Amazon took aim at rival Etsy today with the opening of Handmade, a marketplace selling more than 80,000 handmade products.
“For the first time on Amazon, we’re going to have a picture of the artist, a little icon of what state they’re from, what country they’re from,” Peter Faricy, the Amazon vice president overseeing Handmade, told The New York Times. “We’re going to launch with an experience that’s very different. Customers are going to see the difference.”
The new venture might seem like a departure from Amazon’s history of selling mass-produced staples. But in fact, it’s a natural extension of the e-tailer’s current position as a platform for external vendors.
Third-party merchants brought in 39% of Amazon sales in 2013, accounting for more than $17 billion of the e-tailer’s $32 billion merchandise value. Their listings can account for as much as 95% of a brand’s Amazon presence, according to L2’s Intelligence Report: Amazon.
While brands choosing not to distribute on Amazon have a higher proportion of third-party listings, the gray market also includes officially distributing brands. Third-party retailers account for 70% of product listings among brands that officially distribute on the platform, according to the L2 study. This is particularly common in the Beauty category: only 6% of Almay’s 11,459 SKUs are sold through Amazon.
This system of third-party vendors benefits Amazon, allowing the retailer to keep prices low and skirt inventory costs. With Handmade, Amazon can reach and benefit from a larger pool of sellers.