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 Depending on whom you ask, Alicia Shaffer, owner of the hit Etsy store Three Bird Nest, is a runaway success story — or an emblem of everything that has gone wrong with the fast-growing online marketplace for handmade goods.

With the help of up to 25 local seamstresses and alluring photography, Ms. Shaffer takes in upward of $70,000 a month in revenue selling twee headbands and leg warmers via Etsy. But as her business has grown, she has been harshly criticized online and accused of mass-producing goods, of obtaining wares from China. Detractors consider her a blight on Etsy’s hipster cred.

The dispute over how goods are produced and sold on a site that prides itself on feel-good, handmade authenticity underscores the growing pains transforming Etsy as it moves toward a potentially lucrative initial public offering of stock.

As for Ms. Shaffer, she denies the claims that have dogged her business recently but says she understands why questions have arisen about the volume of goods she produces. She says her store strictly adheres to Etsy’s guidelines, including that all items listed are either handmade or “vintage” secondhand, with some new exceptions that allow for approved outside manufacturing. “We’re a team of dedicated Etsy artisans who have been able to grow a tiny shop into a little machine,” she said.

For many of its fans, Etsy is much more than a marketplace. They view it as an antidote to global mass production and consumption, and a stand against corporate branding. It’s their vote for authenticity and good old craftsmanship, and a seemingly ethical alternative to buying from big corporations. And it has helped spur a wider industry of items that claim to be artisanal, authentic or bespoke, whether bedsheets or beef jerky.

Etsy, in turn, has ballooned and benefited from a growing demand for that kind of shopping, currently offering more than 29 million listings of handmade jewelry, pottery, sweaters and sometimes-regrettable objets d’art. It had 54 million members at the end of last year, of whom 1.4 million listed an item for sale and almost 20 million made at least one purchase in 2014, according to its I.P.O. prospectus.

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