Etsy Is In Its Flop Era, and Sellers Are Fleeing

In 2017, Emily Olson, a stay-at-home mom based in Boulder, Colorado, started selling prints and custom-made puppy portraits on Etsy.

Her watercolors were simple and relatively cheap—images of saucer-eyed corgis and malamutes in mini-tuxes, which she sold for $75 to $300 each—but dog owners adored them: “They were a labor of love,” she says. In 2021, she says she made more than $40,000 off her Etsy store, and her social media following ballooned to 180,000 followers on YouTube.

But in 2022, she noticed something odd: Her sales started precipitously declining. Competitors flooded the platform, and she kept finding copies of her work on drop-shipping sites like Alibaba, where they were advertised as original creations. Then there were the AI-generated pet portraits, which were supplanting her listings in search results and selling for a fraction of the price.

The most frustrating part, she says, was that the AI-generated portraits were getting great reviews. “People were like, ‘Oh, this is the cutest image, I love it in my daughter’s bedroom.’ They didn’t really know or care who made it, they were just eating it up,” Olson says. In 2022, she says, her sales decreased by 30 percent, followed by 50 percent the following year.

In 2024, Etsy officially announced that it would continue to allow AI-generated art on its platform, provided sellers disclosed it as such. Frustrated with the policy and with her declining sales, Olson posted a video on her YouTube channel in January 2025 titled: “Etsy Was Great … Until It Wasn’t—Why I’m Walking Away.” “Etsy doesn’t align with my values these days,” she says in the video. “It feels like they’ve just become another giant corporation chasing profits above all else.”

Once a quirky bastion of amateur vulva jewelry and twee crocheted dolls, longtime Etsy sellers like Olson are now migrating from the platform in large numbers due to their frustration with policies they feel are lax. Competitors are emerging. Fybe, for instance, a new online crafts marketplace, will open to vendors August 1. It explicitly prohibits AI-generated content and drop-shipping on the platform, and will rely on volunteer moderators and direct conversations with sellers to ensure all products are human-made.

Both buyers and sellers on Etsy “are a little discontented,” says Rachel Powell, the founder of Fybe. “I figured if we could start a platform that has human moderation and only allows vendors that aren’t using AI or using drop-shipping, then we could be filling a very real need in the community.”

On the subreddit r/EtsyCommunity, there are dozens of threads from angry sellers griping about declining sales and the influx of what one user referred to as “AI-generated slop” that isn’t labeled as such. “Every maker I've talked to is basically screaming into the void about it, and Etsy doesn't seem to care,” one post concludes.

It isn’t just mass-produced mugs or T-shirts. Buyers have been inundated by AI-generated product listings for crocheting patterns, hermit crab pools, even medieval suits of armor. Longtime vendors say the hand-crafted aesthetics once prized by the platform are disappearing, thanks to a burgeoning market of online entrepreneurs promoting Etsy as a place for AI-driven side hustles.

“The whole AI side of things has really, really hampered Etsy for sellers, big time,” says Chloe Rose, an artist and content creator who for years sold stickers and original watercolors on the platform.

Viktor, a UK-based illustrator who has been on Etsy for 10 years, says his sales have decreased by 98 percent over the last year alone, thanks to people using the platform as “an easy way to make a quick buck.” “People have learned not to trust once-trusted sites like Etsy, because they are tired of seeing AI slop that is now infecting the site,” says Viktor, who goes by his first name online for privacy reasons. “Unfortunately, this has turned potential customers away from actual artists.”

Since 2021, the company’s gross merchandise sales have declined, which analysts have attributed to increased competition from sites like Temu and Shein; in late 2023, it laid off 11 percent of its workforce. In recent years, however, the platform has largely maintained it loyal user base: Etsy has approximately 5.6 million sellers, according to a 2025 transparency report; and it generated $2.8 billion in revenue last year, a 2.7 percent increase from 2024.

As part of Etsy’s 2024 announcement allowing sellers to use works made with AI, the platform prohibited users from selling their own customized AI prompts, also noting that sellers must disclose if they used AI in product listings.

But this mandate is not strictly enforced, and Etsy is largely unresponsive to complaints about AI content regulation, according to Etsy sellers who spoke with WIRED for this story. Olson says that the platform even flagged her own products as copies of other vendors’ works, despite her artworks being wholly original. Her efforts to reach a customer service representative were unsuccessful. “They are not easy to work with, at all,” she says.

In response to a list of questions, James Ossman, vice president of customer operations at Etsy, told WIRED the company knows “how deeply our sellers care about protecting human creativity.”

“Etsy is the marketplace for goods made, designed, handpicked, or sourced by real people,” Ossman said. “That includes original works created by sellers who may use AI as one of many tools in their creative process.” Ossman added that enforcing the company’s standards regarding transparency and AI is “complex, and we know we have a lot more work to do.” He said the company is “continuing to improve our ability to detect and remove listings that don't belong on Etsy.”

Olson has pivoted to Shopify, though she says sales there have been disappointing as well. “It is definitely harder to sell on your own website than on communities like Etsy,” she says.

But given the rising popularity of AI slop across platforms, there are also larger, more uncomfortable questions artists like her have to wrestle with, about whether there is even a future for handmade or crafted products in general. Sure, a hand-painted watercolor of a beloved shih tzu will have a different, more rough-hewn quality than a slick AI-generated portrait—but do consumers even care about the difference, particularly when the latter is so much cheaper and more accessible than the former?

“Face it, art is a luxury, and with all this economic uncertainty right now, it tends to be one of the last things people want to spend money on,” she says. “So I have empathy for people who don’t buy hand-painted works of art, but I also think we will always want to seek out things of beauty that are made by real people.”

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