Etsy is a hugely popular e-commerce website that allows people to sell their handmade crafts, vintage items, and other products to buyers around the globe.
Etsy’s mission statement says it best: “To enable people all over the world to make a living making things.”
Etsy has been around since 2005 and provides an online marketplace for artisans to connect with buyers. In this article, we will explore how Etsy operates as a business and how they make money from their platform. You’ll learn about Etsy’s journey so far in its quest to be the “world’s most vibrant handmade marketplace” by 2022.
Etsy was founded in the year 2005 by Robert Kalin, Haim Schoppik, Jared Tarbell and Chris Maguire. It is headquartered in Brooklyn, New York, USA. It has received over $300 million in funding till date. It is currently listed on US stock exchange since 2015.
Etsy has over one million active sellers on it’s platform who sell more than three billion different items globally.
Etsy has over 50 million buyers on its platform. Etsy had more than 20,000 employees in the year 2018 across 60 countries.
Some key features which differentiate Etsy from other marketplaces are as follows:
The key value proposition provided by Etsy lies with the features they provide to their 2 key segment of users: buyers and sellers:
Etsy is also known for a particular revenue strategy, which is just as unusual as its product offerings.The following are the major revenue models which Etsy uses:
Etsy charges vendors to list items on its marketplace. However, the cost of listing something on Etsy is only $0.20, but it adds a significant amount to total etsy earnings.
Etsy takes a commission for each purchase, in addition to the fee for having an item listed.The fee for the commission has been set at 3.5 percent. Sellers may establish their own selling price, but Etsy takes a 3.5 percent commission from the selling price before remitting money to the seller.
Etsy charges extra money for advertising options like making a product as featured product etc. on it’s marketplace. Sellers can advertise their businesses and, as a result, increase their sales.
Some unique features which helped Etsy to differentiate itself for bigger players like amazon, ebay etc.. are as follows:
Etsy’s own Etsy Studio allowed shops to create their own TV commercials and also use Etsy’s other unique marketing channels like email marketing, social media etc. Etsy offered a free service for sellers where they can showcase their products through these mediums before opening up an actual shop on the website
Etsy used word of mouth and referral marketing to promote Etsy’s own Etsy Studio. They encouraged users to invite their friends and family members through a special link which would earn them $15 credit for every successful sign up or purchase made by the referred person
It was Etsy’s idea of encouraging the creative economy. Etsy has an open API which allows developers to create their own apps and services around Etsy and even sell those services to shop owners on Etsy marketplace.
Etsy provides the artists with Etsy Education which serves as a source of knowledge for how to sell on Etsy. The education section provides video tutorials, written guides and live webinars about Etsy’s systems.
Etsy also provides offline workshops which provides Etsy sellers an opportunity to meet and learn from each other.
Being one of Etsy’s initiatives, it is a program for Etsy shop owners who want to manufacture their own products in small batches outside of Etsy. It helps artists by providing them with raw materials and other required domain expertise. Etsy has an active Etsy Manufacturing community where Etsy sellers can share their knowledge with each other.
Etsy Shop Owners are also interested in Etsy Wholesale, which is a program for large retailers who are looking to buy unique products from Etsy Sellers, without the need of opening up their own online store on etsy.com
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