When it comes to online shopping, Amazon and Etsy are two of the biggest players, but they serve different purposes and audiences. Amazon is a global marketplace known for its vast selection of products, quick shipping, and competitive pricing, catering to buyers looking for convenience and variety. In contrast, Etsy founded in 2005, focuses on handmade, vintage, and unique items, offering a more personalized shopping experience. While Amazon excels in bulk sales and brand-driven shopping, Etsy shines in connecting buyers with independent creators and artisans. Both platforms have their strengths, but which one is better depends on what you’re searching for mass-produced convenience or one-of-a-kind treasures.
Amazon Vs Etsy: Vision/Mission
Amazon:
Vision: Amazon’s vision is to become the most customer-centric company in the world. They aim to offer customers an unmatched shopping experience by providing the widest selection of products at competitive prices, all while ensuring fast and reliable delivery. Amazon seeks to be a platform where customers can find anything they need, from everyday essentials to unique, hard-to-find items. Their goal is to make shopping as convenient as possible, offering both quality and convenience to their millions of customers worldwide. With innovations like same-day delivery and a broad product range, Amazon strives to lead the retail world with customer-focused solutions.
Mission: Amazon’s mission is to continually push the boundaries of innovation to improve customer experience. By expanding its vast product offerings and integrating cutting-edge technology, Amazon aims to provide not only a wide variety of products but also fast shipping, ease of purchase, and great customer service. Beyond retail, Amazon also focuses on revolutionizing other industries through services like Amazon Web Services (AWS), Prime, and Alexa. Their mission is not just about shopping; it’s about making lives easier and more connected.
Etsy:
Vision: Etsy’s vision is to build a marketplace that brings together buyers and sellers of unique, handmade, and vintage goods, supporting small businesses and independent artisans globally. Etsy envisions a world where creative entrepreneurs can connect with customers seeking one-of-a-kind products, celebrating the individuality and craftsmanship of small-scale producers. Their focus on creativity, sustainability, and ethical business practices ensures that each item bought on Etsy holds a story behind it. Etsy believes in fostering a vibrant global community that empowers both makers and buyers, making shopping a meaningful experience that supports independent creators.
Mission: Etsy’s mission is to provide a platform where independent sellers can showcase their unique products, from handmade creations to vintage treasures, offering customers a diverse range of items that cannot be found elsewhere. Etsy is committed to helping small businesses grow, providing tools, resources, and a supportive community for creative entrepreneurs. Their focus is not just on selling but on empowering sellers to thrive while maintaining ethical practices. With sustainability at its core, Etsy strives to make a positive impact on the world by promoting responsible consumption and fostering connections that bring people closer to the products they cherish.
Business Models
Amazon Business Model
Amazon operates a complex, multi-faceted business model that generates revenue through several key streams, each targeting different customer needs. Here’s a breakdown of the primary components of Amazon’s business model, including amounts where applicable:
E-Commerce Platform
Amazon’s core business revolves around its e-commerce platform, which sells a wide variety of products across various categories. It generates revenue through direct sales and by hosting third-party sellers on its marketplace. For third-party sellers, Amazon charges fees which typically include a referral fee (which varies by category, but usually ranges between 6% to 45% of the sale price) and a closing fee for media items like books, which can be $1.80 per item.
Marketplace and Third-Party Sellers
Amazon earns revenue by allowing third-party sellers to list their products on its platform. The fees include:
- Referral Fees: A percentage of the sale price (typically 6% to 45%, depending on the product category).
- Subscription Fees: For sellers using the Professional Selling Plan, the fee is $39.99 per month (not including other selling fees).
- FBA (Fulfilled by Amazon) Fees: Sellers using Amazon’s fulfillment service (FBA) pay a fee based on the size and weight of the items they ship to Amazon’s warehouses. For example, fees for standard-size items range from $2.50 to $5.20 per unit, depending on the weight and size.
Amazon Prime Subscription Service
Amazon generates significant recurring revenue from its Amazon Prime membership program, which costs $139 per year or $14.99 per month. Prime offers benefits such as free two-day shipping, access to Amazon Prime Video, Prime Music, and other exclusive services. As of 2024, Amazon Prime has more than 200 million members globally, contributing billions in revenue annually.
Amazon Web Services (AWS)
AWS is a massive revenue generator for Amazon. It provides cloud services to businesses, ranging from data storage to advanced machine learning tools. AWS operates on a pay-as-you-go pricing model, with pricing based on usage. For example, Amazon Simple Storage Service (S3) pricing starts at $0.023 per GB for the first 50 TB per month. AWS contributes over $80 billion in annual revenue, and its high profit margins make it a crucial part of Amazon’s business model.
Advertising
Amazon’s advertising business is growing rapidly. Sellers can pay for Sponsored Products to appear in search results, with costs depending on the competition for the keywords. The cost-per-click (CPC) for these ads can range from $0.10 to $5, depending on the keyword.
Physical Stores and Technology
Amazon has expanded into physical retail, most notably through its Amazon Go stores, which offer cashier-less shopping using sensors and mobile technology. These stores are located in major cities and use Amazon’s technology to track purchases. While Amazon does not disclose detailed revenue figures for its physical stores, they represent a growing part of its business.
Logistics and Fulfillment
Amazon’s investment in logistics, including its Fulfilled by Amazon (FBA) service, enables it to offer quick delivery options like same-day delivery and Amazon Day for scheduled deliveries. The logistics model includes extensive warehousing, last-mile delivery, and even drone delivery in testing stages. These services are crucial to maintaining customer loyalty but also represent a large investment for Amazon.
Etsy Business Model
Etsy operates on a marketplace model that focuses on handmade, vintage, and unique goods. Its revenue comes from a combination of seller fees, subscriptions, and advertising. Here’s a breakdown of Etsy’s business model, including specific amounts where relevant:
E-Commerce Marketplace for Handmade and Unique Goods
Etsy primarily serves as a marketplace for handmade, vintage, and unique products. Sellers list their products on Etsy and pay fees to Etsy based on each sale:
- Listing Fee: Etsy charges a $0.20 listing fee for each item a seller lists on the platform.
- Transaction Fee: Etsy charges a 6.5% transaction fee on the total sale price (including shipping) of each sale made.
- Payment Processing Fee: This fee varies depending on the country but typically ranges from 3% + $0.25 (for U.S. sellers) per sale.
Fee-Based Revenue Model
Etsy generates a significant portion of its income from fees related to sales on its platform:
- Listing Fee: $0.20 per item.
- Transaction Fee: 6.5% of the total sale price, including shipping.
- Payment Processing Fees: A percentage of the sale depending on the seller’s country, with U.S. sellers paying around 3% + $0.25 per transaction.
- Currency Conversion Fees: Etsy also charges a 2.5% fee for currency conversion, which is relevant for international sales.
Etsy Plus Subscription
Etsy offers a subscription service for sellers called Etsy Plus, which costs $10 per month. Etsy Plus provides additional benefits such as:
- Customizable shop options.
- Discounts on marketing tools.
- Access to more advanced analytics to track shop performance.
- Increased visibility in search results, which can help sellers grow their business.
Advertising and Promoted Listings
Etsy allows sellers to pay for Promoted Listings to boost their visibility in search results. Sellers can set their own budgets for these ads, but Etsy recommends spending at least $1 per day on ads. Etsy also offers Offsite Ads, where Etsy promotes products on external websites like Google, Facebook, and Instagram. Etsy charges a fee (12% – 15%) on sales generated through Offsite Ads.
Etsy Payments
Etsy has its own payment processing system, Etsy Payments, which allows buyers to pay using credit cards, debit cards, and PayPal. Etsy charges a processing fee for each transaction, which is typically 3% + $0.25 for U.S. transactions. Sellers who do not use Etsy Payments are not able to sell on the platform.
Etsy Wholesale
Etsy previously offered Etsy Wholesale, a platform that allowed Etsy sellers to sell their items in bulk to retailers. However, Etsy has shut down this service as of 2018. While no longer operational, it was once another revenue source for the platform.
Global Marketplace and Community Focus
Etsy operates globally, enabling independent sellers from around the world to reach a wide audience. Etsy’s community-driven approach fosters personal connections between buyers and sellers. The platform has built a loyal customer base by emphasizing products that are unique, handmade, and sustainable.
Sustainability and Social Responsibility
Etsy is committed to sustainability, with goals like achieving carbon-neutral operations and promoting eco-friendly products. Etsy’s business model encourages responsible consumption and highlights small businesses that focus on ethical and sustainable practices. Etsy provides a Green badge for sellers who meet specific sustainability criteria, helping environmentally conscious consumers make informed purchasing decisions.
Mobile and Social Media Integration
Etsy has integrated its platform with social media and mobile apps to increase the reach of sellers. Etsy’s mobile app allows both buyers and sellers to interact with the platform from anywhere. Etsy also supports Instagram and Pinterest integration, allowing sellers to promote their products easily on social media, which drives additional traffic to their shops.
Seller Support (Amazon)
Amazon provides extensive support for sellers through its Seller Central portal, offering tools for account management, inventory tracking, and order fulfillment. Amazon’s Seller Support Team is available via email, chat, or phone 24/7 to address issues ranging from technical difficulties to policy compliance. The platform also offers tutorials, forums, and a knowledge base to help sellers navigate challenges.
Seller Support (Etsy)
Etsy offers a seller support system through its Etsy Seller Handbook, which includes a comprehensive guide on setting up shops, optimizing listings, and growing a business. Etsy provides support via email, live chat, and help forums. The platform has a Community Support Team that helps resolve disputes or technical issues. Etsy also offers various seller tools like Etsy Stats for performance tracking and advertising support.
Buyer Trust and Experience (Amazon)
Amazon ensures buyer trust through Amazon A-to-Z Guarantee, which offers protection against defective products or unmet seller promises. The platform provides customer reviews and ratings to allow buyers to make informed purchasing decisions. The site is known for its fast, reliable shipping with Amazon Prime, which builds trust. Amazon also offers seamless returns, ensuring that buyers can easily return products if they aren’t satisfied.
Buyer Trust and Experience (Etsy)
Etsy prioritizes buyer trust by focusing on transparency and personal connections. The platform offers customer reviews for each product, allowing buyers to assess quality and seller reliability. Etsy’s Buyer Protection program ensures that buyers can request a refund for orders that don’t meet expectations, such as non-delivery or incorrect items. Etsy also promotes ethical shopping by emphasizing handmade, vintage, and sustainable goods.
Analytics and Reporting (Amazon)
Amazon offers robust analytics and reporting tools through Seller Central, where sellers can track key performance metrics such as sales, traffic, and customer feedback. The platform provides detailed business reports such as Sales Dashboard, Advertising Reports, and Inventory Health reports. Sellers can assess trends and make data-driven decisions to improve their performance.
Analytics and Reporting (Etsy)
Etsy provides detailed analytics through its Shop Stats tool, which helps sellers understand their shop’s performance, including traffic, conversion rates, and popular products. Sellers can access reports on views, favorites, and revenue to analyze trends and optimize listings. Etsy also provides data on sales growth and advertising performance, allowing sellers to adjust their marketing strategies.
Procedure of Account Creation (Amazon)
Creating a seller account on Amazon is a straightforward process. First, sellers need to visit the Amazon Seller Central page and click on “Start Selling.” After entering personal details such as name, address, and email, sellers must choose between an Individual or Professional account. An individual account is free but comes with transaction fees, while a professional account has a monthly fee of $39.99 but provides additional features like bulk listing tools.
Procedure of Account Creation (Etsy)
To create a seller account on Etsy, users must first sign up for an Etsy account using their email or Google/Facebook accounts. After creating a personal account, sellers can navigate to the “Sell on Etsy” section and click “Open your shop.” Etsy requires sellers to select their preferred language, currency, and country. Sellers then fill out their shop profile, upload listings, and add payment information (for receiving earnings). Etsy charges a $0.20 listing fee for each item sold.
