Exclusive: ‘Etsy’s Richest Seller’ Explains Why She’s Suddenly Leaving — ‘We Can’t Trust’ Them

Three Bird Nest founder Alicia Shaffer tells Yahoo Makers why she’s leaving Etsy. (Photo: Three Bird Nest)

For much of early 2015, Alicia Shaffer was the marquee name on Etsy, the online marketplace for handmade goods.

Shaffer, the owner of the supersuccessful Etsy store Three Bird Nest, was the subject of glowing profiles on Good Morning America, in the New York Times, and here on Yahoo Makers. Her line of handmade “women’s bohemian clothing & boho fashion at affordable prices” was pulling in $70,000 a month in sales. Several headlines crowned her “Etsy’s richest seller.”

Since then, however, it’s been a cruel summer for Etsy and Shaffer’s business relationship. Squabbles with Etsy, criticism from craft purists who resented Shaffer’s dabbles in mainstream manufacturing, and the success of her independent Three Bird Nest website (where Shaffer now sells the bulk of her product line) have taken their toll.

So after what Shaffer calls a self-imposed vacation from the Etsy website, she announced this morning that Three Bird Nest is permanently leaving the Etsy nest.

Update: Etsy has responded to Shaffer’s departure. Their statement appears below in italics.

Now Three Bird Nest’s website is the only place where you can find its products; they’re no longer being sold on Etsy. (Photo: Three Bird Nest)

“We’re really, really excited and a little bit nervous about it because it’s a crazy-huge move for us,“ Shaffer says in an exclusive interview with Yahoo Makers.

Some may not be surprised by this move. After all, how long could the growing Three Bird Nest business continue to coexist with a site that was created as a marketplace for small crafters and hobbyists? Still, this is no amicable “we just grew apart” conscious uncoupling. This is an outright breakup. And, yes, there are hard feelings.

Shaffer tells Yahoo Makers: “We just felt that we’re at the point that some of the runaround we’ve been getting from Etsy and not being supported by them … it was really time for us to make a decision for our business and our customers to have a place where there’s nobody trying to tear you down.”

A crafty conflict

Shaffer says things between her and Etsy started to go south right as both companies’ fortunes exploded. Shaffer’s increased media profile earlier this year happened at around the time that Etsy, which started as a Brooklyn-based arts-and-crafts bulletin board, had a high-profile IPO; the company debuted on the Nasdaq this past April.

In anticipation of its move toward the big leagues, Etsy made the controversial move of relaxing its strict rules regarding the handmade goods sold on its site. The reason was simple: As Etsy sellers became more popular, and demand for their goods increased, they couldn’t make their products in the strictly handmade fashion Etsy required.

Shaffer believes that amid Etsy’s Wall Street success, the company is having an identity crisis. (Photo: AP)

“Etsy’s old policies were putting some long-time sellers in a bind, where they couldn’t run their businesses reasonably without violating our rules,” the company said when it announced the change in October 2013. “We’ve introduced new guidelines that allow Etsy sellers to get help with making and shipping their items.” Those guidelines included allowing sellers to use certain outside manufacturers to help make their products.

That policy change was a godsend to Shaffer. Since her Three Bird Nest store debuted in 2011, it had become one of Etsy’s most popular stores, and she was struggling to keep up with her orders. Once Etsy made the change, she says, she quickly applied for permission to get manufacturing help.

WATCH: Designer becoming self-made millionaire through Etsy

“Etsy as a corporation, I think, wants to have the image of ‘We are this 100 percent handmade marketplace,’” she says. “But I think they also understand that companies like ours grow and need to have manufacturing help. We need to have production help.” Shaffer says she happily complied with Etsy’s strict reporting and authentication rules governing sellers who work with third-party manufacturers. “We sent in any documentation that [Etsy] asked for,” she says.

But critics didn’t see it that way. They bitterly opposed Etsy’s decision to allow outside manufacturing, and they turned a lot of their fire on Shaffer’s company. “Three Bird Nest is a reseller NOT a hand knitter,” wrote one aggrieved craft blogger. Another wrote an even more anti-Three Bird Nest screed; it was titled “How Etsy Raped America.”

Update: Etsy has issued a statement in response to Shaffer’s comments: 

“At Etsy, we work with our sellers to help them grow their businesses and uphold our policies, which are vital to the integrity of our marketplace. If an Etsy seller still cannot live up to her responsibilities, provide the level of customer service our buyers expect or comply with our handmade policy, we may take appropriate action. While we generally don’t comment on specific sellers, Three Bird Nest was unable to demonstrate sufficient compliance with our policies.”

Critics and crafters slammed Three Bird Nest, saying its products didn’t belong on Etsy. (Photo: Three Bird Nest)

Such critics accused Shaffer of being everything from an artisan sellout to an outright fraud. The criticism intensified when items resembling Shaffer’s were spotted on a Chinese website, leading to conspiracy theories that Shaffer was importing stuff from China and passing them off on Etsy as her own handmade goods. (Shaffer says the Chinese website was selling cheap knockoffs of her products and advertising them with photos lifted from her own site.)

Through it all, Shaffer claims, Etsy has done little to defend her or Three Bird Nest. “They’re getting heat from their traditional Etsy shop owner, who sells a few products a week,” she says. “Obviously our shop wasn’t that shop. I don’t think they knew how to respond to the Etsy community. They didn’t know how to respond to the other sellers.”

As a result, Shaffer says, Etsy tried to split the baby, trying to mollify both the individual handcrafters, who gave Etsy its DIY street cred, and the big sellers like Shaffer, who provided Etsy with much of its Wall Street cred (and revenue; Shaffer says Three Bird Nest has paid Etsy more than $360,000 in seller and processing fees).

“They tried to take a middle ground and not really respond or take a stance on supporting my shop,” much to her frustration, Shaffer says. “It kind of got to the point where I asked, Why are we giving Etsy our money? Why are we fighting this battle of someone not supporting us when we don’t have to? We can continue to grow the brand outside of them.”

The last straw

Growing her brand outside of Etsy was precisely what Shaffer had started doing. She’d already begun shifting much of her product line to her own Three Bird Nest site. There, not only can she manufacture her products pretty much any way she pleases, she says she can sell them faster and more efficiently without having Etsy as a go-between. “We can knock out and process 40 orders in an hour, where on Etsy it takes eight hours to process that many,” she says.

Eventually, Three Bird Nest’s presence on Etsy dwindled to about 20 percent of the company’s entire product line. “Because of our focus on the website, our Etsy sales have gone down but the sales on our website continue to go up,” says Shaffer.

Shaffer says lack of support and trust from Etsy led to the split. (Photo: Three Bird Nest)

Things came to a head last month when Etsy suspended Three Bird Nest. Shaffer says it was over an Etsy customer complaint about an undelivered $20 order — a complaint, she says, that Etsy neither told her about nor gave her the chance to make right.

“My blood was boiling,” Shaffer recalls of the incident, which she says was the final straw leading to today’s announcement. “I can’t wrap my head around why we’ve essentially been targeted by them,” she says of Etsy. “I just feel that a lot of sellers are at that point where they’re just really fed up and wanting to move away from that.”

Time to say goodbye

So now Etsy and Three Bird Nest’s partnership is no more. When Yahoo Makers last talked with Shaffer back in March, she acknowledged that she’d outgrow Etsy one day. “It’ll obviously make sense for us from a business perspective that there will be a point where we can only sell some of our products on [ThreeBirdNest.com],” Shaffer said at the time. Still, she insisted she was staying at Etsy because “it seems like home. That’s where we started and that’s what really gave us a name. [Not being on Etsy anymore] would be sad — like seeing your baby go off to college.”

Now that time has come, far sooner than she intended. Is she as sad as she thought she’d be now that she’s leaving Etsy far less amicably than she expected?

“Yeah,” she admits. “One hundred percent. That was our ideal, but sometimes ideals don’t work out that way. So, yeah, it’s a little bit sad for me.”

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