On April 25th Etsy officially launched the previously announced Etsy Studio, a marketplace dedicated to craft supplies. At launch there are over 8 millions items. They are also adding project tutorials and other content to help creators make new ideas.

Etsy always had handmade, vintage and craft supplies products. While handmade and vintage easily worked under one website, craft supplies looked out of place - the customer base is mostly different. So while Etsy didn’t want to stop craft supplies from growing on the marketplace, it had to find a way to better serve that niche. Opening Etsy Studio is that, and we think it is a smart move.

One of the first articles we wrote on Etsy was titled Top Shops on Etsy Are Not the Most Interesting in which we found that looking at shops with the most sales often highlights craft sellers, which is not an interesting table to look at. Any analysis of Etsy requires excluding/splitting craft sellers since their goals, volume and production is drastically different from anyone else.

Based on lifetime units sold, 60 percent of top 1000 Etsy shops are selling craft supplies. Led by Bohemian Findings which has sold over a million products, considerably more than any other shop. We estimate that at least 15 percent of Etsy Gross Merchandise Sales are from the crafts category. So while this category is somewhat invisible for many customers, it is a very big part of Etsy.

Etsy Studio still utilizes the existing infrastructure, and most if not all sellers on Etsy Studio are the same sellers who sold on Etsy. But having made this differentiation, Etsy can optimize the new website for DIY customers, work on content specific to them, etc. This will provide extra growth for the company without a big investment.

Building additional niche marketplaces is a power move. This week Amazon launched “Subscribe with Amazon,” a marketplace for digital subscriptions. Amazon’s Business marketplace, which connects businesses with suppliers, has generated $1 billion in sales in 2015, and likely much more last year. What Amazon is doing is finding product categories with a defined customer base, and launching them as separate marketplaces.

But since those new niche marketplaces are closely related to the already established marketplace, they can use network effects to kickstart it. This is exactly what Amazon has been doing with the multiple programs they are running, and now this is what Etsy has done as well. Craft supplies is a big category, they already have sellers for it, and thus Etsy Studio will go from a new idea to a multi-million marketplace in a matter of weeks.