Etsy says sellers can now use factories for handmade goods

The move will allow those who use the online marketplace to build larger businesses


SARAH FRIER
October 2, 2013 1:58AM (UTC)

Oct. 1 (Bloomberg) -- Etsy Inc., an online marketplace for handmade and vintage goods, will let its sellers use outside manufacturers and hire as many employees as they need, loosening rules amid confusion over requirements.

The change will allow sellers that cultivated their businesses on Etsy to keep expanding on the site, Chief Executive Officer Chad Dickerson said in an interview. It will also permit moves that were previously forbidden, like employing people in another location or producing goods in a factory.

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Etsy is home to about 1 million sellers, some of whom are struggling to keep up with demand for their products, the company said. Under the new policy, sellers will have to disclose their business relationships and apply to use manufacturing services. Etsy will try to ensure that goods sold on the site still meet its definition of “handmade.”

“It’s no secret that our community has struggled for a long time with Etsy policies,” Dickerson said. “We realized that as the community grows, the policies that we created that frankly didn’t work well when the community was smaller were bursting at the seams.”

SELLERS’ ‘AUTHORSHIP’

In order for something to qualify as handmade, a seller has to have “authorship” of a good -- meaning it wasn’t purchased somewhere else to be resold. The seller also has to take responsibility for the production process.

On the store pages set up by sellers, they’ll need to disclose partners and manufacturers to be transparent about how their businesses are structured. That will help prevent the community from finger-pointing at suspected rule breakers, Dickerson said in a blog post.

Dickerson said the company hasn’t determined how the changes will affect the business, which is planning an eventual initial public offering.

“We haven’t run a single spreadsheet on it from a revenue standpoint,” he said. “We haven’t done any financial projections.”

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--Editors: Nick Turner, Niamh Ring

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


SARAH FRIER

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Bloomberg News Consumer Goods Economy Etsy Manufacturing Us Economic Recession Vintage

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