In 2013, Etsy Inc. (NASDAQ:ETSY), the online marketplace for handmade goods started allowing its sellers to use outside manufacturing. This was done to make it easier for sellers making products to scale up their businesses. The sellers then began professionalizing their operations and since then 5,000 sellers have applied to use manufacturing and have partnered with over 7,000 manufacturers. Over 85% of the partnered manufacturers reside within the country of the sellers.
To make it easier for sellers to find manufacturers, Etsy has announced a new program called Etsy Manufacturing marketplace which will help sellers find manufacturers, the program is free and is available to seller in U.S. and Canada. Etsy checks the manufacturers for certain ethical standards. Right now sellers will only be connected to manufacturers in textile, fabrication, jewelry and printing, the company plans to add other industries in the future.
The company plans to earn money on this new offering in future as it would charge a fee on the transactions between the manufacturers and sellers. Etsy’s fastest growing business is the service it provides to sellers and the company has had a good growth trajectory. The growth from marketplace sales has however slowed down while those from seller services have jumped.
The introduction of manufacturing is, however, against the reputation of Etsy as a marketplace for handmade goods and the move to allow the sellers to use outside manufacturing in 2013 is acknowledged as a tension by Heather Jassy, SVP of members and community at Etsy. She added that Etsy is dedicated to helping sellers scale their businesses.
Etsy Inc. (NASDAQ:ETSY) treads a fine line between entering expanding and keeping the reputation it made as a handmade goods marketplace. The company now has over 32 million items, 1.5 million sellers and sales of over $1.93 billion. The investors will welcome Etsy’s new move to scale up the business as the company reported losses due to high marketing costs and a stronger dollar.
