Amazon Handmade recently launched with little fanfare, but considerable anticipation. It could spell long-term trouble for Etsy— Handmade’s most direct competitor — but for Etsy’s users the opportunities are huge.
Amazon Handmade launched on Thursday 8th October. When the site went live it was already stocked with 80,000 handmade items from 5,000 sellers in over 50 countries. For the first day of any launch, it’s an incredible success.
The Amazon Juggernaut Keeps Rolling
According to Peter Faricy, Amazon’s Vice President, the all-new section of the superstore is “a factory-free zone. A mass-produced-free zone”. It was promised to have a different feel to the rest of the store to represent its new focus. In that attempt, it failed catastrophically.
Handmade is as corporate and lacking personality as the rest of Amazon. It’s missing a certain passion. A burgeoning industry that thrives on creativity and originality has been reduced to a stale banality. It’s been reduced to this because Amazon has no real interest in the handmade industry at all, apart from increasing its ever-expanding share of total online sales into every aspect of our lives.
Amazon vs Etsy: A Comparison
What the branding of Handmade is missing in creativity, it makes up for in the sheer size of opportunity on offer. Consider the following information comparing exactly what each company is able to offer their sellers.
Etsy’s marketplace sales are worth a healthy $2bn per year. Unfortunately for the company, however, its share price has recently halved. This is partly due to backlash from users who were angry that Etsy started to allow outsourced products to be sold on the site: it went against the site’s entire philosophy. The company is also struggling because shareholders were aware that Amazon had been approaching — or poaching — sellers from Etsy since May.
Amazon, in contrast, has annual sales in excess of $75bn. Their share price has soared 75% since the start of 2015, giving it a market valuation of $250bn. And its patience in waiting to enter the handmade space has ensured the company can learn from Etsy’s mistakes. One example of this is Amazon’s strict criteria for what can be sold on Handmade, giving customers confidence that what is sold, is what is advertised.
But the real opportunity lies in the size of the market that Amazon is able to offer. Etsy has a tidy 22 million monthly users. Amazon has 225 million. That’s over a 1,000% increase in potential customers. If a seller is looking to make a living from their crafts, that’s not something that can simply be ignored.
Next there’s the matter of what the companies charge their sellers. Etsy’s fees are $0.20 for every item listed, plus 3.5% of all sales. Amazon will charge no listing fees, but wants 12% of all sales. This is a big increase in return for access to a much bigger market.
What’s included in those fees deserves a mention, too. When you sell on Etsy, the postage and packaging is all down to you. Amazon, on the other hand, is also including fraud protection, payment processing fees, and “marketing” in its charges. Plus, sellers on Handmade will be able to use Amazon’s Fulfillment Centers which means (for a small additional charge), they will package and post all orders. Amazon Prime members get free shipping on all orders that are sent from those Fulfillment Centers (along with other benefits), too.
Where’s The Opportunity?
We can safely assume Amazon can dwarf Etsy’s marketing budget without raising an eyebrow. Consequently they can very easily ensure tens of millions of potential buyers know Handmade exists.
Within a few months of launching therefore, Amazon could have a business in the handmade industry that matches, or exceeds, Etsy’s market share, which took over four years to build. When a business can grow that quickly, without needing to worry about scaling issues, or even making a profit just yet, you know opportunities abound.
There are currently, as mentioned, only a few thousand sellers on Amazon Handmade. A few thousand sellers who’re targeting a market of over 200 million buyers. Imagine what the first mover advantage might mean for these sellers.
After all, we know pretty well how people can use a thorough understanding of Amazon’s workings to make a killing on the site. People like Matt Clark and Jason Katzenback (you can sign up to their free guide via that link) have made millions by turning their knowledge of how Amazon works to their own advantage.
That being said, many makers are precisely that: makers. Their skills lie in making, not necessarily in marketing. But it’s at the intersection between making products people love, and knowing how to market those products, specifically on Amazon, that houses the golden nugget here.
Very rarely does the chance present itself to enter an uncrowded marketplace that people understand, and which offers hundreds of millions of potential customers. For makers of handmade goods, whether that’s tea cosies or neo-classical paintings, this really is a once-in-a-blue-moon event. This is why Amazon sees no qualms in demanding a 12% cut in sales. They understand that 12% of nothing is nothing. Whereas 12% for a substantial increase in sales is usually a good deal.
Taking Advantage Of The Opportunity
Tackle the first hurdle as soon as possible. Get accepted to Amazon Handmade. This is a pretty quick application process which requires you to explain the tools you use, and your production methods. Once you’re accepted, you’re free to start listing and selling your products.
But before you list any products, spend a week or two learning as much as you can about how Amazon actually works. The workings of the rest of the site, whether that’s the Kindle Store or Amazon Home Services, all have a lot in common. We can therefore make a solid bet that those same working dictate how Amazon calculates which handmade products to promote, rank, and display on results pages.
To get you started with this, the following resources will be highly useful. Once you’ve developed a strategic understanding of how to list, describe, display, and promote your products, you’ll be in a position to stand out from your relatively few competitors on Handmade.
This will turn your listings into better sales pitches, encourage more people to leave reviews, and generally make sure more people who may be interested in your products, see your products.
- Mistakes To Avoid When Selling On Amazon.
- 10 secrets for successful selling on Amazon.
- Writing product descriptions that sell
- A great discussion on making 5 figures per month on Amazon.
- Should you be using Amazon’s Fulfillment Services?
- How to receive consistently amazing Amazon reviews.
- Interesting podcast on making 6 figures on Amazon by selling physical products.
- Taking product photos that sell
- A highly ranked Udemy course on how to sell physical products on Amazon ($300)
A Problem Of Principles
It’s true that having yet another place to list and manage your products will add to your workload, and means you’re offering more profits to a billion-dollar company. But ignoring Amazon and choosing to stay loyal to more independent companies is arguably shortsighted.
Furthermore, if you only sell on Etsy, you’re keeping all your eggs in one basket and setting yourself up for long-term failure. Of course, There are plenty of other sites to sell your crafts on, too.
If you think Etsy didn’t have ambitions of becoming a billion dollar company (and even of being bought out by Amazon), you would likely be very mistaken.
Amazon may do lasting damage to many of its competitors with this move. But it could also cause the handmade industry to grow considerably in just a few years. For many, moving to Amazon means “selling out”. For others, it’s business, and makers need to make a living. But it’s also taking the handmade industry on its first foray into the mainstream. A trip that could see many makers “making it big”, more than doubling their sales, and contributing to a rapidly growing industry.
You should go along for the ride and put in the hours to make the most of this opportunity.
What Will You Do?
If you’re a maker, will you be selling your goods on Amazon Handmade? If not, why not? Do you think this is a good move for the handmade industry? And do you think there’s room for both Amazon and Etsy to succeed?