Etsy- A Case Study

Arts and crafts are about as Americana as apple pie and blue jeans, so when the founders of Etsy.com set out to bring the world of arts and crafts online the ideas was simple – bring people around the country into an online craft fair. Etsy.com was founded in 2005 by a partnership of Robert Kalin, Chris Maguire, and Haim Schoppik who created the small company called iospace. The initial build of the sit and its platform took approximately two and a half months with money from angel investors in Brooklyn, NY. The website development was strictly in the hands of Maguire and Schoppik according to Robert Kalin in a 2006 interview with Kat Orland. CEO, Robert Kalin and the other founding members have always been asked where the name Etsy was derived from and CNN revealed the origins, “For a while, the company was pretty tight-lipped about the origin, leaving users to come up with their own acronyms or explanations. However, in a January 2010 interview for Reader’s Digest, founder Rob Kalin finally revealed the secret: ‘I wanted a nonsense word because I wanted to build the brand from scratch. I was watching Fellini’s 8 ½and writing down what I was hearing. In Italian, you say ‘etsi’ a lot. It means ‘oh, yes.’ And in Latin, it means ‘and if’” (Lammele 1).

While many tout Etsy as a mixture of eBay, Amazon, and a craft fair it has always been the founders goal to create an online marketplace for users to not only sell items but to learn, share, express, and curate art.“We want to create new ways to shop that are only possible using the Web as a medium. The industrial revolution and consolidation of corporations are making it hard for independent artisans to distribute their goods. We want to change this” (Kalin 1). When interviews Kalin discussed how their web project was handled and expressed his model for others to learn from, “Do you have advice or insights for other people who are trying to create their own Web 2.0 projects? ’Conduct your education in public. Love your users. Use gradients in moderation. Focus on the task and hand and get it launched. Ignore buzzwords. Meetings are distractions. Never be vaporware. Have fun. “Don’t fall in love with the autograph.” Be free’ “(Orland 1).

June 18, 2005 Etsy.com officially launches with the hopes of becoming the online marketplace for all things handmade. The site restricts sellers, but in a different fashion than eBay, the limits are that all items must be either vintage, handmade, or a supply to make other handmade items. By August 19 Etsy begins seeing some traffic according to their blog, “August 19th – Etsy has 1018 sellers, 8451 items listed, over $10,000 in sales and if you bought every item on Etsy at once you’d have to shell out $188,475.17 ( Etsy 1). Etsy relies heavily on its users to get the word out about their site and the marketing strategy is almost nonexistent. The marketing model was one of having the user’s get the word about their shop in fashion with a word of mouth type mentality. Etsy at its inception held craft fairs, online seminars, book sales, and other local venues to get the word out about their dotcom. In a recent article interviewing Matthew Stinchcomb, VP of Communication at Etsy, Rachel Tomlinson discusses the marketing approach of the brand,” Still, some sellers have criticized Etsy’s marketing efforts as insufficient. But Stinchcomb says that the staff is happy with the results they’ve been getting and the way they’ve been getting them. Strategic partnerships– like holding a sewing contest in conjunction with Instructables– are one piece of the site’s marketing plan. Etsy also sponsors events, such as New York’s Renegade Craft Fair, and hosts regional street teams, members who get together to promote their wares and Etsy.’ We find these grassroots things are better than a $4 million advertising campaign,” Stinchcomb says. “One, we don’t have that kind of money, and two, I think it would be bad for our brand.’ It’s almost easier for him to say what the Etsy marketing strategy is not: a Super Bowl ad. ‘I can’t see anything more antithecal to what we’re about than that,’ he said. Word-of-mouth is the crux of Etsy’s notoriety. Stinchcomb estimates that about 80 percent of Etsy members learned of the site through word-of-mouth, and the site attracts 1,500-2,000 more members daily. ‘A big ad doesn’t yield as many results or as fruitful results as being out there and talking to people,’ Stinchcomb said”( Tomlinson 1).

It has always been the mentality of Etsy that the online space should be used to bring communities of artists together not just a place to sell things. Etsy has built its business around the neighborhood feel, and plans on continuing that marketing model in the future. For many it is a model that helps Etsy provide a better shopping experience for buyers, and opens up the market for sellers to reach their consumers. The marketing approach is low budget and enables the consumer to actively market for Etsy.com itself. Sellers can even purchase product highlight spots in the search engine or have buyers driven to their keywords by paying for search engine impressions offered on various budgets by Etsy. It is entirely up to the store owner in how they want to market their goods on Etsy, but for the dotcom it is  completely lucrative whether the marketing by sellers is done word of mouth or through their paid services. “The beauty of the whole enterprise is that everyone stands to gain: Etsy wins when sellers promote their goods through the site, sellers gain when buyers like the site, and buyers win when they realize they can buy organic goat’s milk soap from an artisan on the other side of the globe” (Tomlinson 2).

The social aspect of the Etsy.com experience has always involved the idea of community, so it was not a surprise that Etsy makes use of social media like Twitter, YouTube, and Facebook. According to a site on Twitter statistics Etsy’s rank on Twitter is 59 of the top 500 and has a popularity of .028% with Twitter followers. Blogs, podcasts, and instruction video scour the web with the Etsy tag whether it is from their team of writers and educators or from various sellers that are part of the website community.

The users of Etsy are what you might expect predominantly women in their 30’s, but the following article and accompanying graph shows that women in the united States are not the only ones partaking in the craft online experience.

 “Quantcast found that Etsy.com mostly attracts a young adult female audience.  In February 2009, Etsy saw male viewers account for 33% and female viewers account for the remaining 67%.  Visitors ages 18-34 accounted for 43% of the total visitors to Etsy.com.  In addition, 88% were Caucasian, 69% had no children, 48% make less than $60,000/year.  Interestingly, 62% have a college education under their belt.  What does all this mean?  Your typical Etsy.com potential buyer is an 18-34 year old college-educated white female with no children, who makes less than $60,000/year.  Keep in mind this information was gathered in February 2009 and only includes the Etsy user demographics for those in the United States.

What Do They Like To Do? One way to connect to a potential buyer is to know what that buyer likes to do.  Quantcast lists these top lifestyle activities for Etsy users:

  • Hobbies and Collectibles (9%)
  • Home and Gardening (5.2%)
  • Home Decor and Design (5.2%)
  • Parenting (4.9%)
  • Home/Family (4.7%)
  • Women (4.4%)
  • Fashion/Cosmetics (4.3%)
  • Fragrances/Cosmetics (4.1%)
  • Jewelry/Luxury Goods (4.1%)” (Handmademarketing 1).

In analyzing Etsy.com it may sound like the artists’ community and retreat that we are all searching for, but there are definitely problems with being a member. Etsy started out charging sellers a flat rate of .10 for item listed in the online auction which has double since its inception. Many users also complain about Etsy’s marketing strategies feeling their goods truly are not being reached by the buyers looking for them. For example, eBay if you are searching for a book with a specific title it can easily be found, but Etsy searches often return results that are not anywhere near what the buyer is searching for. Another common complaint by users is the cost of advertising with Etsy many feel it is extraneous and does little to reach their target audience. Many Etsy users are leaving the site to seek out its competitor’s like Devianart, eBay and even Amazon.com searching for a better way in which to sell their wares without the lack of marketing or hefty fees. One blogger discusses many of the reasons for Etsy’s potential customer fluctuation and loss in this article,

Here’s the numbers according to Etsy’s own website for 2010.

  • January 2010: 242,028 new members signed up – 20.1 million dollars of goods were sold in January; roughly 21% lower than December
  • February 2010: 236,034 new members signed up – $20.2 million of goods were sold in February; roughly 1% higher than January
  • March 2010: 246,834 new members signed up – $22.4 million of goods were sold in March, roughly 11% higher than February
  • April 2010: 236,040 new members signed up – $22.4 million of goods were sold in April; (0%) roughly the same amount from March
  • May 2010: 239,340 new members signed up – $22.9 million of goods were sold in May, 2.2% higher than April
  • June 2010: 233,167 new members signed up – $22.1 million of goods were sold in June, 3.5% lower than May
  • July 2010: 260,267 new members signed up – $23.8 million of goods were sold in July, 7.7% higher than June
  • August 2010: 278,208 new members signed up – $25.5 million of goods were sold in August, 7.1% higher than July
  • September 2010: 280,538 new members signed up -$26.6 million of goods were sold in September, 4.3% higher than August

The biggest question that comes to mind after reading through all of these numbers is:

What exactly are all of these new members doing once they sign-up?!

Are they buying? Are they selling? Are they doing anything?

Think about this for a moment.  According to their statistics here, they are averaging almost 250,000 new members a month but it would appear that very few of these new members are actually buying anything.  I mean why exactly would you sign up to become an Etsy member unless you had already picked something out that you wanted to buy?

Since they don’t seem to be buying, does this mean that the majority of these new members are planning on opening up their own shop to sell their own creations?

Etsy (perhaps wisely) doesn’t divide up their new member numbers between buyers and seller accounts.  I would have to guess that the official line would be that since every new account is technically a “buyer” account, reporting this kind of distinction would be impractical.  While this may be true, because there is an additional seller account “sign-up” (aka give-me-your-credit-card-number), it would be fairly easy to report how many new seller accounts had been created each month.  Now since they’re not telling us what’s really going on, deranged Liberal Arts majors with overactive imaginations like myself, begin to create these half-baked scenarios about what might actually be going on behind the scenes. . .

What can we take away from all of this speculation? (if anything)

Even though we can’t really know what’s going on behind the scenes, it is fairly obvious that either a lot of people  are signing-up for an Etsy account and then doing absolutely nothing with it, or these new members are simply replacing the current members as they continue to leave en masse for whatever reason.

Either way, I would caution you to be very careful about putting your entire online presence in single marketplace whether it’s Etsy, eBay, DeviantArt, or any other online site.  As technology and the online environment continues to change and evolve, no one knows if today’s Etsy will become tomorrow’s eToys.com.

Even if they do survive, who knows if they are going to want you as a shopkeeper six months from now?  I have heard far too many stories of Etsy shops being shut down literally overnight for one reason or another.  Always remember that when it comes down to it, it’s still their “shop” and they have the power to close you down if they feel like you have somehow violated their “terms of service”.

This is one of the reasons that I always encourage artists to create their own online home first and then branch off into these other social media sites and online marketplaces.  Use these websites like the tools they are, and not as your complete online identity.  Remember to always send your visitors to your own website first and then link out from there to your Etsy shop, Twitter, or Facebook page.”( Drew 1-2).

Many users also state there is a growing concern for the protection of their products uniqueness. Many store owners on Etsy believe their goods can easily be ripped off or reproduced by users who create buyer accounts, but fail to purchase items merely using the account as affront to steal intellectual property. While Etsy is constantly guarding and protecting those with copyright’s and trademarked goods little is done to protect smaller store owners from infringement of their artwork.

Meeting the needs of their users is not the only weakness in Etsy.com’s business model. Server troubles, downtime, and numerous errors have been an issue since the site’s release in 2005. Ross Snyder discusses in his talk, “Scaling Etsy What Went Wrong,” at the Surge Conference about just how difficult things became for the company.

Sean Gallagher also brings to light many of the problems Etsy faced when trying to incorporate various orms of open-source code in their site and how much of a problem it created for the dotcom mogul, “While some of the database was partitioned by feature, it was largely monolithic. And, Snyder said, the reliance on stored procedures didn’t lend the database to scaling up well. The site’s uptime was “not that great,” he said, and “regular maintenance windows and site deploys often dissolved into outages.” After weighing options that included re-writing the whole site’s code base, he says that in the fall of 2007, the decision was made to help scale the site up by writing some middleware—a software stack that Etsy called “Sprouter,” a portmanteau of “stored procedure router. One of the lessons learned from Sprouter, Snyder said, was that “if you’re doing something ‘clever,” you’re probably doing it wrong.” At the same time, he admits, he and the others at Etsy today are probably making architectural decisions that others will look back with hindsight at and find fault with” (Gallagher 1).

Poor tech choices, problems with users were not the only obstacle Etsy had to face. Recently, changes to Etsy’s privacy policy exposed all users’ purchases and history to the internet making even some of the most personal purchases public knowledge. In and of itself people expect this to become part of the online experience, however many of the users found the results of their shopping spree whether it was handmade socks or lingerie were not in the bottom of Google search, but in the top two hits on the site. According to MSNBC this made many users more than just a little bit uncomfortable, “Ars Technica reports that during the rollout of its new People Search tool, Etsy — a site which encourages people to buy and sell handcrafted or vintage merchandise — made some changes to what private information is publicly displayed by default. As a result, Etsy users’ real names and shopping histories are now public, easily searchable via Etsy, and being indexed by search engines such as Google: Even if users haven’t entered their full names, their profiles are still searchable by username. Even better, people’s Etsy profiles and their purchase histories (via the feedback they leave) are beginning to show up under Google results for their names. Even if the buyer didn’t leave feedback, a seller could leave feedback for the buyer and still expose what that person purchased” (Gollijan 1).

While the weaknesses of Etsy may seem to pan out to be very weighty indeed, the site does offer a lot to the Internet and society as a whole. Bringing artists together to discuss, learn, create and sell or buy wares is something that has not been possible until now. Many artists suffered greatly with the mass production of goods and a retail dependant society who would rather run to Wal-mart than find a local artisan. Etsy brings back the small businessmen who may have closed his brick and mortar store in the retail destructive wake to now be able to open a virtual store and show the world his art.

Etsy also introduced many artisans from all over the world enabling them to not only buy and sell each other’s work, but to commune and create projects together. Seeing what other artists are working on and being inspired by others is just one of the things that Etsy stands for and encourages. Bringing the craft sale away from the flea market and incorporating the web has been something that Etsy has done and done well. Creating a place for artists to share their art, stories, and experiences is something Etsy has always strived o do. Issuing its social media aspects has enabled Etsy to become more popular than ever incorporating web seminars, more podcasts, blogs, groups, and teams has made the site grow leaps and bounds.

The most obvious strength of Etsy is its numbers according to Ryan Tracy  he site is very profitable indeed,”  More than 400,000 online shop owners use the e-commerce site to advertise, sell, and ship crafts to millions of buyers. In 2009, four years after Etsy’s launch, customers bought $180.6 million worth of merchandise. Sales in 2010 have already exceeded that figure. Etsy takes 3.5 percent of each purchase and charges listing fees ($0.20/item) as well as fees for advertising, like featured links on the homepage. Today, it’s a private, and a profitable company, one valued at about $300 million “(Tracy 1).  The profits continue to expand for the dotcom according to Chad Dickerson of Etsy the site increased its sales on Cyber Monday of last year by over 60% from the prior year, and the overall sites success rate was an 80% increase in sales compared to the prior year.

Dickerson goes on to discuss how important the values and community model of Etsy is and how it truly cares about its users, “At Etsy, we pride ourselves on being a community driven by interactions among real people. These values are more timely than ever. Our growth rates this year, particularly our record-breaking holiday numbers, confirm that Etsy’s vision of commerce is flourishing. More and more, big-box retail experiences are becoming impersonal, frustrating, and even dangerous — pepper-sprayed while shopping? Many online shopping venues focus purely on price and convenience. Instead, Etsy focuses on one-to-one exchanges. We connect individuals around the world to creative, independent business owners who provide an array of unique, one-of-a-kind goods.

On Monday, November 28, 2011, Etsy sellers sold a record amount of goods, resulting in a single-day sales record for the community. Today, the community is on track to meet that number again, and we expect that more days will top the charts before the end of the year. We’re excited about this growth because it reflects the success of hundreds of thousands of businesses run by real people. In fact, the number of shops with sales on Cyber Monday increased by 61 percent compared to last year, and average sales per shop increased 11 percent” (Dickerson 1).

As a member of Etsy.com, and a seller of jewelry this case study was quite personal to me. Researching both the strengths and weaknesses of a company I am actively involved in was fascinating and educating to say the least. I believe that Etsy has a strong future, and will continue to grow. Something that I think would give Etsy a stronger hold in the community would be for it to sponsor craft fairs in the local venues across the country. Give sellers a discounted entry fee to allow them to sell their wares and meet some of their fans in public. For example, they could hold a craft fair in Fair Park inviting local sellers to pay a discounted fee if they are an existing member of the Etsy.com family and also encourage people to sign up for Etsy.com by offering discounted tickets for buyers. They could hold seminars, shows, and classes as they do online, but allow some of the local vendors to blend both the online and real world experiences together. Once buyers can hold, see and touch objects it may increase sales online and encourage more “word of mouth marketing” for both Etsy and the seller both. Buyers would also be able to talk with and meet the people they have been doing business with, and maybe even learn more about the art and crafts online culture.

Even if returning to their brick and mortar roots is not in the Etsy future things that can hope to develop and make better would be answering many of the issues that their users have concerns about. Creating more stable servers and online experiences, and becoming more active with their user complaints. Also creating a form of protection for artists’ goods and intellectual property would also truly benefit all who use the service.

Once Etsy has addressed many of these issues it should not be difficult to further their brand and even become a leading competitor with places like Amazon.com and eBay. I personally, would like to see Etsy expand to take on some of the other auction sites, but not to lose their community feel. I believe they could in fact give eBay and other sites similar to that a fair amount of competition which might make eBay and those of that ilk better companies as well. Etsy.com has a bright future ahead of it and I can only predict that it will continue to grow becoming one of the most popular sites on the web.

 

 

Works Cited

“Best Times To List on Etsy.” EverythingEtsy.com. 24 July 2010. Web. 24 Apr. 2012. <http://www.everythingetsy.com/2010/07/best-times-to-list-on-etsy/&gt;.

Dickerson, Chad. “Etsy.” News. 29 Nov. 2011. Web. 24 Apr. 2012.      <http://www.etsy.com/blog/news/2011/etsy-celebrates-highest-day-of-sales-in-history/&gt;.

Drew. “Is Etsy Dying?” Skinny Artist. Web. 24 Apr. 2012. <http://skinnyartist.com/is-etsy-dying/&gt;.

“Etsy Status.” Etsy Status. Etsy.com. Web. 24 Apr. 2012. <http://etsystatus.com/2005/08/19/a-brief-history-of-etsy/&gt;.

“Etsy User Demographics | Handmade Marketing.” Handmade Marketing. Web. 24 Apr. 2012. <http://handmademarketing.org/etsy-user-demographics-who-shops-at-etsy/&gt;.

Gallagher, Sean. “Uptime.” Ars Technica. Web. 24 Apr. 2012. <http://arstechnica.com/business/news/2011/10/when-clever-goes-wrong-how-etsy-overcame-poor-architectural-choices.ars&gt;.

Goliijan, Rosa. “E-commerce Site Etsy Exposes Users’ Shopping Histories.” Technolog. Web. 24 Apr. 2012. <http://www.technolog.msnbc.msn.com/technology/technolog/e-commerce-site-etsy-exposes-users-shopping-histories-124372&gt;.

“Hashtags.” Http://statweestics.com. Web. 24 Apr. 2012. <http://statweestics.com/stats/users/&gt;.

Lammele, Robb. “How Etsy, EBay, Reddit Got Their Names.” CNN. CNN, 22 Apr. 2011. Web. 24 Apr. 2012. <http://articles.cnn.com/2011-04-22/living/website.name.origins.mf_1_skype-service-etsy-laser-pointer?_s=PM:LIVING&gt;.

Ortland, Kat. “Interview with Robert Kalin of Etsy.” Web 2.0 Awards (2006) -. SEO Moz. Web. 24 Apr. 2012. <http://www.seomoz.org/web2.0/interview/etsy/2006&gt;.

Snyder, Ross. “Surge — A Scalability & Performance Conference, Presented by OmniTI.” Surge Conference 2011. Web. 24 Apr. 2012. <http://omniti.com/surge/2011/speakers/ross-snyder&gt;.

Tomlinson, Rachel. “SuperNaturale  Etsy: Optimism Is Contagious.” SuperNaturale. Web. 24 Apr. 2012. <http://supernaturale.com/articles.html?id=268&gt;.

Tracy, Ryan. “The Evolution of a Handmade Ecosystem.” The Daily Beast. Newsweek/Daily Beast, 01 Oct. 2010. Web. 24 Apr. 2012. <http://www.thedailybeast.com/newsweek/2010/10/01/how-etsy-created-an-online-craft-market.html&gt;.

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