Amazon who like to sell everything and have their fingers in every retail pie, have now started competing in the handmade marketplace. Handmade at Amazon was launched recently and has already got 5000 artisan vendors in 60 countries. Should Etsy be concerned?
The article was by a US columnist so there was no mention of Folksy. Just in case you do not know about Folksy, they are a handmade market place for British designers and makers. I chose to sell with them from day one as they are based in Britain and support small creative businesses like myself. I started selling with Etsy about a year later having seen their sellers' success stories and the supportive network of makers.
In my view, Etsy have become too corporate, now listed on the US stock market having to answer to investors and seeking profits.
Etsy is moving away from their roots, since 2013 there has been an agreement to allow the sale of factory made items, as Andrew Dewson says, "Nothing says "handmade" quite like something that was knocked out by a robot". They also made changes to their practices to reduce corporation tax by moving more revenue through Etsy Ireland and they have also changed how Etsy Ireland is registered, so that the company doesn't have to publicly disclose its basic financial information. That move could cause Etsy to lose its B Corporation certification which is given to companies who aim to solve social and environmental problems.
There is no disguising that Amazon is a large commercial organisation that have had unfavourable press about their procedures and tax avoidance in the UK. However, from May this year the online retailer has started booking its sales through the UK, meaning their profits will be taxed by the HMRC.
In September this year, Etsy launched Etsy Manufacturing, a service in the U.S. and Canada that matches sellers to small manufacturers. This does allow small creative businesses to grow. If you are a handmade business that makes everything you can only achieve so much so this approach will support the growth of small businesses. However, this decision has resulted in a fierce PR backlash over what looks like a move away from Etsy's artisan roots. Whereas Amazon will only accept handmade goods and you have to apply to be a seller, it has almost taken on the business model of Etsy when it began.
Whether we like it or not both Amazon and Etsy are businesses that need to make a profit to grow and in order to survive businesses have to change to compete. For handmade businesses the growth of these selling platforms will mean a large customer base, improved technology and advertising that a seller can take advantage of.
Amazon already has a customer base 10 times the size of Etsy, but what are the costs for a seller like me with Handmade of Amazon?....
Handmade Amazon fees are 12% for every sale and after 1 August 2016 there will be $39.99 monthly fee. You would have to sell a lot to make a profit from selling through Amazon which would mean you need to make a lot to sell and if like me you make everything yourself, it may not be possible to make enough to make a profit.
Whereas Etsy fees are a £0.13 listing fee plus 3.5% transaction fee and 4% + £0.20 payment processing fee.
Folksy's fees are £0.15 +VAT listing fee plus 6% + VAT sales commission fee or you can become a Folksy plus seller for £45 (inc VAT) per year which is great for sellers who list more frequently and/or have a lot of stock as there are no listing fees. The commission fee is the same at 6% +VAT.
It's not just Amazon's costs handmade businesses should look into. I came across a blog post by a seller who has already closed her Amazon shop. It makes interesting reading especially the small print she highlights that states they have the right to exploit you and own the copyright of your designs, I don't like the sound of that! You can read her views here.
It's an interesting time for the handmade marketplaces with artists and crafters starting new ventures all the time. More are choosing to buy from small creative businesses with other organisations popping up ready to support handmade sellers with services such as selling and marketing. I am interested to see what happens with Handmade at Amazon and what the future holds for Etsy and Folksy.
For my business I plan to focus my efforts with Folksy, whereas the jury is still out on my future with Etsy. I'll wait to see what happens with Handmade at Amazon but I can't justify their costs for my business yet and I definitely don't want Amazon to replicate my work and exploit my business and products.
I would love to hear your thoughts on the growing industry of handmade and Amazon entering this market.
If you already sell with Handmade at Amazon I would love to hear about your experiences.