The Marketplace Boom   //   July 9, 2024

‘It’s going to be catastrophic’: Sex product sellers are left scrambling after a sweeping Etsy ban

When Preston Stevenson learned that the e-commerce platform Etsy — known for handmade and vintage goods from small businesses — planned to ban many sex toys and other erotic items from its platform, he said, “I felt my blood run cold.”

On July 29, Stevenson’s Etsy web store Fantasticocks, of which he’s the co-owner, will effectively shutter because it sells handmade dildos and other sex toys, which are now prohibited by Etsy’s policy update announced June 27. Stevenson’s Toledo, Ohio-based business specializes in fantastical silicone sex toys, including dragon and basilisk dildos, among other offerings, all designed and produced in the U.S. The news was first reported by Mashable. 

The ban also impacts media made by porn publishers, such as Playboy magazines, nudity on human models, including “female nipples” and items that contain sexual language that references family relationships, such as “daddy” or “mommy,” according to the announcement. 

Stevenson expects to take a major financial hit from the policy change. Even though the company has its own website, where customers can buy products, Stevenson said about 90% of its overall sales come from Etsy. Stevenson’s business has made nearly 57,000 sales on Etsy since it launched on the platform in 2018. Its operations include a four-person team. The business also just signed a new office lease in April, the rent for which costs $1,500 a month. 

“If those same buyers from Etsy don’t find us on our site or elsewhere, it’s going to be catastrophic,” said Stevenson. “How do we afford payroll when, in 30 days, we lose most of our revenue?”

In a post on Etsy’s site forum, the head of its trust and safety team Alice Wu Paulus said the policy change was the company’s attempt “to continue to keep our users safe.” The company declined to provide an on-the-record comment for this story, but an Etsy spokesperson said that much of the feedback the company has received from sellers regarding the change has been supportive.

The change comes at a critical point in Etsy’s company history. After a pandemic-fueled boom when shoppers stuck at home during lockdown started to increasingly shop online, the e-commerce platform has since struggled to maintain the same level of sales volume thanks to inflation and increased competition. In its latest earnings, Etsy reported first-quarter profits of $63 million, down more than $11 million from the year before, due to weak consumer demand.

Etsy has implemented a slew of cost-cutting measures, including layoffs. Earlier this year, activist investor Elliott Management, which has spearheaded turnaround efforts at tech companies like Pinterest, built a sizable stake in Etsy, making it the company’s largest shareholder, per CNBC. Notably, Elliott’s Marc Steinberg also joined Etsy’s Audit Committee, in addition to the board of directors. 

At the same time, Etsy is fending off growing competition from ultra-cheap Chinese retailers including Temu and Shein. Non-homemade items have still managed to flood the site despite Etsy’s efforts to tamp down such goods, Modern Retail previously reported

To Stevenson, part of the shock stemmed from the fact that he said he didn’t receive sufficient notice from Etsy itself about the ban. Stevenson learned about it from social media posts on X (formerly Twitter). Wu Paulus’s post said that the company will contact sellers who may need to update their listings in the coming weeks. 

“To this day, a week later, they have yet to notify sellers like us with any sort of notification on the platform, like on the dashboard or email — nothing,” said Stevenson. “They technically gave us 30-days notice, but if you’re not on social media or didn’t see the announcement in the right place, I’m sure there are sellers that still don’t even know this is about to happen.”

Stevenson isn’t alone. Michael Mickey, president and owner of Mr. Hankey’s Toys, also learned about the policy update on social media. Mickey is less worried about how the ban will impact his own brand, as the bulk of sales primarily come from its website and through wholesale. Invariably, though, smaller businesses that got their start on Etsy will bear the brunt of the effects, he said. 

As Mickey put it, “It’s going to hurt a lot of little companies,” said Mickey. 

‘Slippery slope’

Etsy’s partial ban on adult content has been a long time coming, according to sellers who spoke with Modern Retail. About a year or so ago, Stevenson noticed more products were being flagged or delisted by Etsy, often with little or vague explanation. For example, some products were taken down seemingly due to animal-related references, including keywords such as “tentacles.” This has had a disproportionate impact on sellers like Stevenson that specialize in fantasy-related products, prompting many to exit the platform well before its latest policy change, he said.

All told, it’s gotten harder to run an Etsy store, even before the platform rolled out this new change, said Stevenson. He added that over the past year, his sales have been cut in half due to various problems that have emerged on Etsy.  

“To be fully honest, I don’t think I’ve slept through a single night for a year and a half,” said Stevenson. “We’ve been sitting on the edge of our seat waiting for this worst-case scenario that has been on our radar for a while now.”

Now, Etsy sellers are scrambling to find a new internet home before their products are delisted. 

Alexandra Houston, founder of London-based e-commerce platform Charmskool, which specializes in fetish apparel and accessories, said she’s seen a “major influx” of interest from impacted sellers since the Etsy ban was announced. The online marketplace already operates about 100 sellers. Currently, Houston is in the process of onboarding about 20 more merchants. Another 20 sellers have submitted inquiries about joining the platform but have not officially submitted applications. 

Houston, who is also an Etsy seller of vintage apparel, said the new stance on adult content is the latest sign that Etsy no longer resembles the company it was when it was founded in 2005 as an alternative to companies that sold mass-manufactured goods. 

“It seems like Etsy is going for more homogenized content. The site is flooded with mass-produced items,” said Houston. “This stab at sex-positive stuff feels very much like a slippery slope.”

More harm than good 

Etsy’s policy change adds to the growing wave of internet platforms that have restricted or outright banned adult content. In 2018, Tumblr banned porn on its platform after Apple deleted its app from the App Store, which ultimately led to Tumblr’s demise. OnlyFans notoriously banned adult content creators in 2021 — and then swiftly reversed the rule after a severe backlash — saying it faced pressure from its banking providers. Numerous age verification bills — laws that require websites with a certain amount of adult content to verify that users are over 18 years old — have gained traction in the last couple of years, which critics say can do more harm than good

Industry experts, including sex workers and First Amendment lawyers, generally attribute such crackdowns to the Fight Online Sex Trafficking Act and the Stop Online Sex Trafficking Act, also known as FOSTA-SESTA, which Congress passed into law in 2018. By making platforms liable for what their users say and do in a purported attempt to curb sex trafficking, experts told Bloomberg the legislation resulted in a chilling effect across the internet as websites clamped down on adult content via widespread blanket bans to avoid any risk to their operations.

“Over the past few years, we’ve seen increasing censorship of resources and products related to sex and sexuality,” said Mike Stabile, director of public policy at Free Speech Coalition, an adult industry trade group. “Too often, platforms simply ban anything that might be controversial, including LGBTQ+ resources, sex education, or references to consensual adult sexuality. Unfortunately, as a few platforms command larger and larger market share, that means that a lot of stores and communities are effectively cut off from the market.”

In December, Forbes found that deepfake sexual images of well-known celebrities distributed without their consent were prevalent on Etsy’s website. 

Etsy did not provide further reasoning for its policy change beyond what Wu Paulus wrote in her forum post, but Stevenson said he felt concerns about adult-themed commerce could’ve been addressed with content-filtering and moderation tools rather than leaving independent sellers out to dry. 

“I don’t know why they couldn’t have even just launched an Etsy Plus or something where it’s adult content only,” said Stevenson. “Most sellers within reason want to abide by policies because we understand it’s important that the right people see your things and the wrong people don’t. Etsy just has this habit of enacting policies without warning and then punishing people before they have a chance to comply.”