The Explosion of Etsy, Amazon, and Our Dependance on Chinese-made Goods
There have been some interesting shifts in consumer behavior since 2020. During the first year of the pandemic the convenience of online shopping on Amazon and Etsy became more popular than ever. What are the implications for small businesses and how are US consumers spending their money in 2023?
The Explosion of Etsy
All that time spent at home during the pandemic made people channel their inner creative. In 2020 the 2 million active sellers on the Etsy skyrocketed +106% to 4.36 million sellers by the end of the year. Active buyers also flooded the platform and grew from 39 million in 2018 to 82 million in 2020. Overall, Etsy sales reportedly grew 91% in the first six months of 2020 and a whopping 125% by Q2.
In 2023, we are still seeing high figures all around, with over 70 million buyers and 7 million sellers. This is a good though right? Because buying on Etsy means you are supporting real creators, small businesses, and handmade goods… or does it?
Higher Quantity, Lower Quality
Unfortunately, this doesn’t seem to be the case. While Etsy is marketed to sell personally crafted and handmade goods, it doesn’t take much time browsing the website to realize that there has been an infiltration of drop-shipped items from China that are being sold at a price point most US-based sellers simply cannot compete with.
Check out this article by the Washington Post where author Kate Wagner was quick to realize her “handmade” jewelry order was a drop shipped piece of plastic painted to look like metal.
While this false advertising by suppliers is against Etsy’s terms of service, drop shipping is permitted and filtering out these “scammers” is a difficult task. What used to be a reliable site for discovering handmade goods from small business and creators is now an overwhelming and somewhat confusing shopping experience with a mix of low and high quality items. Couple this with increased competition, higher transaction fees, and additional payments required to appear at the top of Etsy’s search engine, and it’s no wonder Etsy sellers are reporting decreased site traffic and sales.
Amazon and The China Takeover
One of the other major marketplaces is of course, Amazon. Amidst the lockdown restrictions, Amazon’s quick delivery and convenience boomed in popularity, with US consumers using it more than ever before.
The platform features a massive selection of items and vendors from around the world. However, it is estimated that Chinese sellers make up over 63% of all third-party sellers. It's also estimated that there are 1.5 million active sellers, which means there are likely close to a million Chinese third-party sellers on Amazon.
A record 75% of all new sellers on Amazon in 2021 were from China. This is compared to 47% the previous year. Overall, US imports from China have increased over 35% over the last ten years, from approximately $425 billion in 2012 to $575 billion in 2022, and China is the top supplier, followed by Mexico and Canada.
It’s All About Balance
It seems like we as a society have really shifted in a certain direction and makes me wonder where we are headed. I believe most of us want to be able to support small businesses, but with the higher costs and access to an abundance of cheaper alternatives, this is not always feasible. Meanwhile, smaller vendors like those on Etsy are struggling to make sales due to the increased competition since 2020. Something needs to change to bring us back into balance.
Onward + Upward
Let's focus on spending our dollars wisely - investing in quality over quantity, not following online trends, and doing our own research to see who and what our purchase is supporting.
There are so many great small business owners in the US and around the world that are putting a lot of thought and time into making high quality products. Let’s make it a point to support them whenever we can and #buywhatyouknow.
