Etsy Sellers Weigh The Pros And Cons Of An Amazon Buyout

Jan. 28, 2016 1:28 PM ETEtsy, Inc. (ETSY)AMZN36 Comments
Jason Rickenbacker profile picture
Jason Rickenbacker
22 Followers

Summary

  • Etsy is now an attractive acquisition prospect for Amazon.
  • Etsy merchants worry that an Amazon buyout could pose problems for their businesses.
  • Amazon will need to apply a light touch to keep artisans on board.

EtsyEtsy (NASDAQ:NASDAQ:ETSY) is an online marketplace that specializes in handmade or otherwise unique goods. As a relatively pure marketplace business, it relies entirely on third-party sellers to list and ship the products that make up its stock. The size of Etsy's seller community has been a steady point of growth for the business: in the third quarter of 2015, Etsy reported over 1.5M active sellers, representing a roughly 20% increase over the same timeframe in 2014.

Impending Acquisition?

Amazon's (NASDAQ:AMZN) clear interest in the handmade market and the notable devaluation of Etsy since its IPO has lead analysts and artisans alike to speculate about a potential company buyout. Etsy's market cap is now within striking distance of Amazon's past acquisition pricing.

This could be Amazon's chance to buy credibility with the handmade community they have thus far failed to reach. If Amazon pulls this off, their short-term pricing will likely soften, as is common prior to major acquisitions. The following months and years are more important, and they will be determined by the manner in which Etsy is integrated.

Culture Shock

Some might argue that there is a fundamental disconnect between Etsy's homegrown vibe and Amazon's imposing presence as a dominating retailer. Would an acquisition by a notoriously cutthroat company like Amazon drive the handmade community away? Sellers are now weighing the pros and cons.

Artisans Share Their Thoughts

Susie Ghahremani, a venerable artist and owner of the popular shop Boygirlparty, has serious concerns about Amazon's policies.

For all the problems Etsy sellers encounter, protection of intellectual property and stable fee schedules are two major assets of Etsy that make Handmade at Amazon less competitive as a marketplace. If Amazon acquires Etsy, these important points are both threatened.

She has further worries about the underlying principles of the marketplace:

I

This article was written by

Jason Rickenbacker profile picture
22 Followers
Accredited private investor specializing in online marketplace dynamics.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (36)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.