I recently shopped Etsy for a handmade lamp. I filtered to US-only, handmade goods. I waded through pages of junk and finally found a lamp that was being billed as handmade with a design I liked, shipped from the US.
No tracking info to speak of (red flag of drop-shipping!) and when it finally arrived, it was a drop shipped special. From AMAZON. Another cheap, Chinese piece of junk being dubiously billed as "handmade". The seller just tacked on a $15 premium (I found the original product listing on Amazon) and on they went.
There are actual small producers still on Etsy, but recently more and more of my purchasing is shifting away from the Amazon/Etsy/Wayfair world back to eBay, of all places.
All Etsy listings have a flag for "I made this" vs "I designed this and someone else made it", and if the later, the seller is required to specify the production partner. This seller is almost certainly lying about who made it, and you can get them banned for this kind of activity.
My business is a dropshipper for artists that sell custom-print apparel on Etsy and Shopify. This sort of thing is allowed on Etsy, but we're careful to create the listings in a way that Etsy approves. Etsy sells a lot of tshirts.
It's knock-offs all the way down
When it first started out, I had a lot of friends in distant states that had shops on Etsy and I would find really cool, inexpensive stuff from theirs and other shops. I really like the eclectic feel of the stuff people were making and it was original and I have always gotten compliments on the stuff I was buying from their shops.
Last couple years, you really have to search to find stuff that isn't being mass produced in China or overseas. Looking back, thinking of other "eclectic" online shops, it seems to be a pattern. You get the people who set up their shops with their hand made goods, then it gets popular, then it gets overrun with China knockoffs and other people just reselling China goods for a markup.
Even with the requirements in place, I'm not sure how you eradicate it once it gets a foothold like it has now.
I think the money they're earning makes it hard to stick with principled rules against the mass-produced items. It's a sad cycle for the early customers who gravitated toward Etsy and similar shops because they were looking for an escape from the cheap products found elsewhere. Not sure how to structure the business model or incentives to prevent this, other than just being small and staying small. (i.e. not taking VC money, not going public, not inviting outside pressure to grow).
I think you're right though, stay small, maybe have two or three smaller platforms to generate the revenue you want, while still making it exclusive to small businesses. I think that approach might keep you under the radar for a longer stretch.
One thing I'll say is that there are a number of business that I use (both B2B and B2C) that are highly specialized but manage to be successful because they are not interested in growth. I suspect there's lots of these out there that are maintaining their own platform or using an out of the box solution, but that most of us never know about them because we don't need to interact.
I guess the silver lining here is that Etsy is effectively acting as a (closer) competitor to Amazon by letting people resell and drop-ship. Considering how Amazon treats sellers and the inventory commingling issues that arise, it's good to have another similar option.
But yeah, overall there seems to be lots of shops reselling stuff. For example, I recently bought a little dollhouse kit, and I noticed that multiple sellers were selling it. And I've watched youtube vids on how to make money on Etsy, and while the examples I found don't explicitly say to buy stuff from aliexpress, it's clear that they weren't making and packaging those bath bombs themselves.
To be fair it isn't always low quality or terrible, but it's clearly not all made by some lone artisan chiselling away in their workshop either.
Anyway Etsy appears to have a much worse problem with this than even Amazon. The cynic in me suspects that given how much revenue these factories generate for Etsy, they probably aren't too interested in cracking down on it anytime soon.
Which honestly works really well and is one of the most effective filters on the internet. I wish I could similarly filter eBay by "real/old/unique" items.
Or Google images by "real photos" vs. stock/professional photos.
Maybe I was late to Etsy, but it was never this while I was shopping there. There are some people selling handmade goods, for sure, but there's a low signal to noise ratio if that's what you're trying to tune into.
It's just become another avenue for drop shippers, and it seems like Etsy is happy to look the other way & continue with their false marketing, as long as they get their cut.
That is not what I wanted. I wound up buying from an Amazon shop because... well :shrug:
Now, 3 years ago it was not even close to that. Maybe 10%, 20% of sellers. Today it seems like 95% of it is drop-shipped goods.
If I wanted that, I'd go to Aliexpress.
I think, tbh, Etsy will have to kick these shippers out, or rebrand. I know it used to be real rough to move goods in enough volume to have substantial success, but this is wildly different.
There's a lot of money to be made in the expansion, so I expect the trend to continue. There are still a lot of handcrafted items, though, and it might still be the best marketplace for those sellers too.