Etsy Sellers Flee Platform Over AI Goods and Policy Complaints
Emily Olson, a stay-at-home mother in Boulder, Colorado, began selling prints and custom puppy portraits on Etsy in 2017. Her watercolors were simple and inexpensive, featuring saucer-eyed corgis and malamutes in tiny tuxedos, priced between $75 and $300. Dog owners adored them. She called them a labor of love. In 2021, she earned more than $40,000 from her Etsy shop and built a YouTube following of 180,000 people.
But in 2022, her sales started dropping sharply. Competitors flooded the platform. She found copies of her work on drop-shipping sites like Alibaba, where they were sold as original creations. Then AI-generated pet portraits appeared, pushing her listings down in search results and selling for much less.
The most frustrating part, Olson said, was that the AI portraits received excellent reviews. People called them the cutest images and said they loved having them in their daughter's bedroom. They did not know or care who made them. They just ate them up, she said. Her sales fell 30 percent in 2022 and another 50 percent the following year.
In 2024, Etsy officially announced it would continue to allow AI-generated art on the platform as long as sellers disclosed it. Frustrated with the policy and 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." In the video, she said Etsy no longer aligns with her values. It feels like the company has become another giant corporation chasing profits above all else.
Once a quirky home for amateur vulva jewelry and twee crocheted dolls, Etsy is now seeing longtime sellers leave in large numbers because of policies they consider too lax. New competitors are appearing. Fybe, an online crafts marketplace, will open to vendors on August 1. It explicitly bans AI-generated content and drop-shipping. It will use volunteer moderators and direct conversations with sellers to ensure all products are human-made.
Rachel Powell, founder of Fybe, said both buyers and sellers on Etsy are a little discontented. She figured that if they could start a platform with human moderation that only allows vendors not using AI or drop-shipping, they could fill a real need in the community.
On the subreddit r/EtsyCommunity, dozens of threads show angry sellers complaining about declining sales and an influx of what one user called "AI-generated slop" that is not labeled as such. One post concluded that every maker they have talked to is basically screaming into the void about it, and Etsy does not seem to care.
Chloe Rose, an artist and content creator who sold stickers and original watercolors on Etsy for years, said the whole AI side of things has really hampered Etsy for sellers, big time.
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Viktor, a UK-based illustrator who has been on Etsy for 10 years, said his sales have dropped 98 percent over the last year alone because people are using the platform as an easy way to make a quick buck. He said people have learned not to trust once-trusted sites like Etsy because they are tired of seeing AI slop infecting the site. This has turned potential customers away from actual artists.
Since 2021, Etsy's gross merchandise sales have declined. Analysts attribute this to increased competition from sites like Temu and Shein. In late 2023, the company laid off 11 percent of its workforce. However, the platform has largely maintained its loyal user base. Etsy has about 5.6 million sellers, according to a 2025 transparency report. 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 AI-generated works, the platform prohibited users from selling their own customized AI prompts. It also said 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 sellers who spoke with WIRED. Olson said the platform even flagged her own products as copies of other vendors' works, even though her artworks were wholly original. Her efforts to reach a customer service representative were unsuccessful. She said they are not easy to work with at all.
In response to a list of questions, James Ossman, vice president of customer operations at Etsy, told WIRED the company knows how deeply its sellers care about protecting human creativity. He said Etsy is the marketplace for goods made, designed, handpicked, or sourced by real people. 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 they know they have a lot more work to do. He said the company is continuing to improve its ability to detect and remove listings that do not belong on Etsy.
Olson has moved to Shopify, though she said sales there have been disappointing as well. She said it is definitely harder to sell on your own website than on communities like Etsy.
But given the rising popularity of AI slop across platforms, there are also larger, more uncomfortable questions artists like her have to wrestle with. Is there even a future for handmade or crafted products in general? 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, especially when the latter is so much cheaper and more accessible?
Olson said art is a luxury, and with all the economic uncertainty right now, it tends to be one of the last things people want to spend money on. She has empathy for people who do not buy hand-painted works of art, but she also thinks people will always want to seek out things of beauty that are made by real people.