Etsy: Global Online Marketplace for All Things Handmade & Vintage
Searching for extraordinary things requires an extraordinary amount of time and effort.
Products that are handmade, vintage, and crafty are always in short supply. However, the search becomes much easier if you're at the right place at the right time.
Luckily, one company took care of all the searching to ensure the products you're looking for (and more) are found on one platform. That company is the American e-commerce behemoth 'Etsy,' whose mission is to "keep commerce human."
Founded by three buddies in 2005 —Rob Kalin, Chris Maguire, and Haim Schoppik— and later Jared Tarbell, Etsy is an online community of sellers of handmade items. The company's remarkable evolution has transitioned it from being a small private business focused on inclusion and empathy to a publicly-listed Titan worth billions.
Keep reading to discover how Etsy attained mega success!
Beginning as a Tiny Startup - Etsy USA to Going Global
In 2005, Etsy began in founder Rob Kalin's tiny apartment in Brooklyn. Rob— then a construction worker and bookseller— was enthusiastic about selling his handcrafted furniture online. By chance, two of his pals, Haim Schoppik and Chris Maquire, were also keen to sell handmade goods online. Inspired by each other, the trio created an online shop to sell products in their niche.
Etsy began as an arts and crafts online storefront to help artisans sell their goods— a journey that came with plenty of struggle for the founders. From Etsy’s humble beginnings in the USA in June 2005, the company today is a leading global online artisanal marketplace.
The Handmade Millionaire
Founder Rob Kalin was the company's CEO from the founding to August 2008 and then again from December 2009 to July 2011. He depicts himself as an artist and creator more than his image of becoming a self-made millionaire at a very young age.
Rob's pioneering vision, commitment, and unorthodox business approach led Etsy to become the leading global peer-to-peer marketplace for craft, vintage, and artisan goods.
Although Rob is known to be the company's eccentric founder, he's also known for bringing Etsy to success through his approach to making commerce more human.
Born in April 1980, at 16, he left home and moved to Boston to fulfill his dream of becoming a photographer. In 2004, he graduated from NYU's Gallatin School of Individualized Studies, attaining a BA of Arts degree.
After finishing high school, Rob attempted five different colleges but finally attained his undergraduate degree. He paid his college fees with the earnings from his many small jobs. He gives due credit to that work experience for turning him into a successful entrepreneur today.
“Keeping Commerce Human”
Other big enterprises communicate with customers through various messenger applications and bots. Etsy, in contrast, has always believed in "keeping commerce human."
To Etsy, interacting and communicating with its community has always been an inherent part of the company. Along with incredible product variety, Etsy brings the atmosphere and stories that consumers of handmade products love. As a result, Etsy had already achieved over half a million users in 127 countries less than three years after launching.
Etsy's Business and Revenue Models
The Etsy business model is similar to that of eBay or Amazon. The company sells its products through its android app, iOS app, and website. Sellers on Etsy comprise mostly college-graduate women.
Etsy is an e-commerce marketplace that allows artists to sell unique handmade products. But, since handmade products do not interest everyone, this platform appeals to a select few who are interested.
Etsy's business model is a unique, vertical model focusing on handmade products and providing excellent value to buyers and sellers.
The revenue model is also incredibly unique. Etsy charges sellers $0.20 for listing each item for four months on its platform. Further, a fixed commission fee of 3.5% on the sale price is levied on every sale. But sellers can set their sale price.
There are many payment options available on the platform, including credit card, Paypal, check, bank transfer, Etsy gift cards, money order, etc. As for the average product cost on Etsy, it's in the range of $15 to $20.
The Growth Journey
It took the trio two and a half months to create the first version of Etsy. After the website's completion in 2005, Etsy was officially introduced in New York City, where the initial group of sellers was creatives and artists.
The trio did a fantastic job ensuring the site's traffic grew exponentially within the first year. Adding new tools regularly to help sellers gain exposure did the trick.
In 2007, Etsy achieved $26 million in annual sales from its 450,000 registered sellers. That year, the company raised more than $3 million in venture funding.
From 2008 to 2012, Etsy witnessed several disruptions. The major one is Chris Maguire and Haim Schoppik's decision to leave the company. As a result, Rob shifted away from the organization's everyday operations and hired Chad Dickerson as the new Chief Technology Officer. Dickerson's experience working as Yahoo's Senior Director of Product proved beneficial.
Dickerson led a pivotal period for the organization by expanding Etsy's engineering team. Shortly after, Etsy bought the ad platform 'Adtuitive.' Moreover, after three years as CTO, Dickerson replaced Rob Kalin as CEO of Etsy.
In 2012, the company raised $40 million in Series F capital and expanded internationally. The new markets included Australia, France, and Germany. That year, Etsy also bought the artisanal goods seller 'Trunkt.'
In 2013, Etsy's sales flourished to $1.34 billion from $895 million a year earlier. This was owing to Etsy's acquisition of Lascaux Co., a provider of social networking applications for mobile devices. That year, in a move to provide impetus to low-income entrepreneurs, Etsy agreed to permit sellers to sell manufactured goods in addition to handcrafted products.
In 2014, Etsy's sales increased to $1.93 billion as customers increasingly shopped on mobile phones. Etsy made two further acquisitions that year to further boost the business: Grand St. (a creative technology marketplace) and A Little Market (a French online marketplace).
By 2015, Etsy had 1.5 million active sellers and 22.6 million active buyers. In addition, the new program— 'Etsy Manufacturing,' helped connect sellers with pre-approved manufacturers.
In 2016, Etsy launched the Global Brand Marketing Campaign – Difference Makes Us. The virtual campaign consisted of animated GIFs and video ads to celebrate people's distinctive tastes and expressions. The campaign strengthened the company's global presence as well as the values and strength of the brand so that people could easily find unique items.
Through 2016, Etsy became so huge that it had transitioned from an idealistic niche craft-seller platform to a marketplace with 1.7 million active sellers and 28.6 million active buyers.
But, with all that growth, did Etsy move away from its original values?
According to the buyers and sellers of the time, the founders' were swaying away from their initial goal of creating a platform focused on unique handicrafts by skillful manufacturers.
In 2017, as Etsy kept growing, the company welcomed its new CEO 'Josh Silverman,' who still holds that position today. He took charge of the company with his background of working as CEO of Skype and shopping.com and in various executive roles at eBay.
Silverman focused on delivering value to all stakeholders. Through his tenure, one of his key learnings was that buyers and sellers on Etsy didn't bother about things like free shipping as long as the product was handcrafted and unique.
The Pandemic-Fueled Surge
Etsy's growth journey reached a new high in 2020, as its pandemic-induced growth was double the growth the company witnessed in 2019. Towards the end of 2020, active buyers on Etsy had grown by almost 80% over the previous year. In the same period, the total number of sellers on the site had grown by more than 60%.
During the pandemic, Etsy sellers adjusted to changing lifestyles by adhering to consumers' rapidly evolving needs. For example, at that time, face masks were hard to find, so sellers created them in abundance. The selling of masks generated millions in sales for the company, prompting growth across all buyer segments.
Today, sellers find Etsy more attractive than its competitors Shopify, Big Cartel, Zibbet, eBay, and Handmade at Amazon. The reason is Etsy's ability to help sellers produce and sell unique, distinctive items.
But that's not the only reason the company grew to exceptional levels.
Other Critical Success Factors
Etsy's amazing growth is further attributed to the company's timely management restructuring.
Other reasons behind the skyrocketing growth include introducing new products, Etsy's advertising platform, the personalized and dynamic homepage, improvements in the mobile app, cloud-based operations, lower associated costs compared to Amazon, eBay, etc., and Etsy's ability to stay on top of its technological requirements.
Etsy continues to grow beyond anticipation, and experts predict the growth will continue well into the future.
From the very beginning, the headquarters of Etsy is in Brooklyn, New York and the company remains owned by Etsy, Inc.
What has changed, however, is that Etsy is worth a staggering $18.87 billion as of January 21, 2022. Furthermore, the company has raised $97.3 million in over nine rounds.
The latest funding round took place on May 15, 2017, a little over a month after the company’s IPO. Moreover, in 2021, according to statista.com, Etsy had roughly 7.5 million registered sellers and 96.3 billion buyers. Its annual sales were $2.3 billion.
Etsy’s CEO, Josh Silverman, is also a board member. He continues to head the platform with an emphasis on supporting creative entrepreneurs worldwide.
At the end of 2021, Etsy had 120 million items listed in its marketplace. The sellers on Etsy hail from 234 countries and are among artists selling downloadable digital art prints, stationery designs, planners, and other documents.
Among the vintage items sold on Etsy— the items that are at least 20 years old— are costumes, clothing, accessories, furniture, art, bags, jewelry, photos, housewares, games, books, tools, and toys.
Etsy’s Future Plans
Etsy’s long-term strategy is consistent with the company’s original goal— to keep introducing creative yet unique products to the marketplace. The company aims to deliver sustained growth through four essential elements: a collection of unique items, first-class discovery, human connections, and trusted brands.