Wednesday, 10 August 2016

E-Commerce and Handmade Products

The Internet age has brought forth online trading platforms that have revolutionized modern marketing. Two of these online trading platforms are Etsy and Handmade. Handmade is owned by the cloud computing and E-commerce company Amazon.
Etsy can be described as a Peer-to-Peer E-commerce company that mainly specializes in handmade and vintage products. Thus, its main products include hand-made craft, artworks, photography, jewellery, knick-knacks, and handmade body-care products (Luckman, 2015). For a product to be considered as a vintage product by Etsy, it must be at least 20 years old (Bettiol, 2015). The business model of creating a platform for individuals to sell products they have made is unique to Etsy; and it was later copied by Amazon which launched Handmade to offer similar services. The business model introduced by Etsy has its unique strengths and weaknesses which are described below, but the strengths nonetheless outweigh the weaknesses thus explaining why Amazon launched a similar enterprise.
Photo Credit: Technical.ly
Etsy
The greatest strength of Etsy is its offer of open craft fairs which allows sellers to have storefronts where they show their products. Additionally, the process of building a storefront and labelling it with a shop name is free [of charge]. Another strength of its business model is its fair pricing policy which deducts a transaction fee of 3.5% per completed transaction and a listing fee of 0.20USD. Its fee policy for promoted listings, facilitated transactions, and payment processing are also fair. Another unique opportunity offered by Etsy is its global shipping feature which allows traders from across the globe to register and market their products to a global audience (Luckman, 2015). The search feature on the e-commerce website is intuitive and simple thus allowing buyers to quickly find and sample the products they need. Furthermore, the percentage feedback value attached to each online shop allows buyers to gauge the reliability of the online shop (Bettiol, 2015).
The key weakness of the online trading platform is its policy which allows traders to outsource some of their manufacturing duties to third-parties; and this has led to accusations that Etsy has devalued its artisanal origins by creating an exploitable allowance that could permit trading in factory-manufactured or mass-produced products (Luckman, 2015). Another weakness is its privacy policy which allows buyers to access and retrieve the social media profiles of potential sellers, thus risking infringement on the privacy of sellers (Blanchflower & Hodges, 2015). The main threat faced by Etsy is direct business competition in its market niche. One of its main direct competitors is Handmade.
Handmade
Handmade is an e-commerce platform operated by Amazon which allows people to trade in handmade products. Unlike Etsy, Handmade deals strictly with handmade products and thus most of its products are arts and crafts; and hence its description as an arts-and-crafts online bazaar (Shahani, 2015). 
Its main strength vis-a-vis Etsy is that the policy of Handmade does not permit trading in products whose manufacture was outsourced to third-parties. Another strength that Handmade has over Etsy is its market capitalization which allows it to compete with multinational retailers. This means that traders using its platform have greater exposure to the global market as compared to traders using Etsy's platform. Moreover the logistical infrastructure offered by Handmade is much better than that offered by Etsy (Tabuchi, 2015). Thus, it can be deduced that Handmade offers sellers a greater market reach as compared to Etsy.
Nonetheless, compared to Etsy, Handmade charges a transaction fee of 12%. The key weakness of Handmade vis-a-vis Etsy is its stricter trader registration process. The main threat to the business model of Handmade is direct business competition posed by other entities in the same market niche.
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References
Bettiol, M. (2015, July). From Vertical to Horizontal Value Chains: The Case of Etsy.com.
            In 27th Annual Meeting. Sase.
Blanchflower, T. M., & Hodges, N. N. (2015). Understanding Etsy: Social Media and Marketing
            within a Community of Sellers. In Ideas in Marketing: Finding the New and Polishing
the Old (pp. 818-821). Springer International Publishing.
Luckman, S. (2015). Craft Revival: The Post-Etsy Handmade Economy. In Craft and the
Creative Economy (pp. 12-44). Palgrave Macmillan UK.
Shahani, A. (2015, Oct 8). Amazon Takes Aim At Etsy With A New Craft Site,
            Handmade. National Public Radio.
Tabuchi, H. (2015, Oct 8). Amazon Challenges Etsy With Strictly Handmade Marketplace. 
The New York Times.

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