Etsy, a $37 billion e-commerce platform known for handmade and unique items, reached its peak share price in November 2021. However, its value has since plummeted, and the platform faces significant challenges that threaten its sustainability. The primary issues include:
- Proliferation of Dropshippers: Etsy's market is flooded with dropshippers who sell mass-produced items, contrary to Etsy's original mission of promoting handmade goods.
- Counterfeit Goods: The platform has seen an increase in counterfeit products, undermining its authenticity and trustworthiness.
- Seller Exodus: Both small and large sellers are leaving due to unfavorable conditions and mandatory advertising fees.
- Loss of Uniqueness: Etsy's platform is no longer unique, as its business model is easily replicable by new competitors.
- Eroding Trust: Delays in payments, partly due to the collapse of Silicon Valley Bank, have further strained seller trust.
Etsy's drive for rapid growth to satisfy shareholder expectations has led to a departure from its foundational values. This shift has alienated its core community of small-scale artisans, leading them to seek alternatives. To recover, Etsy may need to refocus on its original mission and rebuild trust among both sellers and buyers.
Discussion (3)
From Etsys perspective, I can understand that it would be an easier business to just work with large manufacturers and drop shippers. They don’t have to worry about fulfillment being an issue, and the items come standardized and likely QA’d. But from the consumer, perspective, that’s not at all why we would want to shop on Etsy. It was always about items from individuals you couldn’t get anywhere else.
This to me has ruined pretty much all ecommerce marketplaces. I find that most everything is recycled nonsense spawned from some white label factory in china.
What made esty a worthwhile place to shop originally was it's craftsmanship and unique individual goods. It still has some of that, but it looks like it gets drowned out.
It’s also making the non-drop shippers have a hard time to compete against because it basically creates circumstances where hand-crafter version looks like it’s over priced by comparison.