This week, Amazon released growth statistics for one of their newest ventures, Handmade at Amazon. Handmade at Amazon is a service tailored to move in on the small scale, handmade goods market, a market that Etsy has dominated since their inception in 2005. So, is Handmade at Amazon designed to be an ‘Etsy Killer’, or is there room enough for two in this crafty marketplace?
The numbers released by Amazon this week, show that Handmade has undergone steady growth since it’s debut in October of 2015. Mike Miller, head of Handmade at Amazon, reported that traffic to the platform has increased 30% month over month, and that sales have grown 150% month over month. Keep mind, however, that Amazon did not release total sales numbers, as is their custom. Etsy, on the other hand, has posted quarterly losses since 2013. Though their revenue has been strong, showing a consistent upward trend, the high costs that are contributing to these consistent net losses could be giving Etsy’s investors cause for concern.
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As far as the actual services go, Handmade is nowhere near as developed as Etsy. Handmade at Amazon only has six product categories available, though they have said that they’re looking into expanding that number. Handmade also charges its sellers a 12% referral fee, about double what Etsy charges per transaction. The one big advantage that Handmade offers, is that it can extend Amazon Prime shipping to its sellers. To qualify, sellers must use an Amazon fulfillment service, meaning that they store their products in an Amazon warehouse, and Amazon handles their shipping.
The two services also differ in the way they define what is handmade. In the fall of 2015, the same time Handmade at Amazon was released, Etsy loosened it’s standards by allowing it’s sellers to partner with manufacturers. Etsy’s standards for what they will and will not sell are now a bit more nebulous. They depend highly on Etsy’s relationship with the seller, and the seller claiming a certain degree of authorship over the product. Handmade at Amazon has put more rigid standards into effect. Handmade requires that all products be made entirely by hand, hand altered or hand assembled by companies of 20 or fewer employees, or collectives of less than 100. It’s worth bearing in mind that it is relatively easy for Handmade to enforce these rigid standards, because any seller who does not meet them can easily list their products on the general Amazon marketplace.
When it comes down to it, this is a retail space where perceived credibility counts for a lot. Both services have pros and cons in that area. Handmade at Amazon has tighter restrictions on what they’ll consider handmade, but they’re indelibly linked to one of the biggest corporations in the world. Etsy has looser restrictions, but they have a history of being started in an apartment in Brooklyn. Even though it’s a publicly traded business now, that’s still how a lot of people see that company.
Etsy’s Hudson office (click photo to enlarge)
If Amazon makes this service a priority, they have an overwhelming amount of marketing power that they could bring to bear. However, Amazon also has multiple wings of its business, like cloud computing or content creation, which require marketing attention. Also, just because Amazon moves into the marketplace, doesn’t necessarily mean that Etsy gets pushed out. Sellers are free to list their products on both services. The real victors, in this new competition between Amazon and Etsy, may end up being vendors of handmade goods, as they will now have more opportunities to list and sell their wares.
If you want to read more about Amazon’s moves into the handmade market, 1Digital Agency’s CEO, Dan Kogan, was interviewed by the Baltimore Sun about the topic. You can find the article right here.
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