Amazon crochets itself a rival to Etsy: Handmade
Amazon already sells tens of millions of products. Why not a handmade, reclaimed-wood coffee table that doubles as a wine rack?
With that in mind, the Seattle-based company on Thursday launched Handmade at Amazon, a specialized storefront that promotes only handcrafted goods and the artisans that create them. The program will start with over 5,000 artists — most from the US — and more than 80,000 listings of artwork, jewelry and other items. Handmade will only be available on the main Amazon.com site.
“We’re entering this space because our customers have told us that they want it,” said April Lane, Amazon’s category leader for Handmade. “We get thousands of searches every day for handmade items.”
That means that along with Amazon’s typical fare of Legos, Blu-ray discs and diapers, customers will now be able to shop for beaded bracelets from Ghana and art prints from Austin.
Handmade serves as yet another example of Amazon’s outsized ambitions to be the everything store for everybody. The company already sells millions of mass-produced products, and it’s started to focus on niche areas so it can keep expanding its inventory. The world’s largest e-commerce company by sales already came out with two other online stores this year, Amazon Launchpad and Amazon Exclusives, which both highlight products from small, but up-and-coming companies. Not satisfied with just selling products, it is also expanding into services, including its Home Services marketplace for hiring a plumber or painter.
Amazon’s push into handmade items creates a major headache for Etsy, a much smaller e-commerce marketplace focused on artists’ wares. Etsy’s stock has been in decline since it went public in April, as the company has been accused of failing to control counterfeit sales on its site. Amazon’s move into Etsy’s core business, which was first reported in May, has pushed down the Brooklyn, New York, company’s shares even further.
Amazon has already been aggressively courting Etsy sellers, who should benefit from Amazon’s roughly 280 active shoppers, more than 10 times the size of Etsy’s 21 million active buyers.
Many Etsy artists have been frustrated with the company due to the counterfeiting issue and its move to allow sellers to start mass-producing items, said Wedbush analyst Gil Luria. Yet, these artists didn’t have a sizable online alternative.
“That all changes with Handmade at Amazon,” Luria said. “For Etsy, this is a big problem.”
For its part, Etsy argues that it’s spent 10 years developing tools for artists to grow their businesses, including educational resources, a wholesale service to connect sellers to boutiques and information on craft fairs. In a July report, the company said only about 0.5 percent of all its listings were affected by intellectual property takedown notices and it dedicates “substantial resources” to dealing with site violations.
Amazon plans to be more restrictive with which sellers it lets into Handmade, which may help it avoid the same counterfeiting allegations.
“We believe we are the best platform for creative entrepreneurs, empowering them to succeed on their own terms,” Etsy CEO Chad Dickerson said in a statement. “Etsy has a decade of experience understanding the needs of artists and sellers and supporting them in ways that no other marketplace can.”
A new place for artists
Those artists include Los Angeles-based artist Michael Graham, a former high school science teacher who makes furniture such as credenzas and coffee tables out of reclaimed wooden grape boxes.
Graham, 41, has been selling items on Etsy for the past two years, but jumped at the chance to join Handmade so he could put his wares in front of one of the largest buying audiences in the world.
“Many people haven’t heard of Etsy, but everyone’s heard of Amazon,” Graham said. “I think it’s going to be a game-changer.”
Amazon’s roughly 15 percent commission (after a one-year 12 percent promotion rate) is substantially higher than Etsy’s 3.5 percent cut, but Graham said it was worth it to reach Amazon’s larger customer base.
Darla Garfield, 37, who makes jewelry from her dining table in New Plymouth, Idaho, under the store name Sheekydoodle, was also excited to bring her goods to Amazon.
“I love the handmade idea, and just strictly handmade,” she said. “That’s what made Etsy beautiful when I joined five years ago.”
Despite their complaints about the site, both artists plan to continue selling on Etsy.
While Etsy’s business has been growing fast, the company only brought in $196 million in revenue last year. That amount is tiny for Amazon, which reported sales of $89 billion last year.
But Amazon’s marketplace business, which lets third-party retailers sell on its site for a commission, has become a major profit engine for the company, Wedbush’s Luria said. So any way Amazon can grow that business will benefit its bottom line.
Even though Amazon is often perceived as the big bad wolf in e-retail, Luria said he doesn’t expect any backlash from the artist community over Handmade.
“Not only will sellers accept this with open arms,” he said, “but so will buyers.”
Amazon’s Lane said her company started Handmade with just six categories: home, jewelry, artwork, stationery and party supplies, kitchen and dining, and baby. The most immediate goal will be to expand into more categories as quickly as possible, she said.
“The artisan response has been great,” Lane added, “so we’re excited to see how customers respond.”
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