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Amazon handmade marketplace Vs. Etsy Marketplace

I traveled down my memory lane and I was reminded of an amazing real time strategy game that I had played a couple of years ago. I remember, as I was playing that game, my mind veered into weird territories. I had to use a combination of reason, intelligence and compassion to overpower antagonists and empower protagonists of the game.  The antagonists had a fascinating brainwave. I was sorely falling short in my eternal endeavors of conquering antagonists. Without demeaning my optimistic thoughtful initiatives, I embarked on a plan to reach an all-time high in the game and eventually succeeded in trouncing my nemeses. Now, let me reveal the name of the game- ‘Clash of Kings’ it is!

As brilliant as it may sound, Amazon, the omnipotent king of e-commerce industry has challenged a powerful king of e-commerce marketplace – Etsy. Thus, the battle can be aptly called ‘Clash of Kings’. In its bid to expand its vast e-commerce empire which shows no signs of shrinking, Amazon introduced a marketplace for handcrafted goods. This has truly created an up-roar in the ever changing dynamics of global ecommerce.  We are indubitably never more than a generation away from experiencing revolutionary changes in e-commerce. We are more aware than ever of things around us in ecommerce industry. 

Amazon is a fount of fascinating ideas and hence it comes as a no surprise for the team of Ecommercemix when Amazon announced that it is eagerly looking forward to oust Etsy from its strong hold.  Our wonderful readers have asked us to come up with an insightful article that throws light on “Amazon handmade marketplace Vs. Etsy Marketplace.” Here is our masterpiece on the same:

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Amazon handmade marketplace

Amazon, the Seattle based online retailer, whose net worth stands at a colossal billions of dollars, launched its handmade marketplace strictly for artisanal goods in the month of October, 2015. Amazon’s handmade marketplace is in good standing as it boasts of a ginormous 130,000 items. The wonderful thing about these 130,000 items is that they can be potentially sold to 285 million active customers.

Etsy’s marketplace is in the good books of 22 million active customers. At its height, there is a cold war between Amazon and Etsy that is being fought not with missiles and mines but with intellectual symposia, number of features and customer base.

The figure ’22 million’ (Etsy’s active customer base) isn’t slated to be favorable and productive if one were to compare with that of Amazon. While many ecommerce enthusiasts proffered the concept of ‘Ambush Marketing’, we personally believe that Amazon has indeed exploited the principles of ‘Carpet Bombing Marketing.’ The reasons for our belief in this supposition are not unfounded. According to New York Times, Amazon started sending out emails to artisans in May, thereby humbly inviting them to sell their items on their handmade marketplace.

By the end of September, Amazon pulled out a rabbit out of its hat. Buoyed by the wide range of offerings as diverse as jewelry, art, home, décor, furniture, stationery, Kitchen & Dining (K&D), bedding etc., Amazon officially launched its handmade marketplace on October 8th, 2015. Peter Faricy, Amazon’s vice president told the New York Times, “You can think of it as a factory-free zone, a mass produced free zone.”

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Amazon handmade marketplace’s fee structure

Opportunity awaits artisans who haven’t joined Amazon’s handmade marketplace as the fee charged by Amazon stands at a modest 12 per cent cut per item sold. However, if an artisan sells more than 40 items per month from his/her Handmade marketplace’s account, he/she has to pay $40 per month. This is how Amazon makes money from its newly introduced marketplace.

Amazon isn’t shying away from publicly airing the following criteria:

  1. All products available in an artisan’s marketplace account should be handmade or hand assembled. They can even store hand altered goods.
  2. Products should be hand-made by the artisan himself/herself. However, an employee(s) who works for the artisan can make hand made products and sell on-behalf of the artisan. Companies which have fewer than 20 employees should meet this criterion.
  3. If your collective unit has as many as 100 members, products should be hand made by the person representing your collective unit.
  4. Mass produced products cannot be sold on Amazon Handmade marketplace.
  5. Products hand-made by a different artisan (other than your employee) are not eligible to be sold on Amazon Handmade marketplace.

 Etsy on the other hand charges 20 cent listing fee per item.  Etsy also takes 3.5 percent of the net sales. The result is that Etsy’s listing fee is very much affordable and way cheaper than that of Amazon. Sellers who have hedged their bets on Etsy marketplace platform can thus continue to relish the magic of Midas touch. Unlike Amazon, Etsy doesn’t charge any monthly fee. Etsy came up with the following criteria for Sellers: (Source: www.etsy.com)

  1. Everything listed for sale on Etsy must be handmade, vintage or a craft supply.
  2. All handmade items are made or designed by you. If you work with an outside manufacturer to make items that you have designed, you must apply for outside manufacturing and choose ethical manufacturing partners.
  3. You accurately describe every person involved in the making of an item in your shop in your About page.
  4. You are using your own photographs– not stock photos, artistic renderings, or photos used by other sellers or sites. 

Most of the sellers however feared that they would be kicked off from the Etsy marketplace if they took any “external assistance.” To allay the apprehensions of its darling sellers, Etsy came up with a few terms- “authorship”, “ownership”, “transparency” and “responsibility.” The word “authorship” is an umbrella term asserting that external assistance of any kind is always welcome. External assistance may involve strategic partnerships and fruitful alliances. It is worth mentioning that a couple of months ago, Etsy received multiple complaints that the partnerships encouraged over-seas trade but however neglected local people. 

So, why does Etsy encourage strategic partnerships and alliances? Reasons are not unfounded. A representative who wished to be anonymous for all the right reasons commented:

  1. There are certain companies that are into manufacturing candles. To manufacture candles, wax which is one of the key integrants is all the more necessary. Not astonishingly, manufacturers rely on bee keepers and bee keeping ventures to obtain wax.
  2. Other industries such as jewelry etc. undoubtedly involve third parties. The one who refines gold need not be the one who sells gold and vice-versa.

The representative further mentioned, “With these changes in our legal rules and regulations, what followed is a phantasmagoria of opportunities for local partners. Earlier, most of the over-seas partnerships were carried out secretly by sellers as they couldn’t comprehend the implications of the phrase ‘external assistance.’ Rather than turning a Nelson’s eye to this, we cleared our stand on it. Local strategic partnerships and alliances now account for as much as 80% of the cumulative total.”

Etsy introduced the word “transparency” to tackle customer criticism with unmatched confidence. Etsy received a litany of complaints from many costumers that most of the items that are being listed on its marketplace or being sold by sellers on its marketplace aren’t handmade or handcrafted. To bring certainty in all the products listed by different sellers, Etsy reckoned its sellers to honestly and accurately represent themselves and their business dealings. Etsy has thus prided itself with the term “transparency.” 

To add variety and to expand its customer base, Etsy came up with a program titled “Etsy Manufacturing” which was launched with much hype in the month of September, 2015. Etsy said that it wanted to help the small business players scale their businesses.

Etsy Manufacturing program was thus lionized and feted by the media. Despite all such initiatives, Etsy wasn’t able to witness a mammoth growth in profits. Ever since Etsy embarked on IPO (Initial Public Offering) in the month of April, tumultuous times were always in the offing for it. Its per-share price initially stood at a modest $30. Now, its per-share price reached an all-time low of $14.

The second quarter (Q2) has been a positive period for Etsy as the company registered $61.4 million revenue, a figure that is worth mentioning. The first quarter (Q1) however has been a period of huge loss. Etsy’s revenue rose by 44% to reach $120 million. But the distasteful fact is that its loss widened from $3.6 million to $42.9 million. We believe, it is because of unprecedented restructuring costs. There are a couple of salvaging points as well. Etsy’s active sellers rose by a good 25% to reach 1.48 million and active buyers grew by a remarkable 32% to reach 21.7 million. In a nutshell, the entire year 2015 has been a bag of mixed fortunes for Etsy. There is no gainsaying that Etsy cushions its hopes on its new program- Etsy Manufacturing. Ever since Etsy launched this program, sellers from different countries sent their applications to be an integral part of it. Etsy eventually nodded in the affirmative to 5000 sellers who wished to partner with as many as 7000 manufacturers.

Etsy has now antithetically deviated from its original ‘handmade’ and ‘handcraft’ ethos to machine-made mass manufacturing ethos. Only time will decide the outcome of such an initiative.

On the other hand, Amazon, which is already engulfed in the clouds of love being showered on it by its customers, is definitely on a vigil. It doesn’t want to make mistakes that costed Etsy dearly. Amazon Handmade marketplace is less likely to change its niche from “strictly handmade” to machine-made. When it comes to customer service, nothing beats Amazon. Customers are therefore likely to get the same top notch customer service if they purchase items from sellers who have dedicated seller accounts in Amazon Handmade marketplace. Amazon too has 5000 sellers from as many as 60 countries spread across seven continents.

amazon-handmade-marketplace

Now that you have exercised your mind with some vibrant stuff and mind boggling stats, it is time for us to come to the crux of the topic- Amazon vs. Etsy. We at Ecommercemix believe in providing a balanced view of every piece of information. We strictly do not entertain any lopsided view of any snippet.

Here are a few reasons why Amazon Handmade marketplace would eventually find its feet and succeed in cementing its place:

Numbers matter the most:

In e-commerce sector, numbers matter the most. According to Quantcast Corporation, a digital marketing company that provides free audience demographics measurement and real time advertising, Amazon receives 73.6 million unique visitors per month. On the other hand, Etsy receives 10.9 million unique visitors per month. In terms of most popular sites, Amazon stands at an enviable 8th position while Etsy doesn’t even stand in the top 100. However, Etsy stands 132nd in the United States of America (USA). It shouldn’t be a herculean task for amazon to push a lower minimum of 20% traffic into checking out Amazon Handmade marketplace.

Classic timing:

The timing couldn’t have been better for Amazon. It was indeed Etsy’s Etsy Manufacturing program that triggered Amazon’s killer instincts. Amazon Handmade marketplace was launched when Etsy was looking to make some strides into non-handcraft niche. Also, Etsy wasn’t performing in terms of profits and operational revenue. The launch of Amazon Handmade marketplace is definitely going to give Etsy a few spots of bother.

Facing the giant:

I recall watching a movie called “Facing the giants.” In the movie, a David defeats a Goliath. Clearly, the antagonists were arrogant and hence were destined to lose. However, Amazon has already carved a special place for itself in the hearts of customers. Amazon is known for its top notch customer service. Amazon isn’t an arrogant ecommerce giant. It is known for its integrity. Amazon’s approach in general has been methodical, disciplined and systematic. So, a challenging road lies ahead for Etsy.

Brand Protection:

Amazon serves up perfect slices of brand protection and brand proposition. Brand protection and brand proposition have always been Amazon’s forte. This is a statement known to all and sundry. If you are a seller and if you have satisfied your customers with your superior quality products, customers reward you with some exceptional rave reviews. These rave reviews can yield rich dividends in the future.

Doing it the Amazon way:

Popular marketplace sites are trying to simulate Amazon’s modus operandi. Detailed case studies on Amazon’s customer service, management and methodology are given to many aspiring management graduates. This clearly bespeaks the deeply ingrained ‘Doing it the Amazon way’ convictions.

Amazon’s strictly handmade marketplace:

Etsy seems to lose its strong hold due to its entry into non-handcraft niche. Amazon emphasized its stand on “strictly handmade marketplace.” Moreover, Etsy had to allay the fears of all sellers who misunderstood the phrase “external assistance.” This is slated to work in Amazon’s favor as many sellers have openly expressed their desire to be a part of Amazon’s Handmade marketplace. Etsy intensified its business jargon and came up with rhetorical words- ‘transparency’, ‘authorship’ and ‘responsibility.’  While the implications of these three words seem glorious, only time will tell if the jargon indeed proved to be crowd puller.

Some miscellaneous benefits:

Amazon charges nearly zero if you wish to list your products as an individual. If you list your products as a collective unit, Amazon charges you a certain amount which is partly fixed and partly variable. Amazon charges you a lower sales commission than Etsy. If you are an individual, Amazon Handmade marketplace allows you to sell items such as books etc. from the same store. Moreover, Amazon Handmade marketplace allows you to host your own Amazon store on your website. If you are a beginner with zero revenue and zero working capital, Amazon doesn’t charge you a penny to list your ads. In addition, uploading items to Amazon marketplace is much quicker when compared to that on Etsy. Amazon marketplace webpages are user-friendly and self-explanatory. Amazon stands up for principles and values. Customers’ credibility and trust have always been Amazon’s characteristic trademarks and are likely to remain Amazon Handmade marketplace’s trademarks as well.

Scalability:

Amazon asserted that its Handmade marketplace would support over 80,000 items. In a spirited conversation with one of our representatives (Ecommercemix team), Neil Linsday, Vice President, Marketing at Amazon.com said, “In the near future, Amazon Handmade marketplace would support over 130,000 items.”    

Robust back-end infrastructure and free shipping:

Shipping has always been one of the persisting pain points of customers. One of the reasons for Amazon’s success is undoubtedly free shipping. Customers are absolutely in love with this ‘free shipping’ feature. Amazon is known for its robust back-end infrastructure.  From credit card payments to PayPal adaptive gateway payments, from inventory tracking to payment processing, Amazon fulfills, monitors, and assists customers in their each and every endeavor. These features are likely to stay intact and hence, one can expect free shipping for items purchased on Amazon Handmade marketplace. Amazon’s FBA which stands for Fulfillment by Amazon is a shipping service that lets sellers ship their inventory to Amazon’s warehouse.    

Tons of competitors:

Due to the absence of strict copyright policies and stringent infringement laws, many vendors have come up with ‘Etsy’ like marketplaces. This is definitely going to dilute Etsy’s Unique Selling Propositions (USPs). On the other hand, Amazon is relatively new to the market. It is thus highly unlikely that a few vendors may replicate Amazon’s Handmade marketplace. 

Here are a few reasons why Etsy marketplace would still be successful despite the aforementioned points:

  1. Established brand: Etsy is an established brand. Etsy has been doing well in its niche despite all the odds. It has a loyal audience and hence, it is unlikely that these loyal audiences will switch over to Amazon at the drop of the hat.
  2. Behavioral science: We at Ecommercemix firmly in a principle of Behavioral Science which we fondly call “Reluctance to change.”  If people are accustomed to a particular scenario/thing/entity, it is unlikely for them to break the convention and embrace avant-garde works of art. Etsy still boasts of a good number of handcrafters. It wouldn’t be an easy task for Amazon to grab the attention of Etsy’s loyal audiences.
  3. Decent search rankings: As I mentioned earlier, Etsy stands at 132nd position in US. This isn’t terribly substandard or inferior. Its search rankings are decent. Recent findings by Price Waterhouse Coopers (PwC) substantiate the claim that items listed on Etsy often rank higher in Google Chrome than the items listed on Amazon. This is indeed a milestone for Etsy.
  4. Simplest platform: Etsy is known for its genuine features more or less that resemble Admire marketplace. If you haven’t read my write-up on “Tips to choose B2B marketplace script”, I cordially invite you to read it here. (Please place a link.) While uploading the items on Amazon Handmade marketplace is easier when compared to that on Etsy, Etsy holds a competitive edge when it comes to listing all the uploaded products. For small and medium sized shops, Etsy is a boon in disguise. In its endeavors to help small business owners scale their businesses, Etsy had launched Etsy Marketing initiative. This clearly testifies that Etsy want to win the hearts of large sized shop owners as well. Amazon’s current Handmade marketplace may not be of much use for small and medium sized shops.       
  5. Low variable costs: While the listing fee is as low as $0.10 per item on Etsy, the variable costs are way lower than those of Amazon. Fee structuring of Etsy is robust and solid. Amazon has to come up with modest fee structuring. If it were otherwise, Etsy is sure to exploit the adage- “Big names come with big prices.” This is definitely going to damage Amazon Handmade marketplace’s reputation.
  6. Testing:   Amazon Handmade marketplace, as I said supports over 80,000 items and is much touted to extend its support to over 130,000 items. We can thus infer that it would take a significant amount of time to update themes, templates, add new modules etc. testing thus eats away one’s precious time. Etsy holds an edge over Amazon Handmade marketplace. Given the acceptable size of Etsy and its categories, testing on Etsy shouldn’t be a cumbersome endeavor.
  7. Always trending: “Etsy- a dream come true for artisans” has always been trending in the minds of artisans and handcrafters. Etsy allows buyers to choose from one-of-a-kind items and encourages crafters to work in synergy. It is therefore not uncommon to find crafters joining hands and establishing themselves as a ‘Crafters’ collective unit.” Till the month of September, Etsy did not compete with non-craft listings. Small ecommerce business owners like the feature- “Create your own custom orders.” Most of the handcrafters opine that Etsy is not a marketplace but a reliable community and an alma mater to be worshipped.
  8. Web forums and Discussion boards: If you haven’t read my masterpiece on “How forums and discussion boards can lead business sales”, I cordially invite you to read it here. Etsy, like Admire has a dedicated forum and umpteen discussion boards. Amazon is yet to come up with dedicated forums.    
  9. Amazon’s vice like grip on branding: Whenever you think of setting up your own website, Amazon lets you make certain changes to your products’ photos and descriptions. Apart from that, everything else is owned by Amazon. Hence, your site becomes an Amazon branded site. You fail to add sheen to your site as it resembles an affiliate site of Amazon. Thanks to the presence of umpteen themes and web templates, it is easy to create a site on Etsy. Its turnkey solution is bug-free and feature-rich just like Admire. Brand strengthening is easy on Amazon while brand recognition is tough. Customers become loyal to Amazon and to not your brand. On Etsy, both are relatively easy and hence, Etsy has an edge over Amazon Handmade marketplace.
  10. Capturing buyers’ email addresses on Amazon- Impossible: Amazon Handmade marketplace doesn’t allow you to capture a buyer’s email. On the other hand, Etsy allows you to do capture. This gives you a chance to encourage your target audiences to subscribe to your newsletters and let them sign up for white papers. It is worth mentioning that Admire from Ecommercemix allows you to capture your buyers’ email addresses. 

The bottom line

Etsy will likely continue to win the hearts of artisans and handcrafters. However, Amazon is sure to make tremendous strides into the territorial domains of Etsy. Amazon has nothing to lose and everything to gain. For Etsy, it may become a matter of survival. Only time will decide the destiny of Etsy. A single mistake can cost Etsy a lot and leave it for behind.

Are you an Etsy seller or an Amazon handmade marketplace seller? Do write to us and share your thoughts. Let us know if we have missed anything or something. Your feedback is important to us.

You may reach Steve on +1.302.525.8125 or feel free to drop an email to steve@ecommercemix.com.

And yes! Keep watching this space for further updates and insights. Cheers!

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