Etsy sellers and other small businesses are betting on local sourcing to win the holiday

This holiday season, Darin Mays isn’t staring down labor challenges or supply chain woes like some of his big-box competitors, and sales are strong.

The entrepreneur’s Minneapolis-based business, Urban Wing, makes wood pole tables that can be used around patio heaters, umbrellas and basement poles. He sells the tables, along with sauna products, online and through Etsy’s platform. 

Mays decided to pursue his dream of owning his own business after leaving a career in health-care technology last year. His wife is his only employee. 

“I source most of the product locally, which gives me an edge,” Mays said. “But also as an inventor, I can design and manipulate products on the fly, so it’s relatively easy to pivot.”

Having product available to sell has been an advantage. This month, sales are up some 900% compared with the same time last year, Mays said. He said he’s sold more than 500 of his tables on Etsy alone.

Most Etsy sellers are running their shops from home and are sourcing raw materials nearby. Even as larger retailers face down supply challenges, Etsy is well stocked in categories most impacted by these disruptions like toys and furniture. The website boasts more than 90 million items and 5 million sellers, up from 2 million pre-pandemic.

Etsy CEO Josh Silverman said the company is optimistic it will have another big holiday season this year. Many sellers began stocking up in August and September in preparation.

“Over 90% of Etsy sellers say they source from within their own country. And in fact, U.S. sellers, about half of them say they get all of their own raw materials from within their state,” Silverman said. “So their supply chain is really simple.”

More than a third of respondents to CNBC/Momentive’s Small Business Survey for Small Business Saturday said they plan to patronize a local merchant on this Saturday. That’s an increase from 30% last year, but down from 39% in 2019.

In addition, 72% of the 2,700 adults surveyed said they’ve seen higher prices in the last three months, 62% have seen “low” or “out of stock” inventory in stores, and 51% have seen shipping delays. Nearly half said they are worried supply chain issues will hurt their ability to get what they want this holiday shopping season. The poll was taken Nov. 10-12.

Changing consumer preferences could boost sales on Etsy this year, Silverman said.

“Lots of people through the pandemic have reflected and say they want to support small businesses. Maybe they want to buy fewer things but have those things mean more, have those things come with a story, and that’s where we think Etsy sellers have really had a chance to shine,” he said.

Barbara Lind has owned Grist Mill Antiques Center in Pemberton, New Jersey, since 1994. Like Mays, she’s betting that local businesses will win the season this year.

Last year, Lind’s store was closed for several months due to the pandemic. Like many on Main Street, she and the antique dealers that rent space from her are still in catchup mode.

“We buy from local states and our inventory is high,” she said. “We’re fully stocked and hoping this holiday season will bring us out of the money that our dealers, myself and the entire store lost during the shutdown.”

For Small Business Saturday, she’s planning to offer 25% off discounts on most of her store’s merchandise to help recoup losses. Pandemic trends have allowed her to pick up unique items for the season.

“People are downsizing — they’re moving to other states, they’re buying smaller homes. This gives us an opportunity to buy, so we’re stocked with a lot of beautiful things. And a lot of these things are memories because people want to buy back the memories from their childhood or their parents’ childhood,” she said. “A lot of things are one of a kind almost because they’re so scarce, you don’t see them anymore.”

Back in Minneapolis, Mays said he’s building up inventory in preparation for the holiday rush and he’s hopeful many will support local shops this year.

“Every single sale really means a lot. And it helps people like me and others really do something that we’re passionate about and contribute to the greater good,” he said.

—CNBC’S Betsy Spring contributed to this article.