Amazon stepped into the handcrafted-goods ring Thursday, opening an arts-and-crafts bazaar online that squarely takes aim at a niche but growing market dominated by the online site Etsy.

The new marketplace, called Handmade at Amazon, went live in the US on early Thursday morning with a lineup of over 80,000 items from about 5000 sellers. The marketplace lets artisans peddle their handmade wares - think walnut cuff links and felt pennants - much in the way the fast-growing Etsy has done.

Since 2005, Brooklyn-based Etsy's handicrafts marketplace has grown to $US2 billion ($2.8 billion) a year in sales, showing that a lucrative market exists for knitted socks, upscale pet furniture and a plethora of other quirky, handmade merchandise.

Now Amazon, an e-commerce giant with $US75 billion in annual sales, is gunning for a piece of that market. Since May, Amazon has been sending out invitations to artisans, including those on Etsy, asking if they want to apply to sell on Handmade.

The new site, Amazon said, will have an entirely different feel from the rest of its empire.

"You can think of it as a factory-free zone, a mass-produced-free zone," said Peter Faricy, vice president of Amazon Marketplace, who is overseeing Handmade.

"For the first time on Amazon, we're going to have a picture of the artist, a little icon of what state they're from, what country they're from," he said. "We're going to launch with an experience that's very different. Customers are going to see the difference."

Handmade at Amazon is a move by the company to extend its reach into yet another corner of the e-commerce universe. In March, the company started Amazon Home Services, which connects consumers with professionals who do tasks like installing kitchen faucets and mounting new televisions, jumping into an increasingly crowded market served in the US by the likes of Angie's List, TaskRabbit and Thumbtack.

Daunting challenge

The new Handmade marketplace provides a daunting challenge for Etsy. Uncertainty has loomed since the site made changes to vendor rules, allowing sellers to outsource some of their manufacturing. The changes have caused dismay among some sellers over what they see as a betrayal of Etsy's artisanal roots.

And though Etsy's sales remain strong, hitting $US61.4 million in the most recent quarter, its mounting costs have given investors cause for concern. Etsy's share price has slumped to half of the heights it saw shortly after its much-talked-about initial public offering in April. By contrast, Amazon shares have surged almost 75 per cent this year, aided by strong sales figures, propelling the company past Wal-Mart to become the world's largest retailer by market capitalisation, worth over $US250 billion.

Amazon says it is carefully vetting seller applications to determine whether their wares are strictly handmade. To list, artisans must give details of their manufacturing process, including what tools and machines they rely on. Outsourcing is not allowed. (Amazon invites sellers whose products do not qualify to list instead on Amazon Marketplace, a more general service.)

Another distinct advantage Amazon will offer is reach. Its 285 million active customer accounts dwarf Etsy's 22 million, giving artisans access to far more traffic and potential customers.

And Amazon is also offering logistical backing to its sellers, allowing them to ship products, in lots, to one of the company's many fulfillment centres around the US. Amazon will then ship out those products as part of its Prime service, which offers members unlimited free shipping for an annual fee.

Most sellers are likely to give Amazon a bigger cut of their sales for that reach, however. Etsy charges a 20US¢ fee for each item a seller lists on its site and takes a 3.5 per cent cut of the sales. For now, Amazon will charge no listing fee but take 12 per cent of sales, which it says covers all costs, including payment processing, marketing and fraud protection.

"Amazon has all the capabilities they need to make their program a big success. They have all the marketing power in the world, and they're already so global," said Dani Marie, chief executive of Handmade Seller magazine and author of "The Handmade Entrepreneur," a monthly guide to selling crafts online that is independent of Amazon.

"They're going to send sellers so much more traffic," Marie said.

Crocheted blankets

The marketplace has caused a buzz among Etsy sellers.

Schuyler Ellers, an Etsy seller who makes dizzyingly colourful clothing for men out of crocheted blankets, said that he had applied to list on Amazon Handmade to attract a bigger and more constant stream of shoppers.

Ellers, 37, raced to handle a surge in sales this year when a series of blogs picked up his kaleidoscopic designs. He cancelled a trip to India and bought up every crocheted blanket he could find at thrift stores and yard sales. He set to work stitching together and shipping about 300 pairs of shorts a month from his workshop in Nevada City, California.

Then the online chatter over his Etsy store, Lord von Schmitt, faded, and sales died down. Page views plunged to less than 150 a day from more than 10,000. Now Ellers is stuck with a lot of 1970s-era blankets.

"I'm looking to even things out a little bit," Ellers said. "Amazon is a giant, so people are always going to be looking at Amazon, I think," he said. "I want to get more than 150 page views."

Some sellers were more skeptical because of the two sites' different fee structures.

"I applied but probably will not do it," said Heather O'Cain of Seattle, who sells handmade jewellery in her Etsy store, BluKat Design. "The fees are way too high."

For Eric Unangst, who sells handcrafted wooden signs from his Ohio workshop, Amazon Handmade is yet another platform that may bring a bump in sales - but will also mean more work listing, and managing, sales. He already sells his signs on Etsy and eBay.

"One of the risks is, you have to go through the process of actually listing those items. That's a major struggle for some of the sellers right now," he said. "I guess I'm really trying to figure out the balance between creating art and selling it."

And Amazon will face challenges, Marie said, in recreating the more personalised service and interaction that have helped make Etsy a refreshing antidote to mass e-commerce. Handmade will allow shoppers to contact vendors, but it will also help stores automate made-to-order requests, for example.

"It's very different from Etsy. And not everyone likes big, corporate organisations," Marie said. "That seems to go against handmade."

The New York Times