The Marketplace Boom   //   July 10, 2024

Sellers are cautiously optimistic about Etsy’s new labeling policy

Etsy sellers voiced mixed feelings about the marketplace’s new policy that clarifies the origin of products listed on the platform. The announcement, delivered to sellers on Tuesday morning, comes as Etsy tries to crack down on mass-manufactured items.

Under Etsy’s new “Creativity Standards”, listings must explain what role a seller played in creating an item. There are four classifications: “made by,” “designed by,” “handpicked by” and “sourced by.” Etsy determines the appropriate label for each item based on information the seller provides, a spokesperson confirmed to Modern Retail. To help with this, Etsy is adding more options to its listing form so sellers can share details about their processes, materials and tools. 

For the most part, sellers welcomed the new system, telling Modern Retail they thought it would increase transparency on the platform. Still, some are voicing concerns online, saying they worry that Etsy isn’t doing enough to discourage the use of artificial intelligence.

Etsy’s updated policy arrives at a time in which the platform is attempting to get back to its roots as a hub for artisans. Etsy began in 2005 as a place for makers to sell handcrafted goods, although it started allowing sellers to use production partners like shipping and storage companies in 2013. Today, there are millions of listings on Etsy, and while many remain handmade, others are dupes, dropshipped items and print-on-demand services. These are allowed when properly labeled, but their presence on the platform marks a departure from Etsy’s earlier days.

By emphasizing the human element behind its listings, Etsy is trying to differentiate itself from platforms like Temu and Shein, both of which churn out large numbers of goods at low prices. “The consistent theme here is that items are infused with the human touch because that’s what makes Etsy, well, Etsy,” Etsy’s CEO Josh Silverman said in a video to sellers on Tuesday morning.

Under Etsy’s new policy, anything crafted or assembled by a seller (such as a hand-thrown pot) falls under “made by.” Digital downloads or items buyers can personalize are considered “designed by.” Craft supplies like beads or party decorations are in the “sourced by” category. Vintage items fall under “handpicked by.” Etsy allows for “creations that were generated using AI tools based on a seller’s original prompts,” according to its handbook, although any goods in that category must be labeled “designed by.”

Silverman emphasized that the new policy more clearly outlines what’s allowed on Etsy — but doesn’t allow for items that were previously prohibited. “What we see today is that when people come to Etsy, they sometimes want more clarity about why the things they’re seeing are allowed,” Silverman said in his video. “And we’ve also heard that you want us to be clearer about our rules and enforcement. So we’re taking the opportunity to articulate our policies in a simpler, easier-to-understand way.”

Etsy still says it prohibits the sale of mass merchandise on its platform and regularly monitors listings to make sure they are compliant with its policies. According to its 2023 Transparency Report, Etsy removed four times as many listings and suspended two times as many sellers for violating its handmade policy in 2023 than it did in 2022. Etsy’s latest financial results in May showed a 3.7% year-over-year decline in consolidated gross merchandise sales.

Two sellers who spoke to Modern Retail applauded Etsy’s new labeling policy and said it provided better direction for all parties on the platform. “I can see that it could be more transparent for both buyers and sellers,” Danna Crawford, who mainly sells memorabilia, said. “It would give us a more realistic [picture] about where the seller got the item from.”

Likewise, one seller who wished to remain anonymous said the new labels were “a positive for Etsy overall.”

“I am very pleased by that,” the seller, who has sold vintage clothes on Etsy since 2015, told Modern Retail. “I am glad Etsy is taking steps to make things clearer for buyers in general, and I hope this is a sign that Etsy wants to fix the site and enforce policies across the board.”

The seller also said they can still describe items as “vintage,” even with the new “handpicked by” label. “I have no issue with that whatsoever,” they said.

Other Etsy sellers reacted positively to the news, especially around the differentiation between “made by” and “designed by.”

“Quite happy to see this,” one user, who both makes products from scratch and designs stickers, wrote on Reddit. “While I may have designed the stickers, I simply don’t see them as handmade the same way the items I’m making from raw lumber are.”

Still, some sellers voiced concerns. One pointed out that AI art is being lumped into the same category as graphic designs someone makes in Photoshop or Illustrator. “I like it overall but feel AI should have its own category,” they wrote on Reddit.

One former seller told Modern Retail she would not return to the platform even with the new labeling system because “the app is still over-saturated with sellers.”