The Scoop
Etsy’s efforts to highlight craftsmanship in a world of cheap, disposable goods is backfiring with artisans who sell on its site.
Last month, the ecommerce company changed how it describes products, retiring its “handmade” and “vintage” labels in favor of descriptors that capture how much actual handiwork went into them — whether they were made, or merely “sourced” or “handpicked” by the merchant.
Etsy says the move will add clarity for shoppers and refocus its brand around bespoke goods, its differentiator in an ecommerce landscape dominated by Amazon and ultracheap Chinese retailers like Temu and Shein. The company is “keeping commerce human,” it says in an accompanying ad campaign.
But some vendors say the new categories appear to reinforce a place for resold goods, which threatens to turn Etsy into an online yard sale or, worse, a hub for drop-shipped Chinese wares. And the rollout has been glitchy: Sellers have flooded Etsy’s sellers’ forum with complaints about mislabeled items that they say lump their crafted pieces alongside resold or mass-produced goods.
Etsy said in a statement to Semafor that it didn’t expand the types of items merchants can sell. However, gift baskets made of commercial items are now allowed, according to its website. That wasn’t the case before the changes in July.
“They’re still claiming it’s all about keeping commerce human but they are basically erasing the word ‘handmade’ from the site and allowing more reselling,” said Cindy Baldassi, who has been selling handmade jewelry on Etsy since 2008.
An Etsy spokesperson said: “We’re just starting to roll out our new labels, and have communicated that we will be working to expand and improve their accuracy in the coming months.”
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With the exception of craft supplies, Etsy explicitly bans drop-shipping — when a seller doesn’t keep inventory on hand, but acts as a middleman between warehouses and shoppers. And, with a few other exclusions, it doesn’t allow vendors to resell commercially available products. (Even this step-by-step guide on drop-shipping on Etsy admits the company makes it hard.) That hasn’t changed.
But its site has scores of products like this $68 necklace that are also available for as little as $2 across Shein, Amazon, and AliExpress. The necklace and others like it are now tagged as “made by” the seller, one of Etsy’s new labels, but one that the company says it wants to reserve for products like hand-poured candles and knit blankets.
Before the change, sellers self-designated their items. While a Shein product might have ended up in the “homemade” category, it would have been the seller’s fault. Now, it’s Etsy’s.
The problem is that Etsy makes its money by taking a small cut of each transaction, and handmade items can’t be made and sold as fast as factory-produced ones can. Flushing out mass-produced items would cost Etsy a significant amount in sales, with one-fourth of listings in some categories like jewelry also appearing on Chinese ecommerce sites, said Richard Kramer, an analyst at Arete Research.
“There would also be a knock-on effect since those sellers tend to rely more heavily on advertising,” a high-margin business, he said. Etsy’s services business, which includes advertising and the sale of shipping labels, has grown every year for a decade, driven by advertising sales. Last year, services accounted for $750 million in revenue, or 27% of Etsy’s total sales.
Sellers question if Etsy’s desire to expunge resold goods from the site is genuine. “I think they allowed this to happen in the background with a few little checks and balances but didn’t really tackle it head on,” said Suzanne Lugthart, who has sold 2,800 pairs of handmade earrings on Etsy.
And despite the company’s latest efforts to highlight handmade products, it is still driving some sellers away.
“A lot of us artisans who put the effort into creating genuine, handcrafted items are getting more and more dismayed at Etsy’s essentially abandonment of what was originally its core objective,” said Jonathan Crone, an Ontario-based woodworker who sells handmade fountain pens for up to $130.
Crone said he’s stopped trying to build up his Etsy shop because his sales slowed, which he partly blames on his listings showing up next to cheaper, resold pens.
Rachyl’s view
Etsy is stuck between pleasing its 7 million merchants — the one group that sets it apart from other ecommerce companies — and pleasing its investors. The company’s sales, which surged during the pandemic as people redecorated (and sought out unique masks), have fallen each of the past two years.
It needs to get that number growing again, which may mean putting up with resellers peddling factory-made products they bought from Shein, marked up, and advertised as homemade.
Room for Disagreement
Etsy has invested in technology to flag blatant violations of its rules around drop-shipping and reselling, and last year removed 3.8 million listings, twice as many as in 2022, according to its transparency report. “They’re doing the right things in the area they can control,” said Evercore analyst Jian Li.