When Etsy, the online marketplace for handmade goods, began to allow its sellers to use outside manufacturers in 2013, it was meant to solve a problem: Sellers wanted to grow their businesses, but making all those dog neckties and reclaimed wood shelves and enamel jewelry by hand from start to finish doesn’t scale. So the company eased its rules about manufacturing, and sellers began to professionalize their operations.
Since then 5,000, sellers applied to use manufacturing, partnering with more than 7,000 manufacturers. The vast majority of them– 85%– partnered with manufacturers within their own countries.
But that created a new problem: How do sellers find manufacturing partners? Today Etsy (ETSY) announced a new program called Etsy Manufacturing marketplace which will help sellers do just that.
This program will help sellers whose products involve printing, apparel and textile, machining and fabrication, and jewelry and metalwork. Etsy vets the manufacturers in its database to ensure they adhere to certain ethical standards. It’s free for sellers to use and is available in the U.S. And Canada.
There is a business angle here for Etsy beyond helping its sellers make more products. The company, which went public earlier this year, will eventually earn money on this offering. Etsy noted that it plans allow designers and manufacturers to transact through Etsy. Naturally, those transactions will have fees.
This lines up with Etsy’s growth trajectory. The company’s fastest growing business is not its marketplace, but the services it provides to its sellers. As Coins2Day’s Stephen Gandel wrote in June, Etsy’s revenue continues to grow. That said, growth from marketplace sales, where Etsy takes a cut of each sale, has slowed, and growth from seller services has jumped. He warned that the two are inextricably linked: “If sales of stuff on Etsy’s website are slowing, you would expect merchants would quickly see little benefit in paying for additional services from Etsy.”
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