Amazon.com (AMZN) Launches Handmade Market to Compete with Etsy
Shares of Amazon.com Inc. (AMZN) were trading down -1.05 or -0.19 percent to $540.89 in Thursday’s premarket after the company announced the launching of it new “Handmade at Amazon” website early this morning. The new website, which is now open, directly compete with Etsy (ETSY), a company known for selling handcrafts and collectibles.
Seattle, Washington based Amazon.com Inc. is the world’s largest online retailer. The company, founded as Cadabra in 1995 by Jeff Bezos was originally started as an online bookstore, but later diversified into DVDs, CDs, software, video games, clothing, toys, food and jewelry. The company also makes consumer electronics products such as the Kindle e-book reader and the Kindle Fire tablet computer. Amazon.com operates through separate retail websites in other countries such as Australia, Brazil, Canada, China, France, Germany, India, the Netherlands and Mexico.
Amazon.com launched its new “Handmade at Amazon” website this morning at 3AM Eastern Time, with 5,000 sellers of 80,000 items from 60 countries. News of Amazon’s interest in launching an Etsy competitor first became public in May, when Amazon.com began sending invitations to Etsy sellers to sign up for the new section at the Amazon.com website.
Amazon.com does not charge sellers with a listing fee, but takes a 12 percent cut on each sale, which according to Amazon is to meet costs such as marketing, payment processing and insurance. Etsy only charges $0.20 per listing and takes a 3.5 percent cut on each sale. Nevertheless, Amazon’s 285 million accounts are 12 times the number of Etsy’s 22 million accounts, offering sellers higher traffic and a much deeper market.
Peter Faricy, Amazon Vice President in charge of overseeing Handmade said in an interview that, “You can think of it as a factory-free zone, a mass-produced-free zone. For the first time on Amazon, we’re going to have a picture of the artist, a little icon of what state they’re from, what country they’re from,” he continued, “We’re going to launch with an experience that’s very different. Customers are going to see the difference.”
Mr. Faricy said that the new website will begin with several categories including artwork, jewelry, home, stationary, baby, kitchen and dining, and party supplies. Amazon is vetting seller applicants to ensure that their items are handmade, asking artisans for details on the tools and machinery used to make their products. If the product does not qualify, sellers are asked to list at Amazon Marketplace.
Unlike Etsy, which changed some of its vendor rules and now allows sellers to outsource some of their manufacturing, Amazon Handmade will not allow outsourcing. Amazon’s new Handmade website is the newest addition to the company’s expanding operations; Amazon Home Services, which launched in March of this year, connects customers with professionals such as plumbers and electricians. Investors are cautious after the news, with both stocks off a fraction in this morning’s premarket.
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