Stitch Labs inventory reportStitch Labs, provider of an inventory management service for small retailers, has integrated its service with online craft marketplace Etsy.

You might not think that the people who make crocheted pot holders and carved wooden iPhone docks have inventory management issues, but a significant number of people who sell on Etsy actually make hundreds if not thousands of items a year, selling them not only through Etsy but also in craft fairs, through wholesale channels and consignment shops.

“It’s unbelievable how much carbon paper floats around,” said Stitch co-founder and “thinker upper” Brandon Levey, referring to the carbon-copy slips still used for credit card transactions at craft fairs and trade shows.

With a bunch of old technologies and a variety of different sales channels, keeping track of the inventory gets to be a pain. If someone places an order for a forest green knitted hemp tea cozy through Etsy, how do you know if you have enough additional tea cozies to re-list the item on the site?

Stitch’s solution is a slick, web-based “cloud” app that can tell you how much you’ve sold, which channels are working best, how much money you’re making and whether you need to start knitting to replenish your stock (see screenshot above). It can also email invoices to customers and automatically create packing slips. Now, with the Etsy integration, it logs sales directly from Etsy — and can automatically repost the listing if you have items left in stock.

The interface gives small business owners a dashboard similar to the sophisticated enterprise resource planning (ERP) systems used by big companies.

It’s aimed at people who have significant but not gigantic operations, with 1-4 people and under $500,000 in annual revenues. For example, one Stitch customer, Girls Can Tell, currently has 152 separate product listings on Etsy, representing about 20 percent of the company’s total sales.

“We’re the first thing you log into in the morning and the last thing you look at at night,” Levey said.

Levey, knows the problem intimately. He used to run a small clothing line, Naked Cotton, on the side (his day job at the time was at Sandia National Laboratory, helping ensure the security of the nation’s nuclear stockpile). As his business grew, his garage filled up with cardboard boxes loaded with T-shirts in various sizes. Invariably, there’d be too many of the sizes that people didn’t want (like smalls) because he wasn’t good at predicting demand, and it was hard to know how many of each size were lurking in the garage.

Later, Levey made bendable paper iPhone stands under the brand name iBend, ultimately selling more than 100,000 for $3-6 apiece.

“We did really well on the mommy blogs,” Levey said.

After attempting to use Google Spreadsheets to track inventory (“that became obsolete in two minutes”), Levey and business partner Jake Gasaway started building what would become Stitch.

Stitch Labs, based in San Francisco, has 3 employees and about 120 customers. It has raised a “friends and family” round of funding, and has just started looking for institutional funding.

Stitch Labs team

Above: The Stich Labs team, left to right: Andrew Lassetter (intern), Michelle Laham (co-founder/creative design lead), Brandon Levey (founder, thinker upper), Jake Gasaway (co-founder/director of business development), Willo O'Brien (marketing and social expert).

Photo courtesy Stitch Labs.

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