In 2017, Emily Olson, a stay-at-home mom who lives in Boulder, Colorado, started selling custom puppy prints and portraits on Etsy.

His watercolors were simple and relatively inexpensive (images of saucer-eyed corgis and malamutes in mini-tuxedos, which sold for between $75 and $300 each), but dog owners loved them: “They were a labor of love,” he says. In 2021, he says he earned more than $40,000 from his Etsy store and his social media following skyrocketed to 180,000 followers on YouTube.

But in 2022, he noticed something strange: his sales began to drop precipitously. Competitors flooded the platform and she continued to find copies of her work on dropshipping sites like Alibaba, where they were advertised as original creations. Then there were AI-generated pet portraits, which were spoofing their listings in search results and selling for a fraction of the price.

The most frustrating part, he says, was that the AI-generated portraits were getting rave reviews. “People were like, ‘Oh, this is the cutest picture, I love it in my daughter’s bedroom.’ They didn’t really know or care who did it, they were just eating it up,” Olson says. In 2022, it says, its sales were down 30 percent, followed by 50 percent the following year.

In 2024, Etsy officially announced that it would continue to allow AI-generated art on its platform, as long as sellers disclosed it as such. Frustrated by politics and her declining sales, Olson posted a video to her YouTube channel in January 2025 titled, “Etsy Was Great… Until It Wasn’t: Why I’m Leaving.” “Etsy doesn’t align with my values ​​today,” he says in the video. “It seems as if they have become another giant corporation that seeks profit above all else.”

Etsy sellers like Olson, once a quirky bastion of amateur vulva jewelry and kitschy crochet dolls, are now migrating from the platform in droves out of frustration with what they see as lax policies. Competitors are emerging. Fybe, for example, a new online craft marketplace, will open to vendors on August 1. It explicitly prohibits AI-generated content and dropshipping on the platform, and will rely on volunteer moderators and direct conversations with sellers to ensure all products are human-made.

Both buyers and sellers on Etsy “are a little disgruntled,” says Rachel Powell, founder of Fybe. “I thought that if we could start a platform that had human moderation and only allowed vendors that didn’t use AI or dropshipping, then we could be filling a very real need in the community.”

On the r/EtsyCommunity subreddit, there are dozens of threads from angry sellers complaining about declining sales and an influx of what one user called “AI-generated junk” that isn’t labeled as such. “Every manufacturer I’ve talked to is basically screaming into the void about it, and Etsy doesn’t seem to care,” one post concludes.

It’s not just about mass-produced mugs or t-shirts. Shoppers have been inundated with AI-generated product listings for crochet patterns, hermit crab pools, and even medieval armor. Longtime vendors say the artisanal aesthetic once prized by the platform is disappearing, thanks to a burgeoning market of online entrepreneurs promoting Etsy as a place for side hustles powered by artificial intelligence.

“The whole artificial intelligence aspect has really hindered Etsy a lot for sellers,” says Chloe Rose, an artist and content creator who has sold original stickers and watercolors on the platform for years.

Viktor, a UK-based illustrator who has been on Etsy for 10 years, says his sales have dropped by 98 percent in the last year alone, thanks to people using the platform as “an easy way to make quick money.” “People have learned not to trust once-trusted sites like Etsy, because they are tired of seeing AI that is now infecting the site,” says Viktor, who uses his online name for privacy reasons. “Unfortunately, this has driven potential clients away from actual artists.”