Etsy executives are evaluating how best to align Etsy Wholesale with the core online marketplace and says it will update users when it has more information.

(Bloomberg)—Natalie Jacob has been selling jewelry on Etsy Inc. almost since its founding more than a decade ago. Etsy is No. 13 in the Internet Retailer 2017 Online Marketplaces rankings.

As Etsy grew, so did her business, until she could afford to do it full time. So, when the company started Etsy Wholesale to link sellers with bricks-and-mortar retailers looking for one-of-a-kind goods, Jacob jumped at the chance. Etsy Wholesale even got her jewelry into Macy’s flagship Herald Square store in New York during the holiday shopping season.

Then, about six months ago, Jacob and other Etsy merchants noticed mysterious changes to the wholesale service. Their emails to customer support started going unanswered. A popular Instagram account run by Etsy featuring merchants’ products went dormant and has since been deleted. Etsy stopped updating the Wholesale site.

Etsy hasn’t formally shut down the service, but its seeming abandonment fits in with CEO Josh Silverman’s efforts to refocus the handmade marketplace on areas that generate the most growth on the core e-commerce site. It’s a tacit admission that Etsy has reined in an ambitious push into traditional retail. Closing the service could alienate makers who now have more options to reach shoppers—from easily setting up their own websites via Shopify to signing on with a host of startups pushing into the wholesale business even as Etsy pulls back.

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“It’s the company picking its battles,” says Tom Forte, an analyst with D.A. Davidson & Co.

Helping online sellers get into physical stores is a smart idea, but he says it’s unlikely Etsy Wholesale did much to boost revenue. In an emailed statement, the company said Wholesale users rely on the service to find buyers, and that Etsy will continue to help them do so. Meanwhile, executives are evaluating how best to align Etsy Wholesale with the core online marketplace and will update users when it has more information.

Wholesale came to Etsy by way of Trunkt, an app the company acquired in 2012 that had been helping Etsy sellers with wholesale for years. Etsy launched the revamped product in 2014, a year before going public. Using Etsy Wholesale, retailers and big-box chains could search for Etsy merchants and place bulk orders at lower prices. Several national chains signed on, including West Elm, Macy’s Inc. (No. 6 in the Internet Retailer 2017 Top 500) and Willams-Sonoma Inc. (No. 23). For sellers, the service obviated the need to visit trade shows or cold-call retailers.

“People see us as an online handmade marketplace, but we really see ourselves as reinventing the whole retail supply chain,” then-CEO Chad Dickerson said at a tech conference in 2013. The marketplace wanted to transcend e-commerce, and Wholesale was a big part of doing that.

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Three years later, Dickerson, speaking on a quarterly conference call, called Wholesale the company’s “biggest ongoing effort,’’ to bring new players into the Etsy economy. “We’re excited about the long-term potential this program has to create meaningful growth opportunities for sellers and for Etsy,” he said.

Then Dickerson was ousted and replaced by Silverman, who took over last May amid slowing sales growth, a bottoming-out stock price and complaints from activist shareholders clamoring for change. Silverman set out to refocus Etsy on projects he deemed to have the best chance at re-igniting sales growth. He fired 8% of  the workforce and canceled the company’s internship program. Other side projects, including craft-tutorial site Etsy Studio and a service that linked sellers up with local manufacturers are being cut.

Silverman has presided over three quarters of revenue growth and the company’s first quarter selling more than $1 billion worth of goods on its site. For investors, who’ve pushed the stock up more than 160% since he joined to about $27 (almost an all-time high), Silverman’s plan is working. The shares fell 3.2% to $27.63 on Friday.

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But not for Wholesale users like Rachel Wood, an Etsy merchant from Oklahoma City who sells key chains and coffee mugs emblazoned with captions like “World’s Most Okay Mom.” Wood has been on the site since 2013, and Etsy Wholesale makes up the bulk of her business. Since the company’s apparent abandonment of Wholesale, Wood says her sales have taken a hit.

Wood has already moved much of her business to Indigo Fair, a San Francisco startup founded in 2017 by former Square Inc. employees that says it has signed up 25,000 retailers and boutiques. Indigo Fair chief Max Rhodes says several of these companies have told him that they’re switching their orders from Etsy Wholesale to his company. Indigo Fair ads are the top result when searching for Etsy Wholesale in Google.

Indigo Fair is one of several new services eager to steal wholesale customers from Etsy. Toronto’s Hubba has raised $30 million from investors including Goldman Sachs to help craft brands sell through bigger retailers, and has 20,000 buyers already. Then there’s Wholesale In A Box, a Kingston, New York company that charges a monthly fee to do the legwork of researching and hunting down potential boutiques for makers.

Small merchants looking to hook up with retailers have many more options these days, says Emily Kerr-Finell, who co-founded Wholesale in A Box almost three years ago. Any experienced maker knows it’s important to sell on Etsy in addition to its own website, usually built with Shopify, Kerr says. As people get more sophisticated, Etsy will become less relevant to the average maker-seller, she says.

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More than a decade into its existence, Etsy still struggles to square its handmade ethos with the money-making imperatives of Wall Street. The company’s decision to go public shook the faith of veteran sellers like Natalie Jacob, who want to believe Etsy is a different kind of company, one focused as much on doing good as on making money. Now, seemingly to please shareholders, Etsy appears to be abandoning one of its beloved programs.

Every day, Jacob half expects to log on and find Etsy Wholesale gone. “I don’t want to jump ship,” she says. “But it just makes sense to diversify.”

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