Amazon Targets Etsy With 'Handmade' Marketplace -- Update

By Greg Bensinger 

Having vanquished scores of brick-and-mortar retailers, Amazon.com Inc. has a new target: Etsy Inc.

The Seattle Web retailer is prepping a marketplace for artisan goods it is calling Handmade. Etsy sellers received invites reviewed by The Wall Street Journal over the past few days to sign up for the new section of the Amazon site.

"We're offering artisans like you a first peek at Handmade, a new marketplace for handcrafted goods," the Amazon email states. The invite doesn't provide additional details such as when it will be rolled out or fee details.

The invite points to a questionnaire on Amazon's site that asks sellers which primary product category they fall under, listing 11 general subjects such as apparel, baby, and pet supplies. The poll lists subcategories for jewelry and home and kitchen in particular.

Spokespeople for Amazon and Etsy declined to comment.

Amazon's new site could present a new challenge for Etsy, whose stock has fallen about 43% since the close of its first day of trading last month. Unlike Amazon, Etsy doesn't have its own Prime loyalty program, nor does it oversee a shipping network to expedite deliveries. Still, Etsy's 3.5% commission and 20-cent listing fee are potentially much less expensive than Amazon's cut. Today, Amazon's commission varies depending on the product sold, but for many categories it charges sellers a 15% fee on the price of each sale.

Etsy, which went public on April 16, reported a $36.6 million loss in this year's first quarter, wider than the $463,000 loss a year earlier, despite a 44% jump in revenue to $58.5 million. The Brooklyn, N.Y.-based company said the loss was due mostly to restructuring costs.

The number of Etsy's active buyers--those who have made at least one purchase in the past 12 months--rose to 20.8 million from 15.3 million a year earlier. But that pales in comparison with Amazon's 278 million active accounts.

Dar Garfield, who sells handmade jewelry on Etsy through her SheekyDoodle site, said she was surprised to get an invite from Amazon, since she didn't have a seller account with the Seattle retailer.

"Amazon has such huge traffic numbers on their website already, it's pretty appealing," said Ms. Garfield. "I am probably going to do it."

Ms. Garfield, of New Plymouth, Idaho, said she has about 1,300 products for sale on Etsy at any one time, noting that's the only outlet where she sells her wares.

Monica Estrada, who runs a Manila, Phillippines-based custom document and planner store on Etsy, said she would also consider joining Amazon's Handmade site.

"It's a good idea not to put all your eggs in one basket, and joining another handmade marketplace would make me feel like I'm not so dependent on Etsy for income," she said in an email.

On Etsy.com message boards, some Etsy sellers expressed concern about Amazon's shipping guarantees, which include two days for Prime members. Many Etsy sellers make their goods on demand, which means they wouldn't be able to meet strict shipping deadlines.

It isn't clear if Amazon would hold artisans on the new marketplace site to the same shipping standards as other sellers.

Write to Greg Bensinger at [e-mail]

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