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Inside a tightly packed studio on the fourth floor of a squat brown building in Queens' Long Island City, Virginie Dyvorne is positively bubbly. This is her general mood anyway, but this space is also where Dyvorne feels most at home. She spends upwards of 70 hours a week here—including weekends—making jewelry pieces to sell on Etsy. And nothing gets Dyvorne more fired up than talking about how she works.
"When I get here, I immediately go through the list I prepared the day before," she told me during a recent visit to her studio. “I go through that list, then I start making stuff on my bench.” She waves toward a corner of the room where a long, narrow table with a handful of gold rings sit in different phases of production. Plastic domes cover a few to let the recently applied mint enamel dry safely.
That afternoon, Dyvorne says, she'll call her suppliers, most of whom work out of the Diamond District between Fifth Avenue and Sixth Avenue in Midtown. Her polisher is in that neighborhood. So is her caster. And her diamond setter. “Everything is in two streets,” Dyvorne says. Every day, she plans a trip to the district, picking up castings, polished pieces, and other jewelry with the stones already set. Then she returns to her studio to get the pieces ready for shipping out to customers.
To shoppers who don't follow Etsy closely, something about Dyvorne’s description might not seem quite right. Aren't people who sell stuff on Etsy supposed to make their wares by hand all by themselves? Doesn't contracting out the work sound like a supply chain, the opposite of artisanal? As it turns out, limiting Etsy sellers to a single DIY definition is too simplistic for the Etsy of today.
As the company has grown up over more than a decade since its founding, it has expanded beyond its original concept as a kind of online craft fair for individual makers. Some longtime Etsy sellers complain that the site has strayed too far from its core identity. The company disagrees, saying that it's seeking to humanize the supply chain. As its bottom line wavers, the pressing question for Etsy is whether it can evolve without alienating its loyal sellers and customers, meeting the demands of shareholders while remaining true to its ideals.
Etsy was founded in 2005, and today it has 1.6 million active sellers on the platform, selling more than 35 million unique goods to 25 million active buyers. In 2015, the company says, gross merchandise sales rose to $2.39 billion. ComScore says Etsy was one of the top 10 retail websites in the US in 2015. And market research firm Statista calls Etsy the second-most popular online marketplace among online sellers in the US, behind only eBay.
All of which sounds very impressive. But Etsy has struggled, too. Yes, the company finally turned a profit for the first time since going public in April of last year. But Etsy shares have stagnated well below the company's IPO price, lingering in the single digits as part of a general downward trend. And it’s facing new competition from no less than Amazon, which vies not just for overall consumer dollars but recently launched its own online artisanal marketplace.
Taken together, Etsy’s successes and struggles epitomize the crisis at its core: it's a company whose identity hinges on individuality, craft, and taking things slow—in short, resisting the imperatives of mass consumer culture. At the same time, it's a publicly traded tech company obligated to provide shareholders with a return on their investment. It has to scale. It needs to stay dedicated to its makers—it just needs more and more of them.
To meet these seemingly antithetical aims, Etsy has rolled out a number of policy changes in recent years. In 2013, it began to allow makers to use manufacturing partners to help them produce their goods on a larger scale. It launched Etsy Wholesale, a program that lets retailers like Nordstrom and West Elm source merchandise from Etsy sellers. More recently, Etsy released Pattern, a tool that lets merchants create self-branded online storefronts powered by Etsy on the backend.
These seem like great resources for Etsy’s crafters. But these initiatives also represent drastic changes compared to the time when the company was founded in the early aughts, a time when indie craft was on the rise but setting up a website for an online store was a big pain. In the face of these changes, some sellers feel that Etsy has become so razor-focused on growth that it’s willing to overlook mass-produced goods on its site.
"Indie craft has grown from a close-knit subculture to a giant economy that influences trends in big box stores," says Grace Dubosh, an Etsy crafter who later quit the site and wrote an op-ed about the experience for WIRED. "And Etsy has grown from a startup built by crafters and for crafters to a juggernaut."
And a juggernaut needs to be fed. On a platform the size of Etsy's, some items that seem far removed from the ideals the brand claims to represent appear to slip through. Gil Luria, an analyst at Wedbush Securities, says a quick search on Etsy turns up several examples of items that appear to be mass produced in China and sold through Chinese e-commerce site Alibaba. “It only took us a few hours to find these examples, putting in question the rigor of Etsy’s quality controls,” Luria wrote in a report last year.
For its part, Etsy is upfront that it won’t catch everything. "Etsy is an open marketplace, and we believe that the opportunity an open marketplace holds outweighs the challenges it creates," says Heather Jassy, senior vice president of Values-Aligned Business at Etsy. "Anyone can list an item at any time, we don’t pre-judge or curate items."
At the same time, Jassy points to the successes of Etsy's Trust and Safety team, tasked with flagging and reviewing items and shops abusing Etsy’s policies, to show that the company is committed to keeping products that violate its ideals off the platform. According to Etsy’s 2015 Transparency Report, the team received 305,762 flags in 2014 and closed more than 160,000 accounts as a result of its review. Beyond this effort, Jassy says, Etsy uses machine learning tools to detect repeat abusers and shut them down before they can reopen new shops.
"Due to the open nature of our platform, it is likely that there will always be some goods...that do not belong on Etsy," Jassy says. "The size and scope of this has been greatly exaggerated, but we take appropriate measures in each case to detect and remove these items when warranted."
Dyvorne says that Etsy was indispensable factor in getting her business off the ground. She started her online store in 2011, shortly after she moved to the US from France and struggled with language issues, among other challenges people face when they move to a different country. After getting advice from other Etsy sellers, she bootstrapped her business, growing and refining as she went along.
And today, as she thinks about expanding, she says more outsourcing would be a big help—not the actual designing part, she clarifies, but in administrative tasks like handling social media, shipping, and inventory. While she put together her own network of suppliers, Dyvorne says if Etsy's list of approved, vetted small-scale manufacturers had existed at the time she was building out her mini-supply chain, it would have been a godsend. “That’s life-changing for designers to have that now,” she says.
Indie craft markets have led to dramatic changes for such manufacturers themselves. Joel Weiss is vice president of Carrera Casting, which has been in the jewelry business in Manhattan’s Diamond District for more than forty years. "It’s a different world now," Weiss says. "Thirty years ago, designers also had to be jewelers. Today, a lot of designers are just designers—not jewelers." And it's just this kind of business—call it artisanal manufacturing—that Etsy says it wants to support. In opening up its platform to outsourcing, Etsy says it's not sacrificing its ideals. It's helping its makers grow while supporting a different kind of maker—not just the artist but also fabricators like Carrera Casting whose work involves a craft all its own.
That formulation may or may not allay the concerns of old-school Etsy sellers. And Etsy needs all its sellers if it hopes to keep up with the market, much less grow. Luria says that as long as e-commerce is still growing—and it is, on the order of about 15 percent year-over-year, according to the US Census Bureau—Etsy stands to benefit. But to capture that growth, it necessarily needs more stuff to sell. "At some point the attrition of sellers may get to the point where Etsy grows at a rate less than e-commerce is growing," Luria says. Etsy's efforts not just to fight that attrition but to grow reflect the paradox it faces. Etsy's identity as a platform that pushes back against a culture of mass consumerism is key to attracting individual sellers. It's just that Etsy needs those individuals en masse.
Correction at 12 nn ET on 6/09/2016: This article originally misstated Dyvorne’s name. Millefiore is the name of Virginie's Etsy seller store.
