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Amazon.com Inc. (AMZN) Sees its Chance to Eat Etsy Inc (ETSY) Success

etsy vs amazon.com inc.

Amazon.com, Inc. recently launched Handmade – a website selling ‘homemade’ goods – to gain on the shopping fever before the Holiday season. As it goes, it also lands a challenge to the 10-year old crafts selling portal, Etsy Inc . Both the sites differ in terms of seller base, manufacture of goods’ policy and fee structure. Yet, many analysts think that Big A might be coming on too strong for Little E.

etsy vs amazon.com inc.

Entering Handmade For Amazon

Amazon  has started inviting sellers onto its Handmade platform, allowing them to get access to its huge shopper base of 200 million. The Seattle-based online retail giant promises to carry every handmade thing, starting from $30 walnuts to $350 quilts. This latest business move was probably due to shoppers’ feedback and website searches.

“We had thousands of searches every day from customers looking for handmade or handcrafted items,” said Peter Faricy, VP, Amazon Marketplace.

This move pits Amazon directly against Etsy. Etsy  became a hit because of its handcrafted goods. With 22mn active users as of December 2014, Etsy went public last April. The company showed registered user growth rate of 35 percent in the last quarter of December last year.

On the finance front, things are not all that shiny at Etsy. Rising expenses and a strong dollar doubled its losses in the last quarter. Etsy’s share price has already declined by over 50 percent since April. With Amazon entering its niche, it has further affected the share price. The price has fallen by 4.3% on Thursday.

What Analysts Say

“Until now, Etsy sellers had nowhere else to go,” said Gil Luria, an analyst at Wedbush Securities, LA. “But what Handmade at Amazon represents is a trip back in time to Etsy’s original vision.”

“As impressive as Etsy is, with 22 million active users, they are still almost puny compared to Amazon in terms of brand awareness,” said Andris Pone, President of Coin Branding Inc. “The big story here could be on the demand side, not on the supply side. Many people have never heard of Etsy, and now that Amazon has launched this new category, they will think about buying something handmade online.”

Amazon Pressing On Smaller Companies

Amazon is readying to take on a lot of smaller businesses.  Take the example of AmazonLocal.  AmazonLocal is a altered (and let’s say, better) version of Groupon and LivingSocial. AmazonLocal started in small places such as Portland, Charlotte and Boise. But slowly, it shifted to big cities in the United States and around the world.

Like Google Offers, it might bring its group of services together. The first move might be to offer coupons for buying from Amazon itself, which is definitely not good for the coupon and deal businesses.

With the size and power that it wields, Amazon is all set to crush a queue of smaller companies, including Etsy .

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