The thing about bureaucracy, is that it has a few tricks up its sleeve: things that are easy for real people to do once, but incredibly expensive to do twice, or to fake from whole cloth. The clearest one of these is identity verification. (Which is why it's at the core of so many other kinds of verification flows today, e.g. dating-site onboarding.)
So, consider this verification flow (c/o an Etsy mobile app):
1. On account registration, require the artisan to go through KYC photo identity verification (= "kyc-verify" API call to third-party KYC service that gets the user to securely upload passport/ID through a popover webview; KYC service verifies that it's a real passport/ID, that it's not already associated with any other account for that service; and then returns the name, country of residence, and photo extracted from the ID in the API call); and then store the name and coutry of residence, and extract the person's face metrics from their ID photo.
2. Guide the artisan to film a high-quality "verification video" of themselves saying some random thing. Auto-verify many extracted frames of this video against the extracted ID face metrics, and then MTurk-verify that the video is of what you requested.
And then this per-product-listing flow:
3. Guide the artisan to film a "process video" as a time-lapse from a single static position in their workshop, showing as much of the workshop as possible; tell them to stand with face and raw materials visible at the beginning of the video, and to stand with face and final product visible at the end. They can do whatever in between — even leave the room, as long as the workpiece does not leave the room at any point. (Compare/contrast: the kind of twitch-stream footage required to verify a speedrun as a world record.)
4. MTurk-verify this process video — tell the MTurk worker examining the video to visually verify that the person seen in the product video is the person from the extracted frames of the verification video; that the person in the video in fact is making the thing (whether with assistance from others or not); that the workpiece does not leave the room; and that the final product is the "same in kind and in quality" as the one in the product listing photo.
5. Allow the artisan to check a box to let people watch this process video right from the product listing page. Give more ranking juice to product listings that do this, and tell artisans that you are doing so.
(And optional bonus step:)
6. If the artisan has verified their ownership of a YouTube channel where they produce fancy edited process videos — which a lot of artisans already do! — then allow them to select a video on said channel to be displayed in place of the raw process video. (But still allow the raw process video to be accessed, through some text-only link, for public-auditing purposes. Also, don't allow any videos on the listing page except for the raw process video or the edited process video subsuming it.) And MTurk-verify this video too (having the MTurk worker watch both the edited and raw videos) — verifying that most shown footage of the process comes from the raw process video, and that the edited video is not misleading the viewer about what was seen to happen in the raw footage video.
This simple flow would cover most product categories on Etsy, as most product categories on Etsy can be made in situ in a single room (if perhaps a large room, across several machines.) This would then therefore eliminate most of the problem. Etsy could stop there, not even requiring verification for more-complex product categories, and the site would still be better off than it is today.
If you want to eliminate 100% of the problem, though, then you would have to require the product's creation process to be described with a component-production-flow graph (where components that go through multiple "passes" in different locations are considered distinct components before/after the "pass"); and then require the producer of each component — if not all the same person — to register as a user, go through KYC, and then upload a video showing the production of that component. The goal would be for each distinct component's process video to be able to be, again, a one-person, one-place, single-shot time-lapse job where the workpiece does not leave the shot.
Most things that aren't one component, would still only be two or three, so this wouldn't have to be too taxing. For products with variants that share early steps but then branch in later steps, you could even reuse the already-verified process steps, and so not have to film those again.
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Also, as a bonus anti-drop-shipping measure: require the shipping origin for products to match the country of residence from the KYC'ed ID of the maker responsible for the final step in the production flow (who is also, presumably, the seller.)
Require the seller to submit a shipment tracking number to the site before the buyer gets charged... and if that tracking number's country of origin doesn't match, then the transaction doesn't happen and the seller gets a strike against their account.
And also, show the production-flow graph to the user on the listing page, with the country of origin of each component shown prominently under the component. And let users filter listings (positively/negatively) for having components made in a specified country, or for being entirely made in a specified country.
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> If not then how do you know it's this seller's cutting board being made and not another, almost identical to most people, cutting board?
You don't. But if the seller can prove that they can make an identical cutting board themselves, in a low-volume process... then they're much less likely to be drop-shipping you a cutting board when you order one for yourself.
As much as it could in theory be economical for someone to "scale" low-volume production using drop-shipping... people just don't actually do that in practice. Making things is a skillset; (making a profit while) drop-shipping is also a skillset; and these skillsets aren't often found in the same person.
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And — bit of a tangent here — even if a real artisan were "scaling production" by drop-shipping you a cutting board... would that matter? We've actually pushed past the point of solving the problem, here.
Most people ordering from Etsy don't actually care about provenance for its own sake.
Consider: the provenance of an iPhone isn't any different than the provenance of a Samsung phone, or even a shitty off-brand AliExpress phone: all three can and have come from the same Foxconn plant. But those three were produced under very different requested tolerances and use very different quality control processes. You want the iPhone or Samsung phone, and not the off-brand one, because Apple and Samsung both put their own checks and balances into the process to ensure quality in the result.
Likewise, an Etsy buyer who cares about getting "artisanal goods", is almost never looking for something made in a specific place. They might be just fine buying something directly from an artisan in China. And they might even be fine ordering something from an importer in America who's buying from an artisan in China. They just don't want to buy something from a factory, regardless of location. Most factories happen to be in China — but that's not the rule they really want to be using.
In short, Etsy buyers care about two things:
• They care about not being lied to about provenance (whether they then rely on that information to make choices or not.) I.e., they care about ordering something nice, and being shipped what they ordered — not some failed attempt to duplicate a stolen product image.
• And they care about the requested tolerances and quality control processes that are implied by the seller's listing. I.e., they care about the product being made how the listing said it would be made — rather than being done by some scammy job-shop without the unique skill required to replicate the original artisan's work.
This means that, for at least some (most?) buyers, there's actually nothing wrong with an "artisan" relying on having goods produced for them by a factory somewhere, but to their specifications — this is known as "private label" production. As long as the artisan can receive and inspect those goods themselves to impose their own quality standards on them, then the work can be considered to be "the artisan's" work. (In this situation, the factory isn't any different than an apprentice working under a master artisan: the master still examines, fixes, and signs off on the their apprentices' work.)
And there's even nothing fundamentally wrong with an artisan relying on a factory to do its own quality-control to their specified standard, and then directly ship the resulting items to customers. As long as an artisan can actually ensure that that's happening!
That's hard, though — it requires a lot of OpEx to be able to afford to regularly fly to China to inspect factory processes, and/or employ a local auditing partner, and/or anonymously sample your own drop-shipped product stream to verify the quality that's going out to real customers. It's too hard for the sort of people who exist on Etsy. If you can do this, then you are now a high-volume manufacturer in truth, and your products don't belong on Etsy.
So I think, in terms of results, as long as Etsy is prohibiting drop-shipping production flows, it doesn't have to do anything to prohibit private-label "import and quality-check" production flows. It just has to make those production flows transparent to the buyer. Which is a much easier task.
