Etsy is Experiencing a Downturn, Leading Sellers to Abandon the Platform.

In 2017, Emily Olson, a stay-at-home mom from Boulder, Colorado, began selling prints and custom puppy portraits on Etsy.

Her watercolors were straightforward and fairly priced—depicting corgis and malamutes in mini-tuxedos, which she offered between $75 and $300 each. Dog owners loved them: “They were a labor of love,” she recalls. By 2021, her Etsy shop had generated over $40,000 in sales, and her YouTube following skyrocketed to 180,000 subscribers.

However, in 2022, she noticed a troubling trend: her sales began to drop sharply. The market became saturated with competitors, and she frequently spotted replicas of her work on drop-shipping platforms like Alibaba, misleadingly marketed as originals. Additionally, AI-generated pet portraits started to overshadow her listings in search results, often selling at significantly lower prices.

The most disheartening aspect, she claims, was that the AI-generated portraits received positive feedback. “People were saying, ‘Oh, this is the cutest image, I love it in my daughter’s bedroom.’ They didn’t really know or care who created it; they were just loving it,” Olson explains. As a result, her sales plummeted by 30 percent in 2022, followed by a staggering 50 percent drop the next year.

In 2024, Etsy formally announced that it would permit AI-generated art on its platform, as long as sellers disclosed it. Disillusioned by this decision and her waning sales, Olson shared 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 expresses in the video. “It feels like they’ve just turned into another giant corporation focused solely on profits.”

Once a charming haven for quirky creations like vulva jewelry and whimsical crocheted dolls, many longstanding Etsy sellers like Olson are now leaving the platform in significant numbers due to frustrations with perceived lax policies. New competitors are emerging as well. Fybe, a new online marketplace for crafts, is set to launch for vendors on August 1. It explicitly bans AI-generated content and drop-shipping, relying on volunteer moderators and direct seller interactions to guarantee all products are handmade.

“Both buyers and sellers on Etsy are feeling a bit discontented,” notes Rachel Powell, the founder of Fybe. “I thought if we could create a platform with human moderation that only allows vendors not using AI or drop-shipping, we could cater to a real need in the community.”

On the subreddit r/EtsyCommunity, multiple threads feature frustrated sellers complaining about dwindling sales and the influx of what one user called “AI-generated slop” that lacks proper labeling. “Every maker I’ve spoken with seems to be shouting into the void about it, and Etsy appears indifferent,” concludes one post.

It’s not limited to mass-produced mugs or T-shirts. Buyers have been bombarded with AI-generated listings for crochet patterns, hermit crab pools, and even medieval armor. Longtime vendors lament that the handcrafted essence the platform once celebrated is fading, primarily due to a growing number of online entrepreneurs marketing Etsy as a venue for AI-powered side businesses.

“The whole AI situation has tremendously hindered Etsy for sellers,” asserts Chloe Rose, an artist and content creator who previously sold stickers and original watercolors on the platform.

Viktor, a UK-based illustrator with 10 years on Etsy, reports a staggering 98 percent drop in sales over the past year, attributing this to people treating the platform as “an easy way to make a quick buck.” “Trust in once-reliable sites like Etsy has eroded, as people grow weary of seeing AI-generated rubbish that is infesting the site,” says Viktor, who prefers to use his first name online for privacy. “Sadly, this has deterred potential customers from supporting genuine artists.”