Etsy is growing up. The website, born in 2005 as a marketplace for homespun crafts, this month announced guidelines that expand who can sell goods and how they can sell them. Etsy sellers are now free to hire employees, outsource shipping and fulfillment, and use manufacturers to make items they designed, as long as they’re transparent about the process.
The change follows years of growing pains and awkward moments for the site. Etsy is now home to more than 1 million storefronts and this month will surpass $1 billion in annual transactions for the first time. Last year sellers protested after a featured shop turned out to have help from a staff making handmade furniture in apparent violation of the website’s rules. Critics also say the company doesn’t do enough to police mass-produced goods posing as handmade items.
In a blog post announcing the new guidelines, Etsy Chief Executive Officer Chad Dickerson acknowledged that the site is struggling to balance its roots as an online flea market for solo crafters and the larger sales engine for small businesses that it has become:
… sellers told us again and again that our policies were confusing, that how we enforced them was unclear, and that as a result, they felt anxious and worried about their Etsy shops and unable to reach for their goals. Some sellers chose to work punishing hours to maintain a one-person shop, thinking that if they hired help, they would get kicked off the site. Some sellers quietly began to bend the rules, hoping that no one would really notice.
The company’s solution is more flexible rules and requirements for sellers to be transparent about how their goods are made: “The Etsy community places a premium on knowing the person and the story behind a handmade item,” Dickerson wrote.
The changes let Etsy accommodate bigger sellers, which bring in more revenue. (The site takes 3.5 percent of each transaction and 20¢ per listing.) “They’re seeing more and more people [whose] businesses are growing,” says Tim Adam, an Etsy seller who runs the Handmadeology blog. “Etsy wants to keep those people and grow up other businesses that could be like that.”
The more lenient guidelines mean that smaller Etsy sellers may have trouble competing, Adam says. Someone making glass beads by hand, for example, couldn’t match the price of a seller who designs beads and “could have those manufactured for nothing,” he says.
Rival entrepreneurs are ready to welcome disaffected Etsy sellers. Adam, who hosts a market on the Handmadeology website in partnership with a company called Meylah, said he saw applications to sell on his site more than double in the days after Etsy announced changes.
Erica Riegelman recently opened a marketplace called Aftcra to sell items handmade in America. The site, which just came out of beta after two years of development and testing, has more than 250 sellers and 1,500 products, she says. Riegelman says she has nothing bad to say about Etsy and credits the company with having created the industry, but she thinks Etsy’s evolution has opened a niche for Aftcra. “We are focused on only handmade goods,” she says. “We understand we’re going to smaller than Etsy.”