Amazon Handmade Takes On Etsy With Homecrafted-Only Store

LONDON -- Amazon's latest specialist online store, Handmade, will launch Thursday hoping to cash in on the growing group of artisans and craftspeople making and selling their own products from their homes -- which could spell trouble for market leader Etsy.

According to the marketplace's website, "Handmade at Amazon is a new store for invited artisans to sell their unique, handcrafted goods to our hundreds of millions of customers worldwide." The company is inviting artisans to apply to be a part of its launch but only if you meet its strict criteria.

The company has said it has been working on Handmade for two years after it noticed an uptick in searches for handmade items on its main site, and has been reaching out to craftspeople to sign up for its services ahead of launch -- many of them members of Etsy.

Sellers will only be able to list items "made entirely by hand, hand-altered, or hand assembled," and mass-produced products or products handmade by a different artisan are not eligible to be sold on Handmade, the company says.

Initially items will be sold in categories including jewelry, home products (such as art, bedding, furniture, lighting, patio, lawn and garden, storage and organization), party supplies and stationery. At launch the company says it will feature more than 80,000 items, from all 50 U.S. states and 30 countries.

Amazon of course is not doing this out of the goodness of its heart and will take a 12 percent referral fee for all products sold on Handmade, though it won't charge the monthly fee it charges to sellers on its main site. This approach is slightly different from Etsy, which charges users 20 cents to list a single item for four months and takes a 3.5 percent cut of all sales.

Amazon is hoping to cash-in on the maker movement epitomized by Etsy, which went public in April at a valuation of $1.8 billion and raising more than $237 million. Since then, however, Etsy has lost over half of that value (53 percent) while reporting two quarters of losses. It recently launch Etsy Manufacturing to help connect its users with approved manufacturers to build their products while retaining that sense of being homemade and artisan -- a move designed to keep sellers with growing businesses to stay with the site. Etsy has been criticized for the move as it goes against the artisan movement, with Amazon saying it has no plans to offer a similar service.

In reponse to the announcement by Amazon, Etsy CEO Chad Dickerson said: "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."

Gil Luria, an analyst with Wedbush Securities, told USA Today: “This is going to be a very challenging time for Etsy. For the last 10 years they’ve been the main destination for people looking to buy unique, mostly handmade gifts,”

There will be no restriction on users of Handmade also selling their items on Etsy, and it is likely that artisans will see the launch as a positive move as it will allow them to put their products in front of millions of more customers.