CRAFT WARS

Etsy is bleeding money as Amazon prepares to attack

It’s been rough for Etsy since the craft marketplace went public in April.

Amazon has been emailing Etsy sellers invitations, The Wall Street Journal reported. “We’re offering artisans like you a first peek at Handmade, a new marketplace for handcrafted goods,” the message states, and directs them to an online form to express their interest in selling their anklets, pet supplies, wedding rings, and more on Amazon.

etsy amazon ipo handmade

In the run-up to its IPO, Etsy sellers and customers wondered whether the company would lose its indie spirit and crafting cred—or what was left of it—once it became accountable to shareholders. A report of an Etsy seller earning nearly $1 million by reselling items bought at wholesale didn’t help, and neither did a lawsuit claiming that the company hid a rampant counterfeiting problem from investors.

When Etsy disclosed its first earnings report last week, it showed a quarterly loss of $36.5 million—which it attributed to corporate restructuring (pdf) and adverse currency exchange rates—compared to a loss of $463,000 in 2014. The news wasn’t so great for its stock price.

Already, Etsy sellers—the very community Etsy’s business depends on—are discussing the details and debating the pros and cons of Amazon Handmade in Etsy’s forums. Veteran Amazon sellers who also sell on Etsy are offering prospective “Amazon Artisans” the lay of the land. Both Etsy and Amazon declined to comment.

Some of those Etsy sellers report being contacted by Amazon representatives through their Facebook pages, while others say they received emails. That sort of aggressive assault on the competition is classic Amazon, as the founders of Diapers.com could easily attest.

Although Amazon offers sellers an expansive reach, there’s a chance this could present an opportunity for independent, high-end makers on Etsy—the kind who may not have a warehouse full of merchandise ready for Prime shipping—to reclaim the platform. Or, as one jewelry-maker wrote on Etsy’s forum, “Perhaps Amazon will siphon off the big sellers and leave those of us who are happy to be in a small pond here.”

It will be interesting to see what shareholders say.

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