Etsy CEO Doubles Down on Handmade, Fighting Back Against Resellers and E-commerce Giants
Etsy, the online marketplace known for its unique and handcrafted goods, is taking a stand against the rise of generic, mass-produced items and the growing dominance of e-commerce giants like Amazon. CEO Josh Silverman is leading a major overhaul of the platform’s policies, aiming to reaffirm Etsy’s commitment to its roots and create a marketplace focused on "original goods and real people."
Key Takeaways:
- Etsy is rolling out a new set of policies emphasizing "human touch." Each product must fall into one of four categories: made, designed, handpicked, or sourced by a seller, showcasing a clear distinction from mass-produced items.
- The company is launching a marketing campaign highlighting these changes, including a TV spot featuring artisans and a smashed robotic arm, emphasizing its commitment to human creativity over mass production.
- This shift comes at a crucial time for Etsy, as it faces intense pressure from competitors like Temu and Shein, offering consumers cheap goods with rapid delivery.
- Etsy is hoping to rejuvenate its brand and cater to a niche market seeking genuine handcrafted goods, a market that the larger platforms like Amazon may not fully capture.
A Fight for Survival and Identity
Etsy’s recent struggles stem from a quest to balance growth with its core identity. The company went public in 2015, facing growing pressure from shareholders to increase sales and compete with larger players. This pressure led to changes like allowing sellers to use production partners, a move that was initially welcomed but ultimately contributed to the influx of mass-produced goods that eroded Etsy’s unique appeal.
The pandemic brought a temporary surge in sales for Etsy, driven by the demand for masks and other handcrafted items. However, this growth was not sustainable, and the company saw a decline in Gross Merchandise Sales (GMS) in the most recent quarter. Etsy’s stock price has also suffered, dropping significantly since its peak in late 2021.
Competing on its Own Terms
Silverman, however, is determined to steer Etsy away from a price-driven competition with the giants. He acknowledges the threat posed by Temu and Shein, but believes that Etsy’s strength lies in its unique focus on handcrafted goods and direct connection with artisans.
"The solution to that for Etsy is not to try to play that game," Silverman stated. "They’re selling the exact same product and they’re trying to sell it to you for 2 cents cheaper, or ship it two hours faster."
A Delicate Balance
While Etsy’s new policies aim to restore its handcrafted focus, there’s a delicate balance to be struck. Some long-time Etsy sellers, like Ashley Smith, who has been selling custom wedding handkerchiefs on Etsy since 2011, argue that the influx of generic items has negatively impacted the platform and made it harder to stand out.
Others, like Abby Glassenberg, who runs a handmade stuffed animal shop, acknowledge the challenges of scaling up handmade production. She believes Etsy’s new guidelines provide a much-needed clarity for both sellers and buyers, offering a clear distinction between handcrafted and mass-produced goods.
The Future of Etsy
The success of Etsy’s new strategy largely depends on its ability to attract both buyers and sellers who prioritize handcrafted goods. The company is faced with a challenging task: retaining its loyal customer base while convincing new customers to embrace the higher price points and longer lead times that often come with handcrafted items.
The shift back to its roots is a bold move for Etsy. It’s a risky gamble that could pay off if it successfully reestablishes its position as a haven for authentic craftsmanship. If Etsy manages to win back its identity as a platform for truly handmade goods, it could carve out a unique niche in an increasingly crowded e-commerce landscape.
