When Etsy Founded nearly 20 years ago, the positioning attracted artisans and crafters who finally had a spot on the web to sell their area of interest products and reach a large audience. But lately, Etsy has been flooded with mass-produced and generic items from resellers who’ve learned to outsmart the positioning and push out handmade products.
Now Etsy CEO Josh Silverman wants the corporate, whose declared mission is to “keep trade human” and return to its roots.
The company is launching a significant overhaul of its website's policies on Tuesday to make it “crystal clear” to shoppers which products belong on Etsy, Silverman said in an interview with CNBC. The changes include recent labels on the positioning and within the app that show how each seller created a selected item.
“We’re positioning ourselves to meet the demand for genuine goods and real people by focusing on the things that make Etsy, Etsy,” Silverman said.
Etsy is launching a brand new marketing campaign across the policy changes, including a TV spot featuring ceramicists, dressmakers and other artists followed by a smashing robot arm. The platform's recent rules require all items to have “a human touch,” as defined in its creativity standards. Each product must fall into certainly one of 4 categories: made by a seller (either by hand or with automated tools), designed by a seller, hand-picked by a seller, or sourced from a seller.
With the changes, Etsy hopes it could get buyers and sellers to return to its site at a time when e-commerce is increasingly dominated by Amazon and upstarts like China-linked firms Temu and Shein, which deliver low-cost goods to shoppers’ doorsteps in a matter of days. The stakes are high, because eMarketer estimates The global e-commerce market is anticipated to exceed $6 trillion this 12 months.
“I feel like there's a race to the bottom right now in terms of mass commerce, and almost everyone in e-commerce is in it,” Silverman said. “They're selling the exact same product and trying to sell it to you two cents cheaper or ship it two hours faster.”
Etsy is struggling to address changing market dynamics. last quartergross merchandise sales, or the dollar value of things sold on its marketplace, fell 3.7% from a 12 months ago to $3 billion. The stock has lost greater than 80% of its value since peaking in late 2021. It is down 32% in 2024, while the Nasdaq has gained 23% over that period, closing at a record on Monday.
In December, Etsy laid off 11 percent of its workforce. Silverman cited the “very challenging macroeconomic and competitive environment” as the explanation for the cuts.
The company can also be under pressure from activist investor Elliott Management, which has amassed a stake of around 13% in the corporate, making it Etsy's largest investor. In February, Elliott partner Marc Steinberg announced joined Etsy board.
The rollercoaster ride began earlier. In 2015, Etsy went public, forcing the corporate to reply to its shareholders' demands for growth – a contradiction to its feel-good, social culture.
Etsy's business exploded through the pandemic, boosted by a flood of mask buyers. Its stock price quadrupled in 2020, and the variety of firms selling goods on the positioning greater than doubled between 2020 and 2023—to 9 million.
Until now, Etsy used its “House rules” to oversee the positioning. The foremost policy was that “everything offered for sale on Etsy must be handmade, vintage, or craft supplies.” Resellers were prohibited.
The recent rules are more specific and have been updated to reflect today's realities. For example, a 3D-printed sculpture is taken into account “made by a seller.” A seller is prohibited from attaching a single sticker to a commercially available face mask and passing it off as handmade. Regarding content generated by artificial intelligence, the rules note that “seller-initiated AI art,” reminiscent of a dog wearing regalia, is taken into account “designed by a seller,” but a digital download of “over 5,000 ChatGPT prompts” shouldn’t be allowed.
The challenge of growth
Etsy has spent years trying to take care of its image as a spot for unique, handmade goods while expanding its choice of items to maintain up with its larger competitors. For early sellers like Ashley Smith, the changes weren't at all times welcome.
Smith began selling personalized wedding handkerchiefs on Etsy through her business. The spotted beein 2011. Smith said Etsy was then a spot where you would “endlessly search for amazing things that people were making” and has since evolved right into a site increasingly dominated by generic goods.
One of the largest changes to Etsy got here in 2013 when the corporate allowed its sellers to make use of manufacturing partners. Instead of creating the products themselves, sellers could turn to contract manufacturers for help producing their products.
Abby Glassenberg welcomed the move. Glassenberg, who opened your handmade stuffed animal shop on Etsy in 2005, said she now only has to make a pattern once and might sell “infinite copies,” reducing her workload. Her Etsy shop has gone from a hobby business to a full-time profession, she said.
However, Glassenberg understands the stress, as many Etsy customers still want the handmade experience.
“Handmade is not scalable,” she said. “That's why we like it, that's why people like it.”
Glassenberg gave the instance of a hand-crafted fork that was forged and cut by human hands.
“I'll pay $120 for it, use it forever and love it,” she said. “There's no way someone could make 100,000 of these a month, and that's why we love it.”
Competing on a bigger stage is different, nevertheless, and Smith said the masses' preference for reasonable and fast goods means “an uphill battle for sellers and for Etsy.”
Temu and Shein have expanded their presence within the U.S. lately, luring American shoppers with deep discounts on clothing, jewelry, home goods and other products. Silverman has previously admitted that the sites are “taking a little bit of market share away from everyone.”
He now makes it clear to sellers and customers that the corporate will compete by itself terms.
“The solution for Etsy is not to play this game,” Silverman said.
image credit : www.cnbc.com