Online mega-storefront Etsy.com was intended to be a place where makers of handmade goods and vintage finds could sell their wares directly to customers. The site has had restrictions on the reselling of items made by someone else and on products manufactured in a factory. But today Etsy announced that it is putting new guidelines in place that will allow for some previously prohibited sellers to offer their products on the site.

The new guidelines allow for sellers to hire staff, meaning that they can now bring on additional help to produce their goods. They can also use a third party to handle order fulfillment, so that sellers don’t have to stack up unsold orders in their garage. Taking these two new allowances to their logical conclusion, Etsy is even allowing sellers to apply for the ability to sell items produced by “manufacturing partners.”

This is a huge divergence from the website’s long-held “handmade” ethos, as these eased restrictions effectively open the door to mass-produced goods that the seller may never even see before they arrive at the buyer’s door.

In an apologetic-but-we’re-doing-it-anyway blog post, Etsy CEO Chad Dickerson explains:

When Etsy started, we relied on one word to carry all our values out into the world: handmade. Almost immediately, that was a problem. Many of us felt we knew handmade when we saw it, but that was hard to put into enforceable policy. What kind of tools could you use? How many hands could shape the product? Could you use mass-produced components to put together something original? As Etsy wrestled with defining exactly what handmade meant, and what was and wasn’t allowed, our DOs and DON’Ts ballooned from about 4,000 to 14,000 words. Inside the company, we struggled to see our way out of this bind without compromising what we felt kept Etsy special.

He says that the policies were confusing to sellers, as was the site’s sometimes confusing enforcement of its own rules.

“Some sellers quietly began to bend the rules, hoping that no one would really notice,” writes the Chad.

Case in point: The 2012 incident in which Etsy featured a seller, complete with gushing interview about her handmade furniture, who was actually having her products made overseas and shipped to the U.S., and who was selling the same items on sites like Overstock.com, all while claiming that she was following the “handmade” rules. Etsy further stoked users’ anger by defending the seller, saying she wasn’t a reseller or manufacturer, but a “collective.” This ultimately led to a protest in which more than 1,000 Etsy sellers shut down their shops for the day in May 2012.

In spite of the backlash, Dickerson says the change in policy came about with the epiphany that “handmade” could really just mean about anything Etsy wants it to mean:

Instead, handmade was about values we as a community prize: authorship — the idea that your handmade item begins with you — and responsibility, because Etsy sellers are deeply involved in how their items are made and accountable for their buyers’ experiences. When we began to think about giving sellers greater choices for staffing, shipping and making items, the third value was evident: transparency. The Etsy community places a premium on knowing the person and the story behind a handmade item.

We don’t quite understand that statement, as the mere fact that someone other than the seller is making the product would seem to detract — if not completely negate — this entire “story” aspect.

Dickerson believes that the new technology available to crafty folks — and the fact that not everyone can have a 3-D printer or laser-cutter in their basement — has expanded the boundaries of what it means to be handmade.

“Buyers increasingly want to know where their goods come from,” he writes. “At the same time, makers have access to an ever-growing array of methods to create their items, everything from laser cutters and CNC routers, to manufacturers who do small runs of high-quality items. Artists are integrating these new technologies with some of the oldest hand-making processes in the world in surprising ways. Makers are banding together to collaborate, sharing workshops and tools, and building their own production facilities.”

The goal, he explains, is transparency. Starting in 2014, sellers who apply for review and approval to use an outside manufacturer will be required to publicly disclose this information on their shops’ about pages.

We applaud that requirement, as it gives potential buyers the ability to decide for themselves whether they believe the seller deserves their business, we do wonder if it will result in an influx of small businesses using Etsy as an outlet for their factory-produced goods. Additionally, would an increase in the presence of such operations permanently change the complexion of Etsy to the point where the single-person shops that the website built its foundation on will become an afterthought?

The company tries to downplay that concern in its FAQ about the new policy changes:

The vast majority of Etsy shops are run by one person and we want them to be able to stay on Etsy for a long time. In the long-term, they’re not well-served by overly intrusive, punishing rules about how they run their shop. We don’t believe that sellers have to grow their businesses, we just want to make it possible if that’s their goal. Letting sellers hire help when they need it or partner with a manufacturer also gives them options that aren’t necessarily tied to growth — these tools can also be used to explore new ways of making things or creative collaborations. Etsy sellers wear many hats, and we hope these changes give them the flexibility to focus on the most soul-satisfying parts of their business.

GigaOm’s Lauren Hockenson views this policy change as an unpleasant inevitability. “It’s clear that the tension between Etsy the company and Etsy the community reached a breaking point, and the changes won’t quiet all complaints,” she writes. “But, it’s a process the company needs to begin if it wants to keep thriving.”

In the end, whether or not these factory-producing sellers become the dominant shops on Etsy depends on the people who shop on the website. They may react negatively to mass-produced goods and remain loyal to sellers who maintain that handmade means made-by-hand. Conversely, these shoppers might be tempted by certain aspects that factory-products goods could offer — shorter turnaround times, item-to-item consistency, lower prices — and decide to buy from these larger sellers.

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