening to this podcast right now that was a seller on Jane.com that is owed money. And I hope if that person's listening that they're not— that they weren't solely reliant on Jane.com's platform. I'm talking about this because there's 3 things that we can do to ensure that no matter what happens, we're not losing our business. Okay, so number 1, we have to own our audiences. We have to own our audiences. It's not easy. It is difficult. It takes time. It costs money. But we have to own our audiences and not rely solely on a third-party marketplace to bring us traffic and sales. It's great if that's one of our revenue streams and we can capitalize on a platform like Jane.com that could bring us sales, that could bring us traffic, that could bring us new customers. But if we don't own our audiences and we are solely relying on a third-party marketplace, that's a problem. That could be Etsy, that could be Cratejoy, That could be any of these marketplaces. If that is the only place, if that's the only platform you have as a small business owner, you are setting yourself up to be in the same position that all these Jane.com sellers are. You don't own that audience. You don't own that platform. You're borrowing it every day. So what we have to focus on is number 1, building our following on social media, and number 2, building our list. Do you think if I was a Jane.com seller and I was new into business and I had a little bit of sales to get my qualifications to be on Jane.com, but if I would show up on Jane.com and I would sell 2,000 t-shirts every time that I did a 72-hour sale on Jane.com, that I would even think that I need to go build my audience on my own platform? No, it's too easy. Jane.com made it too easy for small businesses not to build their own platforms. And the same way that they gave it, they took it away. The abrupt manner that they got sales from Jane.com is the same way they ended it. We can't put our future in other people's hands. That's why we're entrepreneurs. Because we want our future in our own hands. That is one of the main reasons that I became an entrepreneur. I didn't dream about this when I was a kid. I didn't go to college for this. But you know what happened over the last, the 10 years prior to me starting my business? I was laid off of 3 jobs because of the economy. One by one, laid off. Store closing, chain closing. Shutting down 500 stores. And every time that happened, it made me realize how much I don't want to rely on someone else for my future. And that's a huge part of why we're entrepreneurs. So why would we then turn around and use a platform like this where we're solely dependent on them for everything? We have to own our audiences. We have to consistently build our following and build our email list. Every month, all year long, 24/7. Can we use a third-party marketplace? Absolutely. As an additional stream of revenue, not our sole stream of revenue. Number 2, we need to ensure we are diversifying our reach with a multi-channel marketing plan. These sellers that were solely on Jane.com and relied solely on their traffic and reach didn't have any other options when it all went away. They weren't diversified. They had all their eggs in one basket, and that basket fell, fell hard. How will you reach your customers? How will you drive traffic to your website? How can you make sure if one platform goes down, you have built another to continue your business without skipping a beat? Think about social media. How many of you are just on one platform right now? Maybe Facebook, maybe Instagram. Guess what? Facebook and Instagram are owned by Meta. If one goes down, I'm pretty sure the other one's going to go down too. Are you diversified outside of Facebook and Instagram? Are you on YouTube? Are you on TikTok? Are you on Pinterest? You have to diversify that. If Facebook— if Meta went down right now, how would you reach your customers? How would you market your things? Would you have to start a new platform completely from scratch? If the answer is yes, like, why don't we start it now? Why don't we start it now? Take the content that you're already using for those meta platforms and put it on a different platform. Put it on Pinterest, put it on TikTok, put it on YouTube. Start building an audience elsewhere. I want you to think about your email CRM. You've been building your list. You're like, yep, Sarah, I own my customers, I got an email list. What happens if one day Klaviyo, which is my CRM, say Klaviyo shuts down, we all log in and it says website down under maintenance, and Klaviyo no longer exists? They went bankrupt, all their employees have been laid off, they have nobody to run Klaviyo. What happens to our list? Have you been backing up your list regularly? Every month I save my list into my Dropbox. Every month I do a pull of my active subscribers and I save it in a Dropbox. Because what happens if I lose my email CRM? I don't own Klaviyo. I don't own that platform. I own that list. But if only— if you only have that list inside Klaviyo or inside Mailchimp or inside Constant Contact and that platform goes down or goes under, how are you going to get that list back? How are you going to get it back? You don't own it. That's your asset. We have to put those in the safe. It's our asset. If you're using a marketplace, make sure you also have your own website. If you're using something like Cratejoy, if you're on Etsy, make sure you have your own website because if that gets shut down, How are people going to be able to buy from you? How are you going to create revenue? How are you going to create income for yourself? Number 3 is build your business with recurring revenue streams. When something happens that throws off your day-to-day business, you can always count on your recurring revenue. I saw this in 2020. My brick and mortar was a huge source of my monthly income, and when it got shut down, very similar to the way jane.com got shut down because COVID came in and shut it down. I had recurring revenue. If these jane.com sellers had a subscription box or a membership, they could fall back on that. Make sure you're building a business with recurring revenue so that if something happens, if something changes, if something drastically is different, you have recurring revenue in your business. I'm talking about this because we can't take shortcuts in business. Yes, we can benefit from a platform with an audience that's already built. Absolutely we can, but we cannot skip the work of building our own audiences ourselves. You have control of your business. We talked about this on a few episodes ago. It's episode 144, but your actions, the way you do things, you have direct control of your traffic and your sales and your conversions. And when you give up your power and you give up your control to someone else, that's where the issue comes in. That's where these sellers are in big trouble because they have a whole lot of inventory and they don't have anyone to sell it to. They were reliant on Jane.com's platform, on their audience, on their reach. Those businesses that had built their own audience and was using Jane.com as an additional revenue stream, those were the ones pulling out when they saw signs of trouble because they knew they could sell it on their own. They knew they could pay themselves. They knew that they weren't going to have to rely on anybody else to give them a paycheck. The same way I felt when I got laid off the first time. I worked for a book, music, and video store, and Netflix was on the rise. The second time I got laid off, I realized that I don't have control of my future. I worked so hard on the second company to get to a level that I didn't think I was going to achieve, and it was all taken away from me in a matter of weeks. I worked so hard for each one of those promotions in that company. To get to the level that I was at. I was making a large salary. I was loving every minute of it. And, and overnight that changed when the company went bankrupt. And here I was for the second time laid off and now wondering what I was going to do. We have control over our businesses and we need to take control. And that's why I'm talking about this topic today. Because I want to make sure that you own your audience, you're focused on building your following and building your list every single month of the year. I want to make sure that you're implementing a multi-channel marketing plan, you're safeguarding your email assets regularly, you're diversifying your platforms—social media, software, website—all of that. It's okay to use a marketplace like Jane.com, but you got— you can't have all your eggs in one basket. And I want you to be building your business with recurring revenue streams. There is nothing going to stabilize your product-based business more than recurring revenue streams. And if you can just listen to those 3 things, you'll have control of your business for the long term. It's not a short-term get-rich-quick scheme. It's a long-term play for us. We're building long, sustainable businesses that will pay us well going forward. Think about it and go back and listen to episode 144 if you haven't yet. We're talking about what's working now, and what's working is you taking control of your business. I'll be back next week for another episode. Make sure you subscribe to the Launch Your Box podcast. I'd love for you to take a minute to rate and review it. Let me know which episode is your favorite so far. Don't forget to join me next week right here.