Amazon (NASDAQ: AMZN) has crushed many retailers in recent years, but it repeatedly failed to loosen Etsy's (NASDAQ: ETSY) grip on the handmade goods market. Amazon challenged Etsy with its Handmade marketplace in 2015, but Etsy's first-mover's advantage, easier sign-up process, lower commissions, and relaxed rules regarding mailing lists and promotions held Amazon at bay.
Amazon owns a much larger e-commerce platform than Etsy, and its higher-margin AWS (Amazon Web Services) cloud platform subsidizes the growth of its lower-margin marketplaces. That virtuous cycle lifted its stock nearly 470% over the past five years.
Etsy's stock rose about 330% during the same period as it expanded its base of buyers and sellers in Amazon's shadow. Etsy isn't boosting its profits with a secondary cloud business like Amazon, but it also isn't shackled to a lower-margin fulfillment network. Instead, Etsy is merely a listing platform that connects artisans to customers -- and it asks merchants to fulfill their own orders.
Source Fool.com