Key Takeaways

• Etsy focused on making it easier to find things on Etsy, buying with trust, marketing, and seller relations. The primary focus was to improve customer experience in the Etsy marketplace and to engage and retain buyers.
• The transformation is credited to a pared-down business strategy. "I observed that Gross Merchandise Sales is the one metric that matters." - Josh Silverman, Etsy, Inc. CEO. "We're seeing measurable results from deepened investments in our Right to Win strategy, which provides a clear road map for product and marketing investments to make it easier to shop on Etsy, build top of mind awareness, and solidify buyer trust." - Josh Silverman, Etsy, Inc. CEO
• The new focus on profitability has robbed many employees of their enthusiasm and expression of their feelings. It is a cultural revolution for Etsy which had neglected customer experience by prioritizing the interests of merchants.
• For the year ended 31 December 2020, Etsy reported $10.3 billion in GMS with Consolidated YOY GMS Growth of 106.7% and $1.7 billion in revenue with YOY Revenue Growth of 110.9%. In 2019, Etsy reported $4.97 billion in GMS and $0.82 billion in revenue.

Introduction

Etsy

• Etsy, Inc. operates two-sided online marketplaces that connect passionate and creative buyers and sellers around the world. Etsy.com is the global destination for unique and creative goods.  

• Etsy, Inc.'s House of Brands portfolio includes Depop, Reverb, and Elo7. Depop is a fashion resale marketplace, Reverb is a musical instrument marketplace, and Elo7 is a Brazil-based handmade goods' marketplace.
• Etsy was founded in 2005 and is headquartered in Brooklyn, New York. Josh Silverman took over as the Chief Executive Officer in May 2017. 

Products

• Etsy focused on making it easier to find things on Etsy, buying with trust, marketing, and seller relations. In 2021, Etsy acquired Depop for about $1.625 billion and acquired Elo7 for $217 million.
• The primary focus was to improve customer experience in the Etsy marketplace and to engage and retain buyers. Reverb is focused on "increased personalization, more new gear sales, international growth, and improving the customer experience."

 

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• To boost conversion and repeat purchase rate for buyers, Etsy created "XWalk, a large-scale, real-time graph retrieval engine that provides more relevant search results and narrows the semantic gap". "Better search results are a technological victory for Etsy—and increasingly a financial one too"
• To make content more engaging and compelling to buyers, Etsy redesigned home and landing pages using machine learning, personalization, and recommendations.
• To expand sellers' returns, provide relevant inventory for buyers, and increase click-through rates and revenue for Etsy, it improved ranking capabilities for Etsy Ads with refined algorithms and new machine learning-based models.
• It created the Star Seller program that celebrates and rewards top-rated sellers, motivating and supporting them to improve their businesses.
• Etsy introduced local pricing that allows sellers to set a specific price for the country of origin enabling pricing strategies that can help sellers grow both domestic and export sales.
• It launched the Sell on Etsy App with updated features to enhance interactions between buyers and sellers and made the Buyer Protection Policy more visible to buyers to bolster trust.
• Etsy adopted listing videos which expanded to about 3.2 million by December 31, 2020. It also enhanced the Etsy Ads service and Offsite Ads improving the functionality and sellers' experience.
• Etsy launched an installment payment option for United States buyers making higher-priced items more accessible.

Business Strategy

•  "The first thing he did was get the company to focus on what matters and stop focusing on what didn't." — Adam Lashinsky, Fortune
• The transformation is credited to a pared-down business strategy. "I observed that Gross Merchandise Sales is the one metric that matters." — Josh Silverman, Etsy, Inc. CEO.
• "Before, the company was measuring 15 or so metrics which justified a lot of projects that may or may not have been worthwhile." — Josh Silverman, Etsy, Inc. CEO. Josh Silverman cut down half of Etsy's 800 products and marketing initiatives that were in the pipeline for months in 2017.

 

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•  "We asked ourselves what are the fewest things we need to do well in order to succeed?'" "We cleared the path and stopped doing everything else to give those teams room to run." — Josh Silverman, Etsy, Inc. CEO

 

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• "We're seeing measurable results from deepened investments in our Right to Win strategy, which provides a clear road map for product and marketing investments to make it easier to shop on Etsy, build top of mind awareness, and solidify buyer trust." — Josh Silverman, Etsy, Inc. CEO
• "We moved the needle by growing our team to deliver an exciting product road map aligned with our Right to Win strategy, and are executing a dynamic marketing strategy focused on driving frequency and keeping our buyers engaged." — Josh Silverman, Etsy, Inc. CEO
• "Product enhancements and disciplined marketing investments worked together to increase buyer lifetime value enabling us to increase spend in marketing while maintaining a high return on investment." - Rachel Glaser, Etsy's Chief Financial Officer
• "I’ve heard many great pandemic transformation tales from CEOs over the past year, but few matches that of Josh Silverman, CEO of Etsy" — Alan Murray and David Meyer, Fortune

Company Culture

• Etsy was founded on the business model of helping female entrepreneurs to make a living online.
• The company's team was known for its diversity, idealism, and sincerity. It has a distinctive culture of a vibrant gay and transgender community and a pet-friendly workplace. It was certified as a B Corp by a nonprofit called B Lab because of its high social and environmental standards. 
• The new focus on profitability has robbed many employees of their enthusiasm and expression of their feelings. It is a cultural revolution for Etsy which had neglected customer experience by prioritizing the interests of merchants.

 

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• United States buyers purchasing with Etsy Payments can donate change to the Uplift Fund whose funds are used to dismantle barriers to creative entrepreneurship. This program has collected donations of over $3 million to date.
• Etsy pledged donations totaling $500,000 in support of the broader Asian American and Pacific Islander (AAPI) community against the marked increase in violence, hate speech, and harassment. It also undertook a marketing campaign highlighting the Etsy.com AAPI community of sellers and supported a campaign by the Etsy.com LGBTQIA+ community. 
• Etsy was ranked 20 on the 2021 Purpose Power Index of Most Purposeful Brands.

 

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• In February 2021, Etsy set a target to run a carbon-neutral business and to achieve Net Zero by 2030. In this regard, Etsy introduced Shop Local signal that provides buyers with faster delivery while reducing shipping emissions.

Financial Performance

•  "Etsy's second-quarter 2021 performance is quite remarkable when viewed in the context of how dramatically the world changed during the year-ago period." - Josh Silverman, Etsy, Inc. CEO
• Etsy reported a Consolidated YOY GMS Growth of 13% and YOY Revenue Growth of 23% for its second quarter of 2021. Consolidated GMS was $3.0 billion, up 13.1% YOY while Etsy marketplace GMS was $2.8 billion, up 14.2% YOY. Consolidated revenue was $528.9 million, up 23.4% compared to the same period of 2020 with a take rate of 17.4%.
• In the second quarter of 2021, Etsy marketplace acquired approximately 11.9 million new and reactivated buyers of which 8 million were new buyers. Habitual buyers were the fastest-growing buyer segment with 115% YOY growth.
• Etsy reported a Consolidated YOY GMS Growth of 132% and YOY Revenue Growth of 141% for the first quarter of 2021. Consolidated GMS was $3.1 billion, up 132.3% YOY while Etsy marketplace GMS was $2.9 billion, up 144.1% YOY. Consolidated revenue was $550.6 million, up 141.5% compared to the same period of 2020 with a take rate of 17.5%.

• "Etsy delivered industry-leading GMS and revenue growth together with strong profitability in the fourth quarter." — Rachel Glaser, Etsy's Chief Financial Officer

• For the year ended 31 December 2020, Etsy reported $10.3 billion in GMS with Consolidated YOY GMS Growth of 106.7% and $1.7 billion in revenue with YOY Revenue Growth of 110.9%. In 2019, Etsy reported $4.97 billion in GMS and $0.82 billion in revenue.
• In 2020, Etsy acquired 61 million new and reactivated buyers and experienced a 160% growth in habitual buyers.

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• For the third quarter of 2018, Etsy reported revenue of approximately $150.4 million with YOY Revenue Growth of 41.3% and GMS of $922.5, up 20.4% YOY. 

Research Strategy