Late last week, Amazon sent emails and an interest form to what apparently are some top-tier merchants on the handmade products marketplace, Etsy, indicating Amazon’s plans to launch a storefront called Handmade.
According to the website Etsy-preneruship.com, the email introduced, “Handmade, a new shopping experience at Amazon,” and told the recipients, “We’re offering artisans like you a first peek at Handmade, a new marketplace for handcrafted goods. While we set up shop, you’re invited to sign up for exclusive announcements … ”
Should Etsy worry?
Etsy is now a “big guy.” Going public (despite investors sending it on a round trip up 100% and then back down to its IPO price ) means that Etsy has the resources and the shareholder mandate to grow its dominance in the handmade marketplace. Part of its rationale for a stock offering (besides it being the “exit strategy” of venture investors) is to have the resources to compete with companies like Amazon. Besides, many of Esty’s top merchants already use the Amazon channel.
And here’s another point often missed about Amazon. It is not merely a retailer. It’s a marketplace where companies who seem to be Amazon’s competitors can all also sell their products. (Example: You can purchase the Office Depot house brand version of 1,000+ products on Amazon.) Who knows? Etsy could make it easy for Amazon customers to buy top-end products by partnering with Amazon, rather than competing.
Amazon will, as it is doing with Amazon Exclusives, enable its top-tier customers (the ones who buy everything from Amazon) to easily discover and purchase the products of Etsy’s top-tier merchants. But don’t expect Amazon to take on the masses of Etsy merchants.
The evolution of the term (and business model), handmade
While “handmade” is part of the name of Amazon’s new storefront, Etsy has made the term handmade a part of its brand’s ethos. However, in preparing for its IPO, Etsy redefined the meaning of handmade to include practices it had long prohibited. In their words: “These new policies are crafted to support a diverse community of makers, designers and curators—from the solo artisan just starting out, to the full-time seller hiring staff, to the artist who partners with a manufacturer to bring her creations to life.”
The new guidelines also cleared the way for its merchants to use fulfillment services like those provided by Amazon.
It’s not just Amazon vs. Etsy
Etsy merchants, along with the broader category of participants in the Maker economy, have another ecommerce channel: Their own. As we shared last week, the acquisition of Woo Commerce by Automattic and the IPO of Shopify both raise the awareness of and potential for small business ecommerce–on their own website.
If you look at successful niche-branded product companies at the top end of what can be described “small business” (or, at least, independent), a good example of how a manufacturer and niche brand company can use multiple ecommerce strategies and channels simultaneously is Griffin Technology, the company best known for cases and accessories for smartphones and tablets. They not only sell products on their own site, some of their products can be found at most major ecommerce retailers including Amazon.com. They’re even (successfully) using the crowdfunding site Indigogo to launch a line of products.
Short lessons: Sell where your customers shop. Test new channels.
For most of Esty’s merchants, even those who are at the higher end of the revenue scale, it won’t make much sense to take on the additional burden of multiple sales channels. Administering the relationships may seem simple, but the more types of administrative burdens you add to a small business, the more time you spend managing rather than making.
Etsy still will likely win (vs. Amazon) in one category: fees and commissions. (However, part of Amazon’s research will surely be focused on this.) Currently, Etsy collects a 3.5 percent commission and 20-cent listing fee. Amazon’s commission varies, but for many categories it charges sellers a 15 percent fee on the price of each sale.