“Etsy truly stands for something different.”

That’s how the company’s CEO, Josh Silverman, explained Etsy’s strong third-quarter performance. Revenue was up 128% in comparison to the summer prior. This is in keeping with a continual upward trend over the last few years. Etsy has a “strong brand, underpinned by the unique inventory in our marketplace.”

But does it really? Sure, it once did, but I’d argue that’s hardly the case anymore.

I’ve been an Etsy seller for 15 years now. I opened my shop in July 2005, when Etsy was still in beta, and have kept it open ever since. Like Silverman described, my shop is booming. In 2020 orders for my sewing patterns and supplies were up 15% and my total Etsy revenue is up 13% in comparison to 2019. And yet, the more I look around when I’m on Etsy, the more uneasy I feel. The way I see it, Etsy is marching steadily towards a future in which it resembles every other marketplace out there (think Amazon, eBay, and Wal-Mart). Etsy’s brand is in jeopardy and, left unchecked, the marketplace is vulnerable to being upended by competitors. Let me explain.

The problem

There are 3.7 million active Etsy sellers right now. That number is up 42% from the same period in 2019. One has to wonder how many of these new shops are like ElegantStudioFinds. My guess? Quite a lot. Based in Nashville, Tennessee, ElegantStudioFinds is doing a healthy business on Etsy at 113 sales since it opened offering “Home Décor & More!.” The only problem? Every one of the 47 vases, mirrors, clocks, and statues listed appear to also be found on the Chinese wholesale site Alibaba.

On the left, a mirror for sale as a “handmade product” in the Etsy shop ElegantStudioFinds. On the right, the mirror on Alibaba starting at $1.70 for 40 pieces. All of the items in the ElegantStudioFinds shop appear to be sourced from Alibaba as do the items from many thousands of other reseller shops on Etsy.

Here’s the thing, though. There’s no need to call out this seller in particular. To do that would really be unfair. After all, ElegantStudioFinds is one of what must be tens of thousands, perhaps hundreds of thousands, of reseller shops on Etsy. They seem to be in every category. They’re literally everywhere. To find them hardly takes any searching at all.

Just look for a product, anything really. Let’s try incense burners. Soon you’ll notice multiple different shops selling the same thing, like the same waterfall incense burner, many using the same product picture. Now head over to search for incense burners on Alibaba and, viola, there’s the identical product. In fact, I’ve found that if you keep an Alibaba window open and an Etsy window open simultaneously on your browser while you’re doing these sorts of searches you’re likely to become confused between the two. The product selection is that similar (and complicated by the fact that Alibaba sellers are notorious for stealing Etsy sellers’ photos and using them in their listings, too).

Now, let’s take it one step further. Open a third browser window and search for the same product on Google more broadly. You’ll very likely find the item being sold on Amazon, too, and on Wish, and likely a few other places.

Waterfall incense burners. The first seven are for sale as a “handmade product” from different Etsy sellers and the eighth is on Alibaba starting at $4 for 10 pieces.

Right now, Etsy is depending on consumer laziness. They’re betting most people won’t take the time to do these sorts of searches and will just assume items on Etsy are artisan-made (even when the prices don’t make sense for an artisan-made product). But how long can this bet last?

This problem isn’t new

Of course, there are still handmade shops on Etsy, along with supply sellers and vintage sellers. These are people doing their best to keep up with the changes, abide by the rules, and make Etsy work. Competing in a marketplace that’s teeming with resellers, but pretends it isn’t, is bizarre and exasperating. The mix makes it very hard for consumers to discern which is which.

There have long been resellers on Etsy. Many of us will remember April Winchell of Regretsy who, from 2009-2013, mocked the ridiculousness of certain aspects of Etsy. Winchell was one of the first to shine a bright light on the reseller problem and the way Etsy was blissfully ignoring it, even then. In 2015, there was Three Bird Nest, a women’s clothing reseller who was blatantly flouting Etsy’s rules. It took Etsy several months to finally shut that shop down. Now, though, the issue is really rampant. I would argue, actually, that it’s out of control. Resellers are everywhere, in every category. They are all over Etsy. The marketplace is, as far as I can tell, saturated with them.

Core values

To me, the question comes down to this: What does Etsy stand for? What does this company value now? One thing we know for sure – it’s not handmade.

Silverman told Vox in 2019 he doesn’t like the words “handmade” or “craft” because they “don’t communicate anything to buyers when they think of Etsy.”

“Nobody wakes up thinking, ‘Gosh, I need to buy something handmade today,’” he told the Vox reporter. “You need to furnish your apartment. You need to prepare for a party. You need to find a gift for a friend. You need a dress. Handmade is not the value proposition — unique, personalized, expresses your sense of identity, those are things that speak to buyers.”

So, according to Silverman, today Etsy stands for unique and personalized. It stands for expressing your sense of identity. But what happens when consumers discover the set of 7 hand-carved spoons they bought from AvoCraftsCo in San Diego to ‘express their sense of identity’ are also available from Maison&Coeur on Etsy, based in Guangzhou, China, and HandmadeBranded on Etsy, based in India, and can be bought on Alibaba in packs of 50? That unique expression doesn’t feel all that unique anymore because it turns out that the maker is really a factory. But then again, at $44.95 with free shipping, how realistic was it to expect a set of seven handmade spoons anyway?

Taking it one step further, to investors Silverman emphasized that Etsy was playing a new role in the economy during the pandemic: supplying essentials. He was referring, I think, to shops selling masks and flour, but Etsy is now also a place to buy controllers for your Playstation 2, a screen protector for your iPhone, multi-packs of Lysol. Essentials, for sure.

A march toward sameness

Granted, as far as marketplaces go, Etsy is now a very well-optimized one. Under Silverman, there have been all sorts of improvements to the buyer experience that have significantly reduced friction and led to increased conversions. Sellers are incentivized to offer free shipping on orders over $35. Personalized search helps shoppers find just what they’re looking for, and lists allow them to save products for easy retrieval. Videos can now show products in action, and “best seller” markers along with alerts about how many other shoppers have an item in their cart create a sense of social buying and urgency. Plus, Etsy has enrolled all of its best-performing shops in a giant ad campaign on Facebook and Google to drive sales, and savvy television ad campaigns are exposing new audiences to the marketplace.

All of this is working. Gross merchandise sales were $2.6 billion in the third quarter, that’s up 119% from the third quarter of 2019. But if shareholders were to scratch the surface and take a closer look at what’s really selling, I think they’d be surprised. It’s not unique, special items buyers can’t find anywhere else. It’s mass-produced products that are being bought and resold (and that includes face masks, by the way).

If Etsy does nothing to course-correct, it will lose the very thing that makes it valuable. Unfortunately, I don’t see any incentives in place for it to do so. Resellers have plenty of inventory that they can ship fast and easily discount, and Etsy generates a listing, transaction, and shipping fee on every one of their sales.

Silverman just received a $9 million bonus to “retain, incentivize and motivate” him over the next four years at Etsy. If things stay along their current trajectory, just imagine what the marketplace will look like then.

Editors Note 1/8/2021: The name of the owner of ElegantStudioFinds has been deleted from the article at her request. The owner of ElegantStudioFinds changed the location of the shop from Tennessee to Utah after this article was published.

Abby Glassenberg

Abby Glassenberg


Abby co-founded Craft Industry Alliance and now serves as its president. She’s a sewing pattern designer, teacher, and journalist. She’s dedicated to creating an outstanding trade association for the crafts industry. Abby lives in Wellesley, Massachusetts.

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