×

Viral Etsy biz Grace & Lace mulls moving to Amazon

The husband and wife team behind a breakout small business that got its start on Etsy said they would consider selling on Amazon.com if the e-commerce giant creates a handcrafts shop—even if it meant forking over a bigger cut of their sales.

"If it means more eyeballs on the business, it could be a phenomenal thing, and we could keep scaling in the crazy way that we are," Grace & Lace's Rick Hinnant said on CNBC's "Squawk Box" last week.

Hinnant and his wife, Melissa, started the clothing and accessories company in 2011 and later found funding on "Shark Tank."

In 2012, its first full year of business, the Grace & Lace brand brought in $850,000 in sales, almost entirely through its Etsy storefront. By the end of last year, annual revenues had soared to $5.9 million. The Hinnants project they'll hit $10 million in 2015.


While Etsy charges just 3.5 percent commission on items sold through its platform, Amazon takes a 15-percent cut on clothing and apparel, although it could charge significantly less to at-home artisans.

Read MoreLife is Good's $100 million ad-free global success story

Meanwhile, Amazon is preparing to launch its own online crafts store called Handmade. According to a report in The Wall Street Journal, the company has begun courting some of Etsy's top sellers.

The news piled more pressure on shares of Etsy after the company recently reported a $36 million loss in its first earnings report as a public company. The stock is down about 17 percent since the announcement.

Etsy also reported it attracts about 21 million buyers, compared with 280 million active accounts.

The 'accidental company' that hit it big

But while Amazon's scale could be a draw, Etsy remains a popular option for early-stage entrepreneurs and hobbyists. Melissa Hinnant said listing her crafts on Etsy led to the formation of an "accidental company."

"I didn't start out to start a business. I started out making my own handmade stuff that I wanted to put up on a site that I could sell and just be a stay-at-home mom doing it," she told CNBC's "Squawk on the Street" last week. "Etsy allows you to have that platform."

After their knitted leg warmers, baby booties and women's apparel went viral, the Hinnants began selling directly through their own personal website. They are now seeking to expand their business by maximizing their sales channels, and said Amazon could be the right platform now that their output has grown considerably.

Read MoreThe 5 biggest mistakes entrepreneurs make: The Profit

"In three years I went from making these out of my home, to now making hundreds of thousands of these boot socks and clothing items, and so we had to go into mass production in order to meet the demand," Melissa Hinnant said.

Barbara Corcoran, founder of real estate brokerage The Corcoran Group and an investor on "Shark Tank," said she had earned a 20 to 1 return on her investment in Grace & Lace in two years.

The lesson to be drawn from the Hinnants' success, according to Corcoran? Become a master of social media.

"They get people to fall in love with them on social media, and so you don't need a big box store to really have a multimillion dollar business," she said.

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."