Amazon expands into handmade goods with new online store

From a small workshop in Severn, Bryan and Lynn Holmes run their woodworking business, turning raw lumber into engraved cutting boards with personalized messages such as "Eat, Drink and Be Married."

Bloxstyle started four years ago in the Holmes' garage, and they sold the boards online through the Etsy marketplace and their own website. But since October, it has tapped into a new market with more than 250 million potential customers.


The staggering level of shopper traffic on prompted the couple to start selling through Handmade at Amazon, one of the newest ventures for the online retail behemoth and one targeted squarely at Etsy, which serves as a peer-to-peer market for handcrafted and vintage items. Amazon describes the 4-month-old offshoot as a new store for invited artisans to sell unique, handcrafted goods "to our hundreds of millions of customers worldwide."

"We always knew that we wanted to be on Amazon," Bryan Holmes said. "It brings so much to the table, being able to present a small product like this from a small shop to the world."


In starting Handmade, Amazon is tapping into a growing artisan crafts movement. And experts see the potential for Amazon to attract more people to sign up for Prime, the free delivery service whose members tend to spend more per year than non-Prime buyers.

"It's a huge opportunity for Amazon," said Dan Kogan, CEO of 1Digital Agency, a Philadelphia-based consultant for online retailers. "Etsy as the No. 1 competitor is a huge business. There's a huge marketplace for handmade products, and Amazon is really going in the right direction."

The online giant launched Handmade after seeing thousands of customer searches a day for handmade products, said Erik Fairleigh, a spokesman for the Seattle-based retail giant, which opened a massive distribution center in Baltimore last year. Customer demand also has driven Amazon's moves into home services and restaurant meal delivery. More recently, the brand has started experimenting with brick-and-mortar bookstores.

"We do these types of new businesses because we get a clear signal from the customer of what they want," Fairleigh said. "We saw this for an extended period of time. Hundreds of thousands of customers wanted this."

The Handmade store features jewelry, home products, party supplies and stationery but plans to expand the categories in coming months.

Vendors are required to make all products entirely by hand, factory-free, and can choose to become Prime-eligible on noncustomized items by having Amazon fulfill orders. Each vendor is featured on a page showing photos, home state and a description of how they make products.

Traffic has jumped 30 percent month-to-month since October, while sales have climbed 150 percent, Fairleigh said. The site has grown from 5,000 artisans selling 80,000 unique items in October to more than 10,000 vendors from 50 states and 60 countries selling 300,000 unique items.

About 95 percent of the vendors who have chosen to use Amazon's fulfillment have made a sale, with tens of thousands reporting repeat purchases, he said. Amazon takes a 12 percent referral fee off each sale.


"Customer traffic has been incredible," Fairleigh said. "Artisans are seeing customer demand and adding more items."

While others might have focused on the handmade niche first, "we have a built-in customer audience," he said. "Handmade is everything you love about Amazon but for handmade."

The move into handmade goods continues Amazon's original vision, said Daniel Sparks, financial analyst at Motley Fool.

"Amazon prefers to just put their foot in the door in different markets," Sparks said. "It's somewhat of a defensive move, but an expansion of the Amazon brand. That's one of their missions, to bring the brand as far as possible."

The expansion also lets the online retailer take advantage of trends such as the rise of self-employment and small-batch manufacturing, some of which is made possible by new technology such as three-dimensional printing, he said.

"Amazon realized that Etsy's position is in a growth market," Sparks said.


Esty Inc., which is in a quiet period as it prepares to release earnings Tuesday, last addressed the potential impact from Amazon in November, when CEO Chad Dickerson said half of Etsy vendors sell in multiple venues, but that Etsy is the primary source of income for those sellers.

"Based on what we're seeing and our conversations with our sellers, we have no reason to believe that any competitors are having an impact on our seller business right now," Dickerson said during a Nov. 3 conference call.

The Holmeses got into the business by making cutting boards for themselves and as gifts for friends. They kept getting requests to make more, so they both left corporate jobs in information technology and started Bloxstyle.

"I was bored," Lynn Holmes said. "I've always been interested in art and making things, and I wanted to do that."

Using a router that can be programmed with patterns and designs, she and her husband went to work. She designs the boards, while her father and husband operate the shop equipment. They started selling on Etsy, then in 2013 through their own website. Before Handmade, Amazon wasn't set up to handle personalized products.

Bloxstyle had one of its best holiday seasons last year, with more than half the sales in November and December coming from Handmade.


"Amazon has customers ... and Amazon knows their customers, and they know the kind of thing their customers are going to be interested in," Bryan Holmes said. As an Amazon customer himself, "a lot of times I see something I didn't know I wanted, and here it is."

Lynn Holmes said consumers seem drawn to handmade items that have a story behind them.

They appreciate that "people put their heart and soul into something," she said.

Samantha Walker, 32, also turned a hobby into a full-time job thanks to the Internet.

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The Hagerstown resident, a former art teacher, taught herself metalsmithing with a soldering torch at her kitchen table and now works 40 to 50 hours a week making jewelry. She started selling on Etsy seven years ago and went full time five years ago. Through her business, Proteales, Walker sells sterling silver mood jewelry, using both vintage and new stones.

"It's a hot thing right now," Walker said of her mood jewelry.


She said she's found the Handmade site easy to use.

"They thought of everything," she said. "Having that exposure has been great. Every week, I'm blown away by the amount of orders that come in. Being attached to this big name, it gives you a little more credibility."

Sparks said he expects vendors to continue to spread their sales across multiple websites, as Proteales does.

"The fact that Amazon is doing this could be a catalyst for Etsy," he said. "It encourages and helps these small businesses to sell more products and to stick with it and hire people and grow over time."