Etsy succeeds with its Amazon-opposite approach
Etsy, the online marketplace for handmade and artisan goods, announced better than expected results during its first quarter as the site saw its traffic and revenue grow for the third consecutive quarter.
The site’s improving results, CEO Josh Silverman said on Etsy’s earnings call, are tied to its ability to differentiate in the marketplace.
“In a world where e-commerce is increasingly commoditized, Etsy provides a differentiated experience where extraordinary goods handcrafted by creative entrepreneurs all over the world are made for you,” said Mr. Silverman (via Seeking Alpha).
“At Etsy, we believe that life is full of special moments that deserve imagination and a human touch; moments of gifting, celebration and trial. Those moments happen often, a wedding, a first day of school, an important meeting, a birthday or a holiday,” he added.
CNBC’s Jim Cramer asked Mr. Silverman about the impact of Amazon.com on Etsy’s business. Etsy’s CEO responded that the two companies were in fundamentally different businesses. Mass retail operations such as Amazon are about selection, price and convenience. Amazon achieves low prices by buying items in bulk.
“If you can buy 1,000 of anything, it doesn’t belong on Etsy,” Mr. Silverman said. “In terms of convenience, they [Amazon] warehouse everything in advance so they can ship it to you [the] next day. Well, a great many items on Etsy are made to order, so you simply can’t warehouse them in advance.”
On this week’s earnings call, Mr. Silverman said Etsy has focused on four key initiatives to achieve success: “improving search and discovery, trust and reliability, marketing capabilities, and solid tools and services.”
Improvements in the site’s search capabilities has led to higher conversion rates among both new and repeat customers. Successful shopping visits, in turn, are helping Etsy create higher lifetime value customers.
- Etsy, Inc. Reports First Quarter 2018 Financial Results – Etsy, Inc.
- Etsy’s CEO Josh Silverman on Q1 2018 Results (Earnings Call Transcript) – Seeking Alpha
- Etsy CEO: We’re in a different business than Amazon and other big online retailers – CNBC
- Etsy CEO: ‘Signs of Progress’ in Boosting Repeat Business – Barron’s Next
DISCUSSION QUESTIONS: Do you think that Etsy is relatively Amazon-proof? What do you think are the keys to the site’s continuing success?