Etsy doubles down on manufacturing

San Francisco, Oct. 8: Etsy Inc, the online store that made its name selling handmade crafts, is trying to stop merchants from defecting as giant rival Amazon. com Inc prepares to attack it on its own ground with a new site for artisanal items called Handmade.

But Etsy's policy of allowing sellers to use outside manufacturers continues to anger some of the smaller vendors of handmade items who helped make it successful. Even changes to that policy have done little to address the criticism or hold off defections, analysts and sellers say.

“Until now, Etsy sellers had nowhere else to go,” said Gil Luria, an analyst at Wedbush Securities based in Los Angeles. “But what Handmade at Amazon represents is a trip back in time to Etsy's original vision.” Etsy disputes that sellers had no other outlets, saying it knows that while about half of its sellers sell only on its site, the other half also use other venues - from craft fairs to their own websites. But on average, even those who sell in many venues make the majority of their income on Etsy, the company said.

Etsy, launched 10 years ago, became popular as an alternative to Amazon and eBay Inc, tapping into shoppers' appetite for handmade items.

But since its April initial public offering, which valued the company at $ 4 billion, Etsy's shares have fallen by more than 50 per cent. And the company's losses doubled in the most recent quarter due in part to rising expenses and the stronger dollar.