Amazon competes with Etsy over new handmade marketplace

Stay Handmade Etsy On Flickr

It’s not been a good time lately for the handmade marketplace, Etsy. They recently announced that they decided to go public and began trading on the NASDAQ. It started off looking pretty promising as Etsy priced its IPO at $16 per share, which is actually at the high end of the price range for companies selling homemade crafts. This would have priced the company at around $1.78 billion. However, on opening day, shares were being sold for $31.86 per share – almost the double! This was valuing the company at over $3.5 billion.

Things have seriously changed since then and Etsy have disappointed their investors with the results of their first quarter as a public firm. The share prices have drastically fallen in price and are now roughly at their original IPO price.

Screen Shot Etsy share price

There are unexpected losses on the books and the firm is looking to increase investment in the business. The problem is, Etsy has made a bit of a gamble; they are trying to maintain their image as a homemade, community-based company but also to go global as a publicly traded company. Even if they went public, Etsy continues to put customer satisfaction over business issues like its share price.

Investors are not convinced with Etsy’s image and are even worried about trademark issues. It is unclear as to why Etsy decided to go public and instead did not try to make their stance as a private company, which would resonate more with their brand.

Screen Shot of new Amazon handmade marketplace

It seems Etsy now has more problems: as if they didn’t have enough to worry about with their own branding,  it looks like they have Amazon raining on their parade. Amazon are seeing the launch of a new section of their website which is focusing on handmade products called Handmade at Amazon. They recently sent an email newsletter to their sellers saying: “We’re offering artisans like you a first peek at Handmade, a new marketplace for handcrafted goods.”

How will this affect Etsy?

The homemade crafts marketplace has already been under scrutiny due to their disappointing figures being released, so won’t this cause even more issues for them?

Amazon’s new category is still in the development stages and they are currently obtaining interest from those merchants selling handmade goods at the moment. It also looks like it is currently restricted to US sellers and there is no clear plan of when it will be launched, or if it will be expanded to other areas.

What is interesting, is that there is a great deal of difference in fee structures, compared to Amazon, Etsy’s fees look very modest. However, Amazon has a great reputation and can provide security for both sellers and buyers. Its popularity and establishment will surely go in its favour. The question is whether people will prefer the secure, professional system that is Amazon or if they will want to stick to the charm and luxurious feel that Etsy offers.
It will be interesting to see how  what impact this new Amazon offer will have on Etsy’s as a brand.