Is Etsy Dead? An Insider’s View of the “Handmade” Company’s Future

Original Art "Dead Bird Series" by Katarina Thorsen, who used to sell on Etsy.

As a designer I need to be acutely aware of trends, and as a trend, the handmade movement, and Etsy in particular, is dying.

When Etsy launched in 2005, it was on the crest of an emerging national handmade movement. A new kind of craft fair, frequented by tattooed hipsters sporting “buy local” canvas totes, sprang up across the country, causing one writer in 2005 to cheekily lament “It's that time of year when the Look mailbox fills to bursting with perky pink postcards, each one advertising a holiday bazaar displaying the goods of local artists and designers.”

By Christmas 2007, supporting DIY and independent designers took on a patriotic urgency as the United States fell officially into the worst financial crisis since the Great Depression. For thousands of gen-Xers, many of whom were laid off and/or starting families, Etsy promised an ideal lifestyle: make sweet jewelry from home in your spare time. Etsy’s Quit Your Day Job series encouraged this dream, even highlighting “typical workdays” that often involved biking to the post office and working around children’s naps and dog’s walks.

I first started on etsy in January 2007 as seller number 43,719. There were just five shops selling in my category (printables), which made it fairly easy to dominate an emerging market. By 2009 I was making more money in less time than in my “day job” and piddix became one of the top 10 handmade shops out of the now-million-plus active Etsy members.

In many ways my success mirrored Etsy’s phenomenal growth. By 2010, I was being approached for licensing gigs, and I soon had my artwork in stores like Target, Trader Joes, and hundreds of independent museums and boutiques. In comparing notes with other etsy top sellers, this year-over-year growth was common, and published etsy statistics trumpeted an ever-increasing amount of good sold, page views, and Etsy members.

The beginning of the end for Etsy came in 2012. Etsy was “busted” by the Wall Street Journal for the proliferation of factory-made goods, and then the situation was exacerbated just a few weeks later when Etsy accidentally named reseller Ecologica Malibu a Featured Seller. Etsy finally went all-in and announced in October 2013 that they would officially allow factory-made goods and drop shipping, as long as they were “designed” by an Etsy seller.

By this time many top sellers had already begun setting up their own, independent shops (I shifted my focus away from Etsy, "graduating" in July 2012). Lifestyle blogging--which came of age hand-in-hand with the handmade movement--was proclaimed dead at the end of 2013, with Grace Bonney of Design Sponge largely concurring in 2014 that independent writers sponsored via advertising were largely being replaced by paid sponsored content from larger companies.

The decline of Etsy as a home to small, US-based independent designers was also due to the maker’s own successes in licensing and wholesale: you can now go to the mall and get the same indie-design products that five years ago you could only find at craft fairs and online.

With Etsy’s stock recently going public many are questioning whether Etsy's success will rise or fall in the future.

My prediction is that Etsy will continue in the same direction as it is now for several years: an ever-increasing global market of disparate goods no longer tied together by a handmade or vintage thread. 
For a while, it will still be possible, though more difficult than before, to make a handmade living. Sellers who want to do so can go several ways. For example, they can become a stylized importer of well-photographed lifestyle goods, like Three Bird Nest (etsy’s current darling). Or they can offer something that is truly unique or hard to replicate elsewhere, such as customized gifts, niche products, and limited offerings.

Is etsy dead? No. But it is dying. Etsy as a company has never made a profit, and absolutely nothing that they are doing now, nor any of my personal experiences with the company and its staff, give me any confidence that they will ever do so. The eventual end-game of the company may be to merge or be bought by an online marketplace with no handmade preference, such as ebay, amazon, or shopify. But Etsy’s heyday as a marketplace to make a handmade living has passed.