Etsy faces big new challenge — from Amazon

Following months of speculation, Amazon.com is officially launching Handmade at Amazon. The new online store features handmade items crafted and sold directly by artisans, and is a direct challenge to Etsy Inc.



Handmade at Amazon offers more than 80,000 handcrafted items from around the world. Customers can shop by country, locally, or by individual artisan profile. Shoppers can also browse by product category, including jewelry, home décor, artwork, stationery and party supplies, kitchen and dining, and furniture.



More than 30% of goods on Handmade by Amazon are customizable. All merchandise must be completely handmade with no factory involvement. Every Handmade product page contains a location icon identifying where the artisan is based, along with a link to the artisan’s profile.



Amazon is attempting to integrate the Handmade customer experience into the mainstream customer experience as much as possible. More than 600 Handmade items are currently available for Prime shipping, and Amazon says more will be added every day. Handmade items are available in regular product searches by using the keyword “handmade,” and there us a “Handmade” link in the “Shop by Department” navigation bar.



“We have designed a custom shopping experience for customers looking for handmade items by bringing together many of the best artisans in the world, and they’re adding thousands of items daily,” said Peter Faricy, VP for Amazon Marketplace. “Knowing an item has a unique story behind it creates a personal experience that customers have told us makes owning handmade items special.”



If any of this sounds familiar, it’s because Handmade at Amazon offers a business model and customer experience remarkably similar to that of Etsy. While Etsy faces a number of other competing online marketplaces for homemade items, such as Aftcra, none of them has anywhere near the reach or resources of Amazon.



Chad Dickerson, CEO of Etsy, issued a statement expressing confidence that Etsy will more than rise to this new challenge.



"We believe we are the best platform for creative entrepreneurs, empowering them to succeed on their own terms,” said Dickerson. “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."



Etsy, which went public this year, reported a growing loss in the second quarter. However, it also reported gross merchandise sales of $546.2 million and revenue of $61.4 million, so clearly there is a large online market for handmade goods. It will be interesting to see if that market is large enough to sustain two major players.