E-commerce marketplace Etsy has had a rocky adolescence in the public market.
Following its massively successful IPO in January -- with stocks nearly doubling on the first day of trading -- Etsy shares plummeted by nearly 14 percent in the first quarter of 2015, for a net loss of $36.6 million. (It beat expectations in the second quarter, albeit marginally.)
This week, however, the company announced an interesting and substantial pivot: Although sellers on the platform were initially prohibited from using production assistance, they can now connect with third-party manufacturers through the new Etsy Manufacturing tool. Those manufacturers must disclose their size and how -- if at all -- they use subcontractors.
"When we think about the future, we don't want to leave out these sellers and manufacturers, because we believe we have a unique opportunity to make manufacturing more accessible for small designers, to humanize the production process and to enable partnerships that might not otherwise be possible," wrote Heather Jassy, SVP of members and community, in an Etsy blog post published on Tuesday.
The move suggests that Etsy wants to go beyond simple craft, rather nurturing startups to scale by offering resources to produce more efficiently. Two years ago, the company had changed its policies, allowing sellers to work with a handful of manufacturers as long as they were approved to do so. To date, Etsy has approved around 5,000 sellers to work with manufacturers, resulting in 7,853 partnerships.
Launching Etsy Manufacturing may also help to retain the more robust businesses, which would otherwise look elsewhere, like Shopify, to set up camp.
Entrepreneurs willing to fork over the fee for the marketplace feature would, in theory, have less incentive to jump ship for a competing service.
Carl Waldekranz, 29, helms one of the newer entrants to the space. Tictail, which recently raised $22 million in its Series B funding round, helps small businesses establish a web and retail presence through its platform -- and he says he's not particularly concerned.
"We're all well aware that it takes more than a website to sustain a growing brand," Waldekranz tells Inc. "At Tictail, we've been less focused on the production of goods and more so on their distribution, doubling down on initiatives that help our brands tell their stories and connect with a global audience."
Jassy adds that the new manufacturing feature will allow businesses to expand on their stories, such as in the case of Virginie Dyvorne, a Parisian expat and jewelry designer, who now sources from Manhattan's diamond district.