Merchant Innovation

Etsy Feeling The Amazon Handmade Pain

Amazon’s foray into handmade goods has continued to spell bad news for the original craft-commerce gangsters over at Etsy since it launched about a month ago.

Etsy’s stock has taken a 14 percent hit since November, largely attributed to Amazon Handmade. Interestingly, this does not seem to be related to a dip in activity on the site — quite the opposite, Etsy reported both an increase in revenue and profit during Q3.

A good result, however, does not seem to have persuaded investors that Etsy is the little engine that can against Amazon’s powerful eCommerce machine in the long-term scope.

And Amazon has not been subtle in targeting Etsy. The New York Times reports that Amazon spent months pre-launch trying to woo Etsy merchants with its large scale and big access to a huge consumer base.

“Amazon has all the capabilities they need to make their program a big success. They have all the marketing power in the world, and they’re already so global,” Dani Marie, chief executive of Handmade Seller magazine told The Times.

Etsy however, is not exactly totally ill-equipped to compete; it is a rather well-run marketplace. The firm posted a gross profit for the third quarter of $41.5 million, up 40.7 percent from the same time last year. Etsy also reports 1.5 million active sellers and 22.6 million active buyers year-to-date.

But next to Amazon’s numbers — 200 million active customers (and a number of Prime Members that only Jeff Bezos and God know) — those figures look pretty small.

In the end, it may all come down to price and where merchants get the best one. Etsy charges $0.20 for each item a seller lists on its site and takes 3.5% of any sales. Amazon is letting people list for free is but is also taking 12 percent of sales. That can be a big figure — and perhaps not one all that tempting to small artisans working on small margins.

The verdict?

Though having to take on Amazon directly is not good news for Etsy, they might not be quite as marked for doom as investors seem to think.

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