Jane.Com Shutdown Cautionary Tale For Marketplace Sellers
Sudden shuttering of Jane.com leaves sellers holding the bag in cautionary tale about the importance of diversification for all ecommerce entrepreneurs.
The female focused marketplace shut down just before Black Friday with no warning and millions of dollars still owed to sellers.
Marley Jay
Hundreds of sellers on the e-commerce platform Jane.com, which targeted female consumers and helped small businesses make millions, were getting ready for the Black Friday shopping rush when the site suddenly shut down on Nov. 17.
Now, sellers say they are owed tens of thousands of dollars and have no clear path to recover it. Some had spent thousands of dollars getting ready to handle a surge of orders.
In total, Jane’s sellers are owed $10.1 million in sales, according to documents signed by Jane’s last CEO and published by DSI Assignments, a company that helps businesses liquidate their assets to repay creditors as an alternative to bankruptcy. Those documents show that 13 sellers are owed more than $100,000 apiece.
The end of the Utah-based platform left many sellers feeling betrayed. They had used Jane for years to list products, and some made millions and grew small businesses over the website’s 12-year run.
Sellers on the Sellers Ask Sellers forum are discussing the news along with lessons from the failure that may apply to doing business on marketplaces as well.
papy
One issue I’m seeing here is sellers are basically unsecured creditors to the platform. And this goes for every marketplace. The funds aren’t being held in an escrow account for the sellers when the marketplace collects it. If Amazon went bankrupt sellers would be waiting for a year for it to play out in bankruptcy court to see how much, if anything, they’ll get paid on their owed balances.
It SHOULD be set up in a way where seller funds go into a segregated account, and unless there’s cause to revoke those funds (buyer complaints that the seller’s a fraud), the marketplace shouldn’t be able to use those funds for business purposes, and those funds should also be protected from other creditors.
Some considerations if one of your platforms is suddenly shut down:
- How/can you contact your current customers?
- How can you capture orders due and perhaps make other payment arrangements (after they cancel pending payment to the platform)? Some jane sellers are using their ShipStation integration to do this.
- Where can you quickly redirect shoppers and customers? Another platform? Your own website? Heck, a phone number? Something professional, with a viewable catalog/menu. (NOT cashapp or venmo.)
- How long can you float your business without platform disbursements?
- How will you pay employees?
- How will you pursue any available funds owed from a company in bankruptcy/disarray?
- How quickly can you pivot to another platform, in the midst of a crisis?
- What resources will you need to lean on?
- How will you manage the impact to your brand that might come with cancelled/delayed orders and/or a platform’s lack of refunds to Buyers?..without badmouthing or begging.
- Will your business be protected from Buyer claims?
Etsy sellers took to reddit, saying this situation is a stark reminder for why sellers should always have a backup plan.
If anyone doubts that you need a selling backup plan, look at what is happening to sellers at Jane.com right now.
by u/-You-know-it- in Etsy
Jane.com was a midsized boutique that served as an advertising and payment website for thousands of individual sellers. Similar to Etsy or Groupon goods. They went out of business overnight and left their sellers holding the bag right before Black Friday. They aren’t forwarding payments to the sellers and many are owed $10k+. On the Reddit “jane sellers” it looks like insiders saw fraud take place and the case is being referred to the FBI by local law enforcement.
What advice would you give to Jane.com sellers and how do you mitigate marketplace risks like this for your ecommerce business? Let us know in the comments below!
