Professional Documents
Culture Documents
Etsy Strategic Analysis PDF
Etsy Strategic Analysis PDF
STRATEGIC ANALYSIS
BDAL 701 Course Project
Professor Chance Farago
Fall Quarter 2016
Haley Bice
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Table of Contents
Introduction page 3
Organizational Overview pages 4-9
o Company Description
o Revenue Model
o Company History
o Executive Organizational Chart
Conclusion page 50
Introduction
Etsy is an ecommerce website where individuals and small businesses can sell artwork,
vintage, handmade, or unique manufactured items. It is a website where people from across
the globe meet to exchange goods in a marketplace format. It also provides merchant services
to sellers that wish to operate like a brick-and-mortar store or that want to expand their online
business.
currently operating and how it will operate in the future strategically. This document analyzes
both financial and marketing strategy, as well as current operations. It looks to calculate based
on that analysis what improvements Etsy can make to continue operating in the future and
what successes the company can look at going forward. As a leader in online commerce, Etsy is
relatively new to the game. This document will also serve as a marker of how Etsy has been
successful thus far and hopefully outline how they can continue that success.
Organizational Overview
Company Description
Etsy is a for-profit corporation that Etsy is headquartered in New York,
connects buyers and sellers of craft and art but it has branches in Berlin, Germany;
with one another on a global scale. It is an Dublin, Ireland; London, United Kingdom;
online marketplace like Amazon or eBay, Melbourne, Australia; Paris, France; San
but specifically for artists and creators. Part Francisco, CA; Tokyo, Japan; and Toronto,
of the appeal of sites like Amazon is that it Canada (“About Etsy”). This broad range of
Revenue Model
While Etsy does not have any business partners per se, it invests in outside technology
such as API software, and also has an affiliate program for companies that have Etsy listings
linked on the affiliate websites. Technically speaking, as it is an online marketplace, it also is the
hub for many small businesses in the arts attempting to sell products. Etsy considers all of these
sellers and anyone involved with the manufacturing process as partners to its business,
The heart and soul of Etsy is our global community: the creative entrepreneurs who use
Etsy to sell what they make or curate, the shoppers looking for things they can’t find
anywhere else, the manufacturers who partner with Etsy sellers to help their individual
businesses grow, and the Etsy employees who maintain and nurture our marketplace
(“About Etsy.”).
This is the company’s way of acknowledging the fact that without the individuals that use Etsy
to create and sell, Etsy would not function. Etsy makes a profit every time a buyer and a seller
complete a transaction through a 3.5 percent fee and a .20 listing fee rather than selling a
particular product itself (“About Etsy”). Thus, without a seller or buyer, Etsy as a company
Company History
This business was created to fill the need for an online marketplace for artists. At the
time, online marketplaces existed for other markets, but these marketplaces mostly consisted
of commercial businesses rather than individual sellers. Mail-order websites existed and then
evolved into what we now consider e-commerce sites (Tozzi). Since 2008, when Chad Dickerson
took over, Etsy has created a culture of engineering and creating new ideas for commerce. The
focus of Etsy’s website was no longer specifically on the artists, but the ease in which buyers
can interact with those artists (“About Etsy”). Etsy became a culture that promoted usability
from both the standpoint of the artist and the buyer, without language barriers or having to
Etsy has grown from a three-person operation out of an apartment in Brooklyn in 2005
to a worldwide commerce website for artists of all trades. It has also instituted sustainability
efforts and promotes volunteer hours (“About Etsy”). Those aspects of the business would not
have made much of an impact at the start, but are important aspects of the culture of the
company now that it has more than nine hundred employees and 1.7 M sellers.
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Analysis
Mission Statement Analysis
This mission does not say a lot about the core values of Etsy’s business. It also doesn't
describe exactly what they mean by "reimagining commerce," nor does it describe how they
help "build a more fulfilling and lasting world." Part of what Etsy believes in as a company is
creating a global community of artists that specialize in handmade products. Another quote
from the Etsy site emphasizes "creativity, community, thoughtfulness" ("About Etsy"), which
may be a better analysis of Etsy’s mission than its mission statement. The thoughtfulness aspect
relates not only to Etsy's customer service, but also relates to the company's sustainability
efforts. That is probably what Etsy means by "building a more fulfilling and lasting world" but it
When it comes to how it wants to change how online marketplaces conduct commerce,
that is a broad way of saying that Etsy wants to change things, but "reimagining commerce"
does not describe what or how it wants to change anything. Both the creativity and community
aspects of the second quote from Etsy's website are better descriptors, because those terms
describe what Etsy does differently than its competitors, which is essentially what Etsy wants to
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put forth by "reimagining commerce." Etsy does not want to change anything specifically about
its business; it wants to brand itself as a company that does commerce differently than other
online marketplaces. "Creativity, community, thoughtfulness" are the three things that Etsy
itself puts forth as what makes the company different, so those should be the focus in the
mission statement, not "reimagining commerce." Etsy’s format for buying and selling is, as
mentioned on page 3, different than other ecommerce sites. Etsy is not eBay. It is not a place to
bid on items like an auction house. It is also not Amazon, where one can click to buy 100 of the
same commercial product. Etsy artists sell handmade goods; thus, the goods are available in a
limited quantity. This is how Etsy “reimagines commerce” but this is all wrapped up in the
“handmade” aspect of the mission and does not need to be expressed with a vague statement
Though "creativity, community, thoughtfulness" is a better idea for the mission for Etsy,
an actual statement rather than three simple words might sound like, “Etsy's mission is to strive
for creativity, community, and thoughtfulness in order to reimagine how artists globally
conduct commerce.”
While one cannot find a vision statement on Etsy’s website currently, in 2009 it listed its
vision as, “Our vision is to build a new economy and present a better choice: Buy, Sell, and Live
Handmade” (Strine, 10) which sounds a lot like a combination of Etsy’s current mission
statement and the new mission statement suggested. It fails to mention the sustainability
efforts of Etsy. To be fair, however, in 2009 those efforts were not at the forefront of the
company’s values. Etsy did not become a certified B corporation until 2012 (“Etsy” Certified B).
The community aspect of Etsy’s vision is also not as apparent, but the aspect of “living
handmade” implies a sense of community that is lacking in its current mission statement.
If Etsy were to narrow down who exactly uses Etsy, it could help Etsy’s vision and
mission improve. In its former vision statement, it is obvious that its users were those that
bought and sold handmade items. Today, Etsy talks a lot about creating a global community,
but fails to define who is welcome in that community. If Etsy were to speak more to the
audience that community consists of, Etsy’s vision would improve. The audience has not
changed a lot since 2009; it still consists of artists and artisans that value the handmade and
those that want to buy handmade art. There is a new element of wanting “vintage” art that was
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introduced around 2010, but overall the overarching idea of craftsmanship has not changed
(Strine, 10).
The vision from 2009 is not that bad as far as vision statements go. To rewrite the
statement, it could be updated from the previous version to a contemporary vision. Perhaps,
“Our vision is to build a sustainable community of buyers, sellers, and visionaries that value the
Logo Analysis
white text on an orange background occasionally, which makes for variety from printing in a
monochrome format. Research in color theory states that orange is a color that promotes
communication (think certain cell phone stores or television companies) which implies that Etsy
is concerned with creating a place to communicate easily. This aligns with Etsy’s goal of making
a community. Orange is also a color often used in companies that want to emphasize human
If Etsy could use a different color or additional color, teal may be the way to go. It would
reflect the eco-friendly aspect of sustainable water without using an overdone green. It also
complements the current orange well, so perhaps Etsy could use a combination of both colors
as representing the company. The typeface that Etsy has chosen for its logo is also nice because
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it is not a cheesy, gimmick type of font like papyrus or wingdings. It implies creativity without
being unprofessional. Adding another color to the mix would not drain from Etsy’s professional
Slogan Analysis
This slogan is something of a rehash of Etsy’s vision from 2009. It basically has all of the
same faults as the vision from 2009 as well. In other words, sustainability and community are
not explained. It also fails to define who is the “your” that the slogan is referring to. Etsy’s
dream of a global community may want to be inclusive, but it fails to acknowledge the arts
community from which it derives its business. While it mentions “Things Handmade” it does not
instill confidence in the artists who spend their time making handmade things, because it does
not acknowledge them. In other words, this slogan focuses too much on the commerce and not
enough of the people that make up a community on Etsy. As a new slogan, “Etsy: the
handmade, sustainable, grassroots community” could reference the business’ beginnings and
Etsy lists its goals on its 2015 Progress Report for investors as follows:
•business •wholesaling
•individual sellers •manufacturing
Growing
Continuous
Sustainable
Improvement
Business
These goals are focused on improving things that Etsy already does, but the business does not
seem to have many new goals. One new goal for Etsy would be to better understand its
audience. While it was very focused on the vintage and handmade craftsmanship in the past, it
is now focused so much on the community and creating relationships that it has lost some of
what made it unique. Etsy is not a social media platform, though social media plays a part in its
success, and while a community of sellers is important, common ground between those sellers
is just as important.
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Socio-
Political Environmental Technological
Economic
Benefit corporations–not the same as certified B corps– need to have certain clauses in
its articles in order to be certified as B corps. As Etsy goes forward, it will need to renew its
certification every 2 years because it is incorporated in the state of New York (“Corporation
Legal Roadmap”). Furthermore, Etsy needs to maintain its status as a certified B corp not only
by following the laws of Benefit corporations, but also by following the environmental laws set
One outside factor that Etsy will have to keep an eye on is the political climate regarding
the postal service and other shipping services. Etsy’s consumers pay for the shipping costs of
the items they are buying. Consequently, as the costs of shipping increase, Etsy’s consumers
may look to cheaper alternatives. This also comes into play as national postal services
downsize. With less employees to work with, the national postal services will take longer to
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ship products both nationally and internationally. Additionally, Etsy will have to keep up on
international trade laws (Fidler, David). As Etsy wants to maintain its “global community” these
trade laws will become a huge factor in where and how Etsy is allowed to do commerce.
international scams, but ecommerce sites like Etsy could potentially be a hub for these scams
without any kind of reporting service (“Report…”). ICPEN and other international ecommerce
networks regulate not only the privacy of consumers but also make sure that no scams are
being advertised as true to consumers that might not know otherwise. Etsy maintains its
software in a way that allows users to report filings of scams, which Etsy then forwards on to
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ICPEN or similar networks. Users can file reports of scams to ICPEN themselves, but most do not
know this kind of network exists and blame the company for any misgivings. Without Etsy
offering a way to report issues, consumers will not trust Etsy as a safe ecommerce site.
Disposable income
One environmental factor that ties a bit into the political factors is the idea of
disposable income. This may seem like a socio-economic factor, but it also is important to
company, the disposable income range of its consumers varies widely. As global markets
change, this environmental factor may be something that will have an impact on Etsy’s
business. Etsy gains a profit using a percentage of sales, so if possible consumers in one area do
not have the disposable income to spend on Etsy’s products, Etsy loses those consumers. This is
Another factor Etsy has to deal with is the fact that shipping rates are not a flat rate all
over the world. As mentioned in the political section, Etsy’s consumers pay for shipping costs.
Etsy’s consumers will not only be conscious of the political climate of the US postal service, but
also the political climate internationally. They will also be aware of taxation on incoming
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products and the exchange rate between nations, as these affect prices. While this may not
seem like much of an environmental factor affecting Etsy at the moment, Etsy has recently
gained a manufacturing department. This manufacturing department will rely heavily on the
importation of raw goods, so the shipping costs of these goods which may have only been a
political concern to Etsy’s consumers before now affects Etsy’s bottom line even more.
requirement to maintain certified B status), one factor that may come into play with Etsy’s
business is how much of the businesses’ operating costs are being spent on quality causes. Etsy
gains a lot of its consumers due to its social mindedness as a business and Etsy widely promotes
to its investors that it is a Certified B corporation. These social issues are extremely important
to the consumer base and to its rank as a “Certified B” corp. Without spending the money on
social issues, Etsy will lose consumers, but it also needs to keep enough of the funds to turn a
profit.
As a generation of computer literate consumers gets older, they look to the internet to
provide them with various options for commerce. Etsy is one of those options and will continue
to gain customers simply because it is a well-established business and there is a steady flow of
new consumers enjoying online shopping for the first time. However, Etsy needs to focus on
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retaining those customers by offering better products than both online competition and local
competition, wherever that consumer is located (Steinfield, Charles et al). Etsy can continue
this flow of customers by either offering or promoting computer literacy classes in communities
where computer literacy is not common, but overall it needs to focus on customer retention
The difficulty with ecommerce is that there becomes such a huge variety of competition
that an ecommerce company either needs to be the cheapest out there or market itself as
different than everything else out there. With the addition of a manufacturing department, Etsy
has reduced its emphasis on the “handmade” and this could have a potential impact on
consumers that went to Etsy for handmade products. As stated in the description of new
computer literate consumers, consumers are looking for something different. Has adding a
recent, the impact so far has been minimal, but Etsy has also not promoted its additional
manufacturing department either. The department is not hidden or a secret by any means, but
Etsy as a company knows that this may turn away customers so it is not something to promote.
Image Source:
“Etsy Manufacturing” web screenshot
<https://www.etsy.com/manufacturing?ref=ftr>
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Merchant Services
One of the more recent advances that Etsy has put into place is the use of its credit card
reader service. This service has an additional cost, much like any brick-and-mortar retailer
would have to pay. This enables buyers to purchase goods easier, but it also puts some pressure
on sellers, as this service comes at additional cost to the seller. This cost can be included in the
price of the product, but that would take the seller changing the price for all of that product
instead of one instance of the product. For example, if a seller has a quantity of five of one
item, the price needs to change on the whole listing, whether or not one of the quantity is
being sold in person using the credit reader. This means the cost has to be absorbed
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somewhere else, or the seller needs to make a new listing for the in-person sale. Of course, Etsy
gets paid for every new listing, so to some extent this is intentional on behalf of Etsy to
generate additional earnings from its merchant services, but may put off some sellers from
Distribution channels
One of the supposed advantages of buying online is the fact that it eliminates many of
the costs of distribution. In a traditional store, the item has to be made at a manufacturer,
shipped to a wholesaler, shipped from that wholesaler to a store, and from there to the
consumer. The price of this shipment and the rates at which the manufacturer and wholesaler
sell goods and services falls onto the consumer. In an online store, originally, the middleman
was cut out. Today, big box stores like Amazon have wholesalers contracted to sell the items, so
the cost of that again falls on the consumer. There is simply more negotiation of prices between
Amazon and wholesalers because they have choices from which wholesaler to choose from.
This has never been the case with Etsy, because Etsy sells products directly from an artist to a
consumer. In a time before ecommerce, big name artists would go through a gallery as if the
gallery were the wholesaler, but local artisans would simply sell locally. Etsy caters more
towards those local artisans than big name artists that are represented by a gallery, so again
this is not an issue that applies to Etsy, though it applies to many ecommerce websites.
Image Source: “Etsy Newbies & Social Media Basics” video still
<https://www.udemy.com/etsy -stores-social-media-basics-your-journey-starts-here/>
Etsy has a huge social media following, simply because it promotes small web based
businesses that already rely on social media for marketing. Etsy has been trying to compete on
other mobile and social technologies, such as mobile purchases and purchases linked through
other websites, including Facebook (“Etsy Sellers…”). The advancement of this technology has
increased the social media access of Etsy, but may start to falter as bigger websites take
At this point in writing, few companies challenge Etsy for both its market and consumer
base. Amazon has recently unveiled "Amazon Handmade," which may have an effect on the
buyers looking for handmade products, but Amazon Handmade has a vastly different base of
sellers. "Amazon Handmade," as a part of Amazon, consequently has no qualms about tapping
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into its large network of manufacturers to offer more home goods rather than strictly artisan
goods. Amazon Handmade also comes with a 12 percent fee as opposed to Etsy's 3 percent fee
for listing an item. Again this is due to Amazon's range of manufactured home goods that it has
access to (Anderson, Mae). This could also be why Etsy has recently added a sustainable
Amazon Handmade seems to still be in a beta version where one requires an invite
before they can sell or buy handmade items. In contrast, Etsy has acquired a new artificial
intelligence engine (“About Etsy”) aimed at helping users find products even better. This speaks
to the different markets that Amazon and Etsy are trying to break in to, as well, where Amazon
wants to make its consumer base feel privileged and Etsy wants its consumer base to have
worldwide access.
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Another website the offers artists the ability to sell their handmade products is
Storenvy. It still offers Etsy some competition in the market, despite joining the ecommerce
market later, simply because it had no listing fee until 2014. This obviously was a benefit to
sellers, but it also invited a large amount of fraud products into the market. Storenvy is also
somewhat of a competitor to Amazon Handmade because it lacks the listing fee, so in theory
any manufacturer or artist could post a listing for free on its website, as well. Storenvy gained a
small following of artists that still use the site, but overall Storenvy has slowly been falling in
both seller and buyer numbers due to rampant fraud and a D rating in the Better Business
Bureau (“Storenvy Reviews”). This increase in security risk pushes away most buyers and thus
sellers, despite the free listings and is one of the reasons Etsy has such a huge software
Facebook has also recently rejoined the race for ecommerce by reinstituting the FB
Marketplace. Experts seem to think that this is more of an attack on eBay's business and other
second-hand markets like craigslist than it is on craft sellers like Etsy. However, the FB
marketplace, eBay, and craigslist all have the potential to break into the craft and artisan
markets (Hahm, Melody). Facebook, for now, seems only to be focused on local communities of
sellers, which Etsy has some hand in as well with their "Team" pages. Etsy also has an app to
find which local brick-and-mortar stores sell Etsy products called "Etsy Local" which may be the
turning point between a seller's use of Facebook or Etsy, but Etsy does not seem to promote
"Etsy Local" much at all. The FB marketplace is so new, though, that it doesn't pose a threat as
of yet. It would be something for Etsy to keep an eye on going forward, as Facebook has the
prior experience of running a marketplace previously and can avoid some of the pitfalls it faced
Etsy is, above all, an online retailer. Despite the fact that it sells handmade items from
individuals rather than large scale manufacturers, in the end it is a place to buy and sell goods
over the internet. "Online retail in the US continues to grow at a rapid rate, outpacing sales
growth at traditional stores and stealing market share from them" (Heath, Tyrona). Etsy is not
one of the largest online retailers, but it has its own niche market. The two largest online
retailers, Amazon and Walmart (Zaczkiewicz, Arthur), are both distributors as well as
ecommerce websites. Etsy has been, in recent years, one of the fastest growing online retailers.
There are a few reasons for this, its brand image, its customer service, the quality of the goods
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as opposed to a large-scale manufacturer. The biggest trend that Etsy does not follow in the
market is the distribution aspect of these big box retailers. By working with the postal service or
a shipping company like FedEx, the larger companies have the advantage of low cost shipping.
In the future, as Etsy expands its manufacturing area, this may become a larger problem
necessary to solve.
Another big concern for all online retailers is security of transactions. As mentioned
previously, Craigslist, eBay, Storenvy, and the previous Facebook Marketplace, all have or had
security problems which put off some customers. Etsy has the potential to invite these
problems as well, because individual sellers are creating the listings. However, as Etsy gets a
commission from posting a listing, and vets quite a few of the scams, Etsy has not had the same
Overall, Etsy has competition found in other ecommerce / online retail websites, but
none of them have quite the same market of sellers or buyers. As long as Etsy continues to
focus on usability and security, it will weed out a lot of the competition in the market from sites
like Storenvy and even eBay and Craigslist where security is a huge problem. The market
competition that Etsy needs to worry about in terms of consumers are Facebook and Amazon
as they both begin to expand into the handmade ecommerce market. Amazon already
guarantees the products it sells on its main site and Facebook is breaking into the local markets
that Etsy has tried to get a hold on through "Teams" and "Etsy Local." Facebook and Amazon
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currently do not pose a threat as both companies are only just beginning the local and
handmade departments, but Etsy could have some serious competition a few years down the
road. Amazon, especially, may pose a threat as its distribution of goods is more cost effective
SWOT
Internal External
Strengths Opportunities
Sustainability Expansion of market analysis
Internal Feedback (from employees and Explain the benefits of external
sellers) manufacturing division sellers
Opportunities for employee growth Joining or merging with other
technologies to make experience
better
Promotion of sellers doing good work
Secure buyer & Seller Experience
Acquiring artificial intelligence search
bar
Weaknesses Threats
Promoting Etsy local (lack of) Facebook Marketplace
Feedback from buyers Amazon Handmade
Only 921 full-time employees Shipping costs & worldwide export
(close knit is good but employees may and import taxes
be overworked)
Having so many departments may lead eBay
to disconnect
(aka Etsy Local, manufacturing, Local brick-and-mortar stores
software, etc. having trouble working (though Etsy local is one way to counter
together) it)
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Etsy is extremely focused on sustainability. This focus is not much is being done to
relatively new for the company and came out of a discussion promote feedback from
between upper management and its employees, telling us the buyers in Etsy’s
that internal communication and feedback is a huge part of market. The focus seems
the company’s success, as well. One of the prospects that to entirely be on those
Etsy encourages is growth and learning for its employees, selling, without giving
mostly due to the fact that there are only 921 employees, so much notice to the people
the more those individuals know, the more the business can buying aside from making
utilize their skills. This has its disadvantages, though, because sure transactions are
it’s possible that the employees may become overworked. secure. There also seems
programmers and web design writers / content creators. The “Etsy Local.” Most of the
programmers are extremely good at making the Etsy artists I have talked to that
community a safe place to engage in the market. The writers use Etsy have never heard
are great at promoting sellers who fit the brand image and of Etsy local. It is another
are doing good business (such as sustainable shops, way to get customers to
entrepreneurial shops that are focused on giving back, etc.) buy products from Etsy
customers, though in
As mentioned previously, one of its weaknesses is the
person rather than online,
fact that employees may be overworked. As a consequence,
but this service seems to
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be relatively ignored. While there are only 921 full time However, in the future, at
employees, so these things may be put on the backburner, Etsy continues to grow, it
another weakness is the fact that there are so many different is possible that the
departments within Etsy (“About Etsy”). At this time, because departments will begin to
One opportunity that Etsy could continue to do, is look towards technology
is their manufacturing will enable customers to search through Etsy stores more
department. While this easily. Now that the purchase has been made, it opens the
department is technically door to the creation of a formal plan on how to acquire other
internal, it is new and very businesses to improve usability and technology. This also
disconnected from the applies to the threats to Etsy’s growth. Along with the
buying and selling Etsy obvious marketplace threats, one of the biggest differences
marketplace. Integration between Etsy and those marketplaces is the fact that the
of the formerly external consumer pays for the price of shipping based on the
manufacturers is an location the item is shipping from, rather than a flat shipping
important aspect to rate. Amazon ships items out of a warehouse, so its items
joining the two together. can have a lower shipping cost as well as a flat rate, whereas
Another thing that Etsy Etsy sellers do not have that luxury.
businesses and sustainable manufacturers. Etsy's "product" is its service as a way for art buyers
to contact sellers, for artists to contact manufacturers, small businesses to access merchant
services, and other services online businesses and sole proprietors use. Etsy's goal is to create a
global marketplace. It has a focus on human interaction, which is at the forefront of its service.
To provide the selling service to artists, Etsy charges a 3 percent fee (“About Etsy”). There is no
price as of yet for matching manufacturers with artists, however. Etsy's service to artists limits
the need to understand web design or create contracts with merchants, get web support, assist
with mobile selling, etc. These services can be less of a focus for the artist so that they may
make their art instead. Etsy also assists consumers that do not want a product from big box
o aka what if two people buy the same one product advertised on two
Etsy also depends to some extent on the technical knowledge of its users.
Shipping is a concern (beyond the cost being placed on the consumer, which I
by shipping in bulk.
As Etsy continues to grow, it has plans to better connect artists and manufacturers; thus
moving away from the handmade vision it had at the beginning. Etsy also intends to make more
customizable individual seller pages, hopefully without compromising usability (“About Etsy”).
As of right now, there is a bit of a disconnect between all of the services Etsy offers. Moving
forward, those additional services will either have to promote one another better or fade out as
services become more in tune with the needs of Etsy's buyers, sellers, and manufacturers.
Bice 36
Etsy's marketplace is obviously at the forefront of the business. It is the entire point of
Etsy and Etsy's entire mission— “Our mission is to reimagine commerce in ways that build a
more fulfilling and lasting world.” —revolves around the commerce that occurs in that
marketplace. Etsy’s focus on fulfillment has a lot to do with its marketing strategy (next bullet
point) and the focus on the lasting world aka sustainability seems to permeate the other
services Etsy offers moreso than the marketplace itself. The other services that Etsy offers
(merchant services, manufacturing, Etsy local, etc.) are add-ons to the main marketplace, thus
The products that receive the least attention are probably "Etsy Local" and Etsy's
answer to Paypal's "square" (“About Etsy”). "Etsy Local" seems like it would be a big hit for
those looking for handmade products in their area (also eliminating the shipping cost issue) but
it garners little to no attention. Part of this is because of a lack of advertising. The Etsy Reader
gets less attention because it requires additional payment on behalf of the user (this is a Visa
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and Mastercard requirement, Paypal’s square has it as well), it requires an established store as
a small business (most of which already use Paypal or their own bank’s merchant services), and
it requires the use of Etsy’s mobile app. The fact is that Etsy’s reader has very little
differentiating it from the other readers on the market. Paypal’s square offers so many other
benefits compared with the variety of other readers (including Etsy’s) that it is difficult to
The target market for Etsy is usually homeowners or home renters rather than high art
collectors. Its market is those with space to display handmade goods, but those with an interest
of art as craft rather than the type of work that would be displayed in a gallery. The age-range
of most of Etsy's buyers and sellers tends to be millennials on the older end of that range,
rather than teens. Those with homes, apartments, or dorms between the ages of twenty and
thirty-five. As a secondary market, there are quite a few older customers that have owned
established small businesses for some time and are using Etsy as a way of selling their product
Etsy, on the whole, is trying to communicate that it has a crafty, unique style. It brings
images of craft fairs, individual sellers that also hand make their art, and green or sustainable
energy. It has a very hipster style (if hipster is still a word people use) so its focus is definitely on
the concerns of millennials, such as work-life balance, sustainable commerce, and a close knit
workplace community (the fulfillment aspect of their mission). These aspects of Etsy target the
ideals of the primary market, but may alienate users from the secondary market that are not of
the millennial generation. Etsy seeks to make its business a great place to work for millennials
Bice 38
in the hopes that millennials will see the value in its ethics and goals, thus causing them to shop
As for how Etsy promotes itself, it mostly leaves that up to the individual sellers. While it
does use page tags to promote listings on google, most of its promotional material is provided
by the sellers on the marketplace. This kind of advertising depends on the target market of each
individual store in the marketplace and is also constantly revolving. As a new entrepreneur
enters the Etsy marketplace, so does that store’s target market. I agree with this particular
strategy because it leaves the individual stores able to market towards their brand. Etsy does
not pick and choose which stores fit and which stores do not fit. As long as Etsy can be of
service to the entrepreneur, then Etsy will allow the store to exist. On the other hand, this is
extremely difficult for Etsy to market on a larger scale (hence why it uses buzz words like
“community”). I do not think Etsy would function if it did not allow sellers to market for
themselves, however.
Bice 39
When it comes to public relations, Etsy is heavily focused on its brand image. The fact
that it is one of the few companies that publically point towards their B-corp status is not an
accident. Etsy wants to promote its sustainability because it helps with public relations and
are buzz words that can be bent to reflect nearly anything on the internet, but the real focus is
on Etsy’s image (Reeves, Blair). Etsy intends to come off as a mission-driven company rather
than a profits-driven company, despite having shareholders. Its goals are valuable: promoting
sustainable energy, helping with worldwide hunger, and promoting other international crisis
needs.
Any capitalist venture with a moral obligation is going to be at odds with profit margin
versus giving back. The fact that giving back also ends up getting Etsy more customers is
entirely intentional. If positioning itself as a caring, mission-driven company did not generate
enough profit to continue giving, Etsy would not continue its efforts. I think that Etsy’s goal to
be self-aware as a company, realizing that the way companies have traditionally used up
resources is not beneficial, is an admirable one. I simply do not believe that Etsy is self-aware
just because it wants to benefit the environment. I think that promoting and positioning Etsy as
Still, the company does a great job at assisting with environmental and worldwide
causes. It is difficult for me to say that it should choose another strategy for marketing when
the benefit of its positioning is the attempt at ending world hunger and the downside is less
Bice 40
marketing for the Millennial generation. Because Etsy is positioned as mission-driven, I doubt
that there will ever be a time on the horizon when the company stops caring about worldwide
issues. I think that the definition it currently has of some of its key values may change over
time, however. It has already moved away from the “handmade” towards retail and
manufacturing to justify its goals as a company, redefining what “handmade” really means. It
would certainly be willing to redefine some of its other key values if it means growth of the
company.
Bice 41
Financial Analysis
as of October 2016
As it stands, Etsy is seeing an increase in revenue for its third quarter results that were
announced November 1st. Etsy has seen a big jump in revenue from its seller services, but has
not seen an equal growth in “gross merchandise value, active sellers, and active buyers”
(Green, Timothy). It is also not surprising to see that Etsy’s stock has fallen in the third quarter–
Etsy operates in quarters that run from February through January– because of the huge jump it
had in the second. Investors do not buy stock when the price is high. During the second quarter,
Etsy was still operating at a loss in terms of day to day operations. Etsy made enough because
Bice 42
of the 40 percent hike in revenue to no longer be negative in operating costs in the third
A big chunk of the costs of operation were due to expansion into international markets
(not all of which have the same tax laws, accounting principles, etc.) Perhaps now in the fourth
quarter, Etsy can focus on gaining active sellers and buyers through marketing towards existing
customers and making them last instead of spending all of its income on operations. It either
needs to increase revenue as it did in the second quarter or vastly decrease its operating
budget. Something that could also have an impact going forward is the fact that Etsy’s CFO is
departing. There is enough insight from Etsy’s remaining team members to get them through
the process of hiring a new financial officer, but the search may impact financial goals for the
Etsy currently has a lot more cash on hand than it has had in previous years, which may
take part in why the its operating cost is so high. If the cash on hand is high, it is possible that
Bice 43
people in charge of Etsy’s spending believe that they can spend that cash in operations, not
understanding that cash on hand needs to go towards the company’s liabilities and other
Etsy needs to focus on operations and sales rather than entering into more
opportunities for sellers, unless those opportunities significantly increase the amount of new
customers. Etsy could either increase its ‘sales’ enough to cover for operations, as it did in the
second quarter, or it could decrease its operating expenses. In this past quarter, it could be that
Etsy was trying to make certain that it was ahead of its competition with Facebook Marketplace
and Amazon Handmade both opening this year, but now that they have moved ahead, they
need to make sure they are sustainable going forward. Despite Etsy’s goal of becoming an
“international marketplace,” breaking into new markets costs quite a bit of money. Before Etsy
can think about continual expansion, it needs to maintain internal structures and operate in a
Financial Ratios
as of November 2016
1) Operating Cycle:
a) Etsy currently does not deal with inventory. It will once the manufacturing area takes
off. It currently has a self-imposed operating cycle of 60 days for the software area of
2) Liquidity
3) Profitability
4) Activity
5) Financial Leverage
6) Shareholder Ratios:
c) Etsy does not pay dividends to shareholders. It uses the earnings to fund its operations
budget (“Investors”).
7) Return Ratios:
*there was difficulty finding the information to make this calculation, but the balance sheet
** there was difficulty finding the information to make this calculation, but the stock information
Analysis Summary
The strategies listed in the following As for the strategies that are listed
section are goals for the future of Etsy in the next section, many of them are based
based on the research presented thus far. on goals that Etsy has already identified
Significant pieces of the analysis thus far such as the need to grow as a business and
that are not in the goals following this have real world impact instead of just a
section are: the use of a vague mission due virtual marketplace impact. Another piece
to the fact that Etsy has to market to both that is included in the next section is the
requirements that Etsy has to continue in With such a small team and so many small
the ecological goals which are a part of project elements with varying team
Etsy's mission as well), and goals for members is a must for Etsy and probably
changing distribution channels along with something the company already does to
the transition to using manufacturers. some extent. The final goal relates back to
The reason that these pieces were the financial section of the analysis which
not mentioned in the strategy for Etsy, includes a need to either lower operations
despite their importance, is that they are costs or increase sales. The sales piece is
not aspects that Etsy needs to work on not a guarantee, although it is something
relatively soon, but they are items that Etsy that the employees of Etsy can work on in
will probably need to consider going the first strategic goal. The real impact on
Strategy Formulation
1) Grow sustainable business in wholesaling and manufacturing by marketing the new
a) this strategy is finished when more sellers take advantage of the manufacturing area
and / or the manufacturing area is repurposed for Etsy's use as a company instead of
the sellers
b) The process begins by marketing manufacturing to sellers, getting the proper supplies to
2) Continue real world impact on the environment and community by promoting employee
a) Timeline for completion & measurable goals set by the employees and giving campaign
partners
3) Nurture marketplace by growing relationships with current customers, conversing with seller
current sellers
b) Grow relations and have conversations within six months; celebrate sustainable
4) Merge with more technology partners to improve other site functions (beyond the search
a) Focus on local partnerships to Etsy's existing offices or non-local businesses with offers
of significant improvements
b) research into other tech expansion opportunities within six months and implement
5) Promote cross department teamwork by creating project groups for goals 1-5
a) This project will be complete when the project groups decide and / or if the groups are
a) Review: warranty policy, cost of new manufacturing area, costs for travel between
offices
b) Eliminate: direct mail advertising and limit use of paper in all departments
i) limiting the use of paper promotes the company's ecological goals as well as its
c) This goal will be considered complete when the operations budget is more manageable
i) We should see improvements to this area within the next two quarters or else more
ii) reviewing the policies does not necessarily mean cutting the budget from those
areas, but those are the areas that are easiest to cut spending from at this time
Bice 49
not face to
Technology value-focused face millennials (older
partners Buy/sell marketplace enterprise interactions end or Gen X)
buyers -
provide
Fed ex / postal assistance w/
service secure transactions sustainability transactions "Hipsters"
sellers -
Merchants & provide
manufacturers local / merchant established small
(also clients) genuine products handmade services businesses
sellers w/o much
Banks? Credit not mass web design
card companies? sustainable manufacturing produced experience
buyers of unique
Key Resources security Channels products
reliability
change from
household postal service
supplies for manufacturers name to FedEx
data servers
supplies for software
engineers
marketing supplies
Conclusion
Etsy is in an interesting position where it has the potential for a lot of growth especially
with existing customers, being that it is a leader in its market, but it also is struggling with
budget concerns and needs to be able to make a profit. This does not have to be taken as a
negative for Etsy, as the company can easily make a profit if it grows business, but the
strategies for generating business vary widely. This document serves as an analysis of the
business, especially in terms of the market and how the company conducts business on a larger
scale, rather than day-to-day operations. The strategies outlined here are not the only solutions
to Etsy’s current operations, but some of the aspects of Etsy could possibly work on going
forward. Etsy has made itself a leader in ecommerce. This document described not only how it
has made it to that point, but also where it can go in the future.
Bice 51
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