Breaking Stories

Etsy Positions Itself as Antidote to ‘Commoditized’ eCommerce



Peer-to-peer marketplace operator Etsy is investing heavily in making the buyer experience more personal as the holiday shopping season gets underway, positioning itself as the antithesis to other marketplaces such as Amazon and Walmart.

CEO Josh Silverman told analysts on a conference call Thursday (Nov. 3) that he sees consumers consolidating their shopping behavior around fewer and fewer places, “and most of those places are playing the same playbooks. They’re going to try to sell you commoditized products that are cheaper to buy and arrive faster.”

“The more people consolidate their purchases, the more they’re going to crave an alternative,” he added. “And Etsy is the leading alternative to commoditized commerce.”

What Etsy is focused on improving, though, is setting clearer expectations for when an item will arrive and meeting those expectations. As recently as January, nearly 25% of listings didn’t tell buyers when an item would arrive; now, nearly all listings provide an estimated delivery date, in part because Etsy has incentivized sellers to meet certain standards through its Star Seller program.

Related news: Etsy Customer Service Program Could Hinder Growth Of New Sellers

Etsy has over 5 million sellers on its marketplace globally. Most are businesses of one working from their homes, Chief Financial Officer Rachel Glaser said, and over 90% of sellers say they source materials locally and have limited overhead.

“We believe that our massive peer-to-peer fulfillment ecosystem is a core part of building Etsy’s sustainable competitive advantage,” Silverman said. “We’ll likely never promise to deliver every item on Etsy in two days or less. It’s not what we’re about.”

Etsy reported that its consolidated gross merchandise sales (GMS) were up nearly 18% year-over-year to $3.1 billion, with the GMS of the Etsy marketplace up over 12% to $2.7 billion. Excluding face masks, the Etsy marketplace GMS grew by almost 24%.

Silverman noted that the fourth quarter will likely be Etsy’s toughest year-over-year comparison because of a “blow the doors out” November and December last year that saw the marketplace’s sales grow 111%, as well as concerns that eCommerce will continue to decelerate.

“Our main focus is to make sure that our customers, our buyers and our sellers, have a really good experience this quarter,” the CEO said. “That’s what’s under our control, and that’s what we’re focused on.”

PYMNTS data show that 87% of consumers plan to do at least some of their holiday shopping online, up 10 percentage points versus 2020.

See: NEW DATA: Nearly 90% of US Consumers Plan Online Holiday Purchases in 2021 — 13% More Than in 2020

Investing in Experience

The Etsy marketplace acquired approximately 11.1 million new and “reactivated” buyers who haven’t purchased in at least a year, including 7 million new buyers. The growth of new buyers is slowing, as anticipated because of consumers’ increased mobility, executives noted. In the third quarter, active buyers grew 30% year-over-year to 89 million, approximately the same level as the previous three-month span.

“People are moving about and shopping wherever they want,” Silverman said. “They continue to choose to come back to Etsy again and again.”

The key, though, is to keep these customers around, which can sometimes be easier said than done. Silverman said Etsy is currently investing heavily in “multiple areas focused on driving buyer inspiration,” including personalized onboarding for new buyers, an Updates tab to improve the Etsy shopping feed, and providing better recommendations to customers.

“In the past, Etsy recommendations have often felt like a rearview mirror, based on things you’ve recently bought or searched for,” Silverman said. “Today, we’re investing heavily in machine learning tools, attempting to understand your tastes and preferences in order to anticipate and inspire your next purchase.”

The CEO also noted that Etsy has seen a 36% increase in app downloads year-to-date, and for the first time, the app has surpassed the GMS of mobile web — though the latter still has the most visitors.

Subsidiaries

Glaser said integration of new acquisitions Depop, a secondhand marketplace, and elo7, a Brazilian version of Etsy, is going well, and the teams are beginning to develop new product and operating plans to drive growth. She noted, though, that Depop is facing headwinds because of increased consumer mobility.

Silverman said the priorities across Etsy’s subsidiaries, which also include musical instrument marketplace Reverb, are also focused on improving the customer experience, especially around search technology and shipping costs.

“We’re working closely with them … to streamline the path to purchase so people can go from view to purchase even faster and more easily,” he said.





What is your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *