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.