Amazon Gears Up To Rival Etsy

The already struggling Etsy may have some steep competition from a much bigger eCommerce player: Amazon.

Amazon has started approaching some of its merchants to open up its marketplace to take Etsy’s edge away from it by introducing a homemade goods element on its own site. The eCommerce giant is reportedly starting a marketplace called Handmade, which is designed for artisan sellers, according to a recent report from The Wall Street Journal.

“We’re offering artisans like you a first peek at Handmade, a new marketplace for handcrafted goods,” stated an email Amazon sent to artists, which was acquired by WSJ. The email doesn’t provide any indication, however, as to when the new marketplace will roll out and neither Amazon or Etsy provided comment.

The Journal spoke with two merchants currently on Etsy who said they would consider joining Amazon’s marketplace. One merchant said Amazon’s vast audience makes it more appealing than Etsy, and another suggested she would join Amazon to diversify her sales across two marketplaces.

“Amazon has such huge traffic numbers on their website already, it’s pretty appealing,” jewelry-maker Dar Garfield told WSJ. “I am probably going to do it.”

The only hitch for Amazon in attracting sellers could be those who don’t want to be forced to stick to the two-day shipping for Prime members. This was a concern of some Etsy sellers, The Journal reported, since many of those artisans aren’t able to turn their product orders around in such short time frames. But no indication was given by Amazon to the early invited artists what the shipping constraints would be.

This decision by Amazon comes at a particularly tough time for Etsy as its first quarter following its IPO wasn’t a smooth one. The online marketplace missed earnings expectations, sending shares down close to 18 percent on May 19 when it reported its first quarter earnings.

Despite having a gross profit of $37.8 million, Etsy still posted a net loss of $36.6 million for its first quarter earnings. Etsy also posted $58.5 million in revenue, which was a 44 percent growth from the same period the year prior. To help offset this loss, Etsy’s executive team said it plans to increase hiring and marketing efforts to flip its business around.

When Etsy was filing for its IPO in April, analysts were questioning if the $14-$16 a share that valued the company at $1.2 billion was worth it, which leaves the company with a lot to prove as it moves forward in 2015. Still, Etsy has yet to make a profit, citing its high development costs.

At the end of the first quarter, Etsy’s core base included more than 1.4 million active sellers and 20.8 million active buyers. Amazon, however, has an estimated 278 million active accounts.

To check out what else is HOT in the world of payments, click here.