The game is over for arts and craft seller Etsy (NASDAQ:ETSY), reckons Edison, as it has not defended its niche market robustly enough, and there are warnings for taxi app Uber too.
In October 2015, Amazon (NASDAQ:AMZN) launched Handmade and in doing so became a direct and brutal competitor of Etsy, says analyst Richard Windsor.
Handmade artisan goods...
"Although Etsy remains the leader in the small niche of handmade artisan goods, it simply has no chance of competing against Amazon," he suggests, adding that it is likely to end up being forced to sell itself at a valuation far less than the market is pricing in today.
Etsy is a just a market place rather than Amazon which mostly runs its own inventory and makes a retail margin.
"Network based businesses are an all or nothing market where if one is a niche player, one must defend that niche at all costs. As long as one remains the go to place to transact with more than 60% share or double the nearest competitor, a good return will be earned," says Windsor.
The analyst goes on to say that Uber is vulnerable right now as its current turmoil has allowed rival Lyft to make up some ground in its home USA market.
Uber and Lyft...
"Uber cannot afford to let Lyft get to close to half its size otherwise it will be at risk of losing that “go to” status signalling a bloodbath in its home market.
"Uber still has time to act, but for Etsy, the game is over. While there may be bargains to be had on its site, the share price is certainly not one of them," says Windsor.