With new seller distinctions, Etsy’s core identity is shifting as mass marketplaces like Amazon, Shein, and Temu continue to grow.
Etsy, historically known for its unique handmade and vintage items, is undergoing significant changes as it struggles to rival the onslaught of fast-merchandise behemoths like Amazon, Walmart, Shein, and Temu. Recent policy updates have introduced new classifications for items on the platform, potentially altering its artisan identity and opening the doors for more mass-produced items.
Etsy’s new policy delineates four categories for products: “made by,” “designed by,” “handpicked by,” and “sourced by.” These categories do away with the handmade and vintage labels that built the platform while aiming to provide more transparency about how an item is made and the seller’s involvement.
‘A race to the bottom’
Etsy, which brought in more than $2.7 billion in revenue last year according to Statista, says that this policy shift will not change its foundational practices. Prohibited activities, such as reselling items made by others, remain banned. CEO Josh Silverman told CNBC that the consistent theme is that items sold on Etsy are infused with a human touch, “because that’s what makes Etsy, well, Etsy.”
“I feel like there’s a race to the bottom in terms of commoditized commerce right now and almost everyone in e-commerce is playing that race,” Silverman said. “They’re selling the exact same product and they’re trying to sell it to you for 2 cents cheaper, or ship it two hours faster.”
Vintage items, long a staple of Etsy, now fall under “handpicked by,” with specific indicators on listings. Supplies like yarn or fabrics are categorized as “sourced by.” A handmade ceramic mug would be classified under “made by,” whereas a digital illustration falls under “designed by.”
Despite these assurances, Etsy’s evolution has sparked concerns. The platform, which has long differentiated itself from other e-commerce giants like Amazon by focusing on unique, artisan-made items, has gradually loosened its rules on what constitutes “handmade.” In 2013, the company allowed sellers to use external production assistance, such as print-on-demand services for T-shirts and tote bags instead of screen printing.
While this expansion has attracted a broader range of creatives, it has also opened the door for less scrupulous sellers. Frustrated shop owners argue that scammers and drop shippers — those who buy cheap, mass-produced goods and sell them as handmade — have proliferated on Etsy. This shift was at the heart of the 2022 Etsy seller strike, with artisans claiming the company did not do enough to enforce its handmade policy as it faces steep competition from platforms like Temu and Shein where the average cost of goods is considerably less than handmade items on Etsy.
Cheaper platforms have indeed taken a toll on Etsy. Earnings last quarter dropped nearly four percent over 2023 and Etsy’s stock has lost more than 80 percent of its value since 2021. Last December, it laid off 11 percent of its workforce in a moment Silverman described as a “very challenging macro and competitive environment.”
In a post shared to X (formerly Twitter), Juozas Kaziukėnas, founder of Marketplace Pulse, says Etsy is a “balancing act of handmade low-production goods versus mass-produced customizable items. One is Etsy’s roots, another is most of its GMV [gross merchandise value].”
AI products on Etsy
The platform is now also reconciling with the increase of AI-generated content. The introduction of new product categories aims to reassure buyers that they are purchasing items created or selected by humans. This move also seeks to address the concerns of genuine artisans who feel threatened by drop shippers and now, AI tools. “After carefully considering the complex issues surrounding AI-generated content, we have decided to continue to allow sellers to use their original prompts in combination with AI tools to create the artwork they sell on Etsy,” the company said in a statement. “We believe this decision aligns with our values of supporting artists through the evolution of art.”
Etsy says permitted examples of this might include “a fantasy scene based on a seller’s original prompt or inputs and produced by an AI generator, or a custom portrait of a buyer’s pet generated using AI tools,” the company added. “Sellers must disclose within their listing description if an item is created with the use of AI.”
Etsy’s latest campaign, “Keep Commerce Human,” underscores its commitment to human creativity in an increasingly automated world. The campaign, created by Orchard Creative, features real sellers in TV commercials, billboards, and social media across the U.S. and U.K., including the Paris Olympics. The TV spot begins with the question, “What does a robot know about love?” The voiceover celebrates the human effort in creating unique items, juxtaposed with images of artisans at work and a dismantled robot. Billboards in New York and London highlight makers like Paulien, Dejvi, and Juliana.
The campaign coincides with Brad Minor’s promotion to Etsy’s first chief brand officer. “Our sellers are the heart of our marketplace, and their unique human touch is what makes Etsy, Etsy,” Minor said in a statement, underscoring Silverman’s refrain.
“Our film isn’t anti-tech, it’s pro-human,” David Kolbusz, Orchard Creative’s chief creative officer, said of the campaign. “It’s a reminder that the things that arrive on your doorstep can come from someplace more meaningful than a fulfillment center.”
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