Yahoo Finance 
Etsy sellers aren't very loyal, leaving a huge opening for Amazon
(Michael Seto Photography)
Jeff Bezos, Founder Amazon
Amazon launched Amazon Handmade Thursday, a new marketplace for artisanal and handcrafted goods.
That puts Amazon Handmade squarely in competition with another artisanal goods marketplace Etsy.
Given Amazon’s market size, it’s a major potential threat to the $1.5 billion company that just went public in April. Amazon has roughly 285 million active customers versus Etsy’s 22 million.
And new data from Wedbush analysts suggest it’s likely going to get worse for Etsy going forward.
According to a Wedbush note published last week, nearly 90% of current Etsy sellers said they’re planning to or would consider selling items on Amazon’s new marketplace. Although the survey only asked 30 Etsy sellers, it’s a sign that shows many of the sellers “lack a sense of loyalty” to Etsy, Wedbush noted.
The bigger concern is that Etsy sellers are becoming growingly upset about Etsy’s recent decision to open up the marketplace to mass-manufactured items. Etsy used to have rules against selling items mass produced, sticking to its artisinal roots, but launched Etsy Manufacturing last month to broaden its market.
“A majority of [Etsy] sellers we surveyed were concerned with the presence of mass manufactured and potentially counterfeit merchandise on the platform,” the Wedbush note wrote. “Many sellers complained that lower-priced manufactured items from China resulted in an unmatchable pricing environment and lower sales volumes.”
It added, “We believe this will further drive Etsy sellers to the Amazon platform, as many of them are already frustrated by manufactured items on the site as our survey indicates.”
Amazon Handmade, on the other hand, has strict rules against manufactured goods. It states in its press release, “We only approve artisans whose products are handcrafted. We are factory-free.”
But shifting to Amazon Handmade will come at a price. Amazon Handmade takes a 12% cut of the sales (which includes all costs associated with payments and security) versus Etsy’s 3.5% cut.
Etsy shares closed down 4.3% Thursday, continuing its slide of more than 50% since its IPO in April.
Etsy sent the following statement in response to Wedbush's note:
"We believe we are the best platform for creative entrepreneurs, empowering them to succeed on their own terms. Etsy has a decade of experience understanding the needs of artists and sellers and supporting them in ways that no other marketplace can. Our platform attracts 21+ million thoughtful consumers seeking to discover unique goods, and build relationships with the people who make and sell them.”
Tom Forte, an analyst at Brean Capital, said Amazon Handmade may have a hard time keeping up with two-day shipping, and buyers may find similar manufactured goods at a lower price on the Amazon platform.
“While I always take Amazon as a competitive threat to any company that I cover, in the case of Etsy, I think the market has overreacted,” Forte said.
NOW WATCH: Clever iPhone tricks only power users know about
More From Business Insider
