Etsy, Kickstarter and the Problem with DIY: It Doesn’t Scale

Recent Etsy purchase.

The Wall Street Journal has a story today about Etsy–“Etsy Knits Together a Marketplace”–and that company’s recent $300 million valuation, which is 10 times the sales Etsy says it did last year. “Some skeptics also fear the company’s growth could be hampered by its ironclad rule that sellers can use the site only to offer good they have made themselves,” tech reporter Spencer Ante writes, and proceeds to not quote any of these “skeptics,” giving Betabeat the impression that “skeptics” really refers to “Spencer Ante.”

The number of items listed for sale on Etsy was up 40 percent from 2009 to 2010, but is down four percent for the first half of 2011, he says. There’s only so many people in the world who want to crochet eyepatches and hand-cut paper dolls, and they can only produce so many of those things a week. Also, Etsy may have reached market saturation among DIY-ster at least in the U.S. Even if it hasn’t, the exclusion of mass produced goods will cap its growth at some point far below that of other marketplaces like eBay and Amazon.  Read More