Do you even remember a time without Etsy or wondered how was Etsy developed, how did it get so big? Well, in recent years, making and selling handicrafts has increasingly turned from a hobby into a successful business. It is enough to have a good and original idea and the courage to present that idea or product to the general public.
New businesses without an established reputation or clientele had difficulty selling handcrafted or vintage items in the past. But, social networks have greatly helped to spread information about interesting handicrafts that no one would otherwise even know about.
However, in addition to social networks, various services have been developed for the sale of these handicrafts. Some are local, while others have positioned themselves globally, such as Etsy.
So when you think of Etsy, what comes to mind?
Chunky knitted scarves? Hand-painted wine glasses or coffee mugs? Kitschy wooden signs? Etsy offers these products, of course, but the marketplace offers so much more than that. With millions of products and millions of sellers, and with a mix of new makers and established retailers, Etsy is an e-commerce mega-successful company.
Breaking into the online store market and becoming a recognizable global brand along eBay, Amazon or Alibaba is an almost impossible mission. Not for Etsy. Etsy has grown from a tiny startup to a mega-successful company worth billions of dollars — and the company is seemingly only growing more and more successful.
This online handicraft store brings together 1.7 million retailers who offer 40 million products in its online stores, which are searched by 26.1 million users in more than 190 countries.
And today, we will take to a journey about how was Etsy developed, how did it expand and what is the key to its immense success. From its humble beginnings to multiple controversial moments through the years and till today, we will point up the continuing journey of Etsy as an online marketplace.
What is Etsy?
Etsy is the Brooklyn-based (New York) online artisanal marketplace for vintage – Etsy defines vintage items as more than 20 years old- handmade, and unique goods.
This online marketplace also serves to connect people from across the globe both online and offline through buying and selling products. Furthermore, it offers a clearinghouse for handcrafters, collectors, and entrepreneurs to open a store and sell their products online. Everything is sold on Etsy – from jewelry to clothes to art objects.
How was Etsy developed
Etsy started as a group of creatives and artists that could sell their products online. So the story starts with three entrepreneurs and friends: Robert Kalin, Haim Schoppik, and Chris Maguire – who founded Etsy on June 18th, 2005.
The motivation for creating Etsy came from Robert Kalin, who at that time was an amateur furniture maker and he had difficulty selling his handcrafted furniture online. He was lucky to have two friends – Haim Schoppik and Chris Maguire who wanted to support him and wanted to participate in the creation of an online store.
Robert formed the idea that a group of sellers would generate more interest from potential buyers than people trying to sell handmade items on their own. Naturally, sellers were thrilled with this idea and the store owners referred to the Kalin idea to help them to become “the protagonists of their own lives.”
The trio developed the first version of Etsy in 2005 in the space of two and a half months and officially launched the website in the same year in New York City, firstly for a group of creatives and artists that could sell their products. They developed a platform in one of their apartments in Brooklyn, which was also the first headquarter of the company.
In Etsy’s first year, the site’s traffic boomed as the guys frequently added new tools to help sellers gain exposure. Soon enough, they gained a cool-hipster reputation on their site rising the popularity of the website even further.
By 2007 Etsy has expanded with nearly 450,000 registered sellers who generated $26 million in annual sales. Actually, Etsy had become successful so quickly after being founded in 2005 that venture capitalist Jim Breyer led a $27 million investment into the company.
In addition to that, the company also raised over $3 million in venture funding.
From 2008 to 2012 – turbulent years
Between 2008 and 2012, Etsy has seen a series of turbulent events. For one, Chris Maguire and Haim Schoppik both left the company.
Rob Kalin then hired Chad Dickerson, the former Senior Director of Product at Yahoo, as Etsy’s new Chief Technology Officer after which Kalin removed himself from the day-to-day operations of the company.
Dickerson started to build out Etsy’s engineering team, which was the beginning of a major turning point for the company. Soon after, Etsy acquired its first company, Adtuitive, a contextually driven ad platform that worked with publishers to provide retailers with marketing solutions.
After three years of effective leadership in his CTO role, Chad Dickerson then replaced Rob Kalin as CEO of the company
In 2012 Etsy raised $40M in Series F funding which they used to expand more into international markets, including France, Germany, and Australia. This year Etsy also acquired Trunkt, an online wholesale marketplace that sold artisanal goods.
In 2013, Etsy went further in investing in their growth and acquired Lascaux Co., a company that developed social networking applications for mobile devices.
This year also marked a major shift in the company’s corporate values as it decided to allow sellers to sell manufactured goods as well as handmade items. Through this strategic step, Etsy was also aiming at providing low-income entrepreneurs a head start.
So even though they expanded from just handcrafted products, Etsy’s platform was still being used especially by low-income, entrepreneurial-minded people looking to take control of their lives and finances by starting a business and reaching customers they may have never met otherwise.
Due to huge interest among people, Etsy announced a partnership with Larry Morrissey, then-mayor of Rockford, Illinois, to teach low-income individuals living in public housing as well as high school students the entrepreneurial skills needed to form a successful small business on Etsy.
That created a learning hub for participants in the program and they were allowed to use Etsy’s website to sell their own products under the guidance of an instructor before launching their very own Etsy shops.
Overall, the company’s sales grew from $895M to $1.34B that year.
Over the years Etsy remained firmly planted in Brooklyn, where so many independent, creative businesses were flourishing. Dickerson said that they wanted to influence and be influenced by the mix of industries here, from media to fashion to a burgeoning manufacturing renaissance.
In 2014, Etsy hired Mike Grishaver, a former executive at Pandora, as its senior vice president of product in Etsy. While working with Pandora, Grishaver helped the music streaming service develop its mobile user experience.
Due to that, he was hired in Etsy to improve to pour more resources into its mobile presence, as customers were increasingly shopping on their phones.
This year Etsy also made two more acquisitions — creative technology marketplace, Grand St., and French online marketplace, A Little Market.
The company’s total sales hit $1.93 billion that year.
In 2015, Etsy announced that it was launching a new program called, Etsy Manufacturing. The service would connect sellers with pre-approved manufacturers to help them source production and get further assistance.
By this year, the company had 1.5M active sellers and 22.6M, active buyers.
Next year, in 2016, Etsy Launches the Global Brand Marketing Campaign – Difference Makes Us.
Through this campaign, the Etsy market celebrated people’s unique tastes and expressions, allowing individuals to find items that cannot be found anywhere else. Therefore, they celebrate the differences that make us all unique. But, this marketing campaign was also showcasing Etsy’s huge success and the fact that it has grown from a modest American trade to a giant,
“Difference makes us” was created for Etsy by the global agency Office of Baby, and is made up of a series of animated GIFs and video ads posted all over the virtual world, from YouTube, Facebook to Instagram.
As Etsy’s marketing director Andre Rickerby told AdWeek, they have been waiting for the launch of the campaign for a full eleven years, and now is the time to celebrate their global presence and highlight the values and strength of the brand.
On the other hand, many media, especially in that year, pointed out that Etsy has lost its charm and credibility, precisely because of that growth. In fact, it was assumed that the campaign was launched not to celebrate greatness, but to save the image damaged by that dizzying growth.
A year before, The New York Times published an article stating that the success of Alicia Shaffer, owner of the Three Bird Nest store, highlighted all the shortcomings of that online store. Namely, at that time, the New York Times was discussing the story of an entrepreneur who lost her job and decided to open a store on Etsy and sell clothes and fashion accessories made of knitwear.
Over time, the business of entrepreneur Shaffer grew so much that she began to earn an incredible $70,000 a month, which, clearly, attracted media eager for stories about realizing the American dream.
However, articles celebrating the entrepreneur’s success have sparked a lot of online criticism and accusations that she has no theoretical chance of knitting her own products, but rather mass-produces and imports them from China or similar markets.
One problem for Etsy was that over years it surged in popularity and grew into a machine of its own. So, many buyers and sellers who were initially attracted to the website for its hip, underground feel found themselves disappointed in the direction the company seemed to be heading.
Another problem was that in 2013, Etsy’s then-CEO Chad Dickerson lifted a previous ban that prohibited sellers from outsourcing production of their goods, and by 2015, there were already over 5,000 cases of Etsy sellers outsourcing manufacturing of goods.
Critics of this move argued that the new manufacturing rules would allow a rush of poorly-made, mass-produced jewelry, and other items to be sold on the site rather than carefully crafted, quality-made, artisan goods.
Unfortunately, discussions about where, in fact, products come from on Etsy are not something that the owners of this online platform would like to hear about. And this is mainly because it has built its strength on the claim that everything sold is made by hand and with soul, and that this is what distinguishes them from eBay or any online shopping giant.
Yet Etsy has gotten bigger, and not surprisingly it’s gotten more like eBay.
And although Etsy has denied allegations that they have become a mass trader of substandard, factory-produced goods, they needed to convince customers that they are the same, just a little bigger platform than they were when they were founded. By that “slightly bigger”, we mean huge.
So huge, that Etsy has gone from an idealistic niche craft-seller marketplace to a company that had 1.7 million active sellers and 28.6 million active buyers in 2016. In fact, so huge that Etsy managed to sell $1.93 billion worth of products the previous year and grew to $196 million.
But precisely because of this mass, buyers and traders who sell their handicrafts through the platform are rightly afraid that Etsy has moved far away from its initial values.
The three designers from Brooklyn’s initial goal, the platform’s founder, was to create a collection that would be the complete opposite of mass, soulless and non-organic production, focused on unique handicrafts, and connect talented manufacturers with an audience eager for original products.
From 2017. till now
In 2017, Josh Silverman was named Etsy’s new CEO and has kept that position to this day.
Silverman has two decades of leadership experience including growing consumer technology companies and scaling global marketplaces. He previously served as President of Consumer Products and Services at American Express, CEO at Skype, CEO of shopping.com, and he held various executive roles at eBay.
When named as CEO, Silverman announced:
“I have a deep appreciation for the mission of Etsy and the unique role that it plays in global e-commerce. Our focus will remain on delivering value to our community, including our shareholders. Having worked at other marketplaces, I recognize how difficult it is to create a differentiated value proposition for buyers that provides a unique opportunity for sellers—and Etsy has done that. In the coming weeks, I look forward to listening and learning from our employees, sellers, buyers, and shareholders to help ensure we are focusing on the most value-enhancing near- and long-term opportunities.”
In 2019, he announced Etsy’s plans to give priority placement in the United States search results to sellers who included the price of shipping within the total price of their product.
However, neither seller nor buyers quite liked the “free” shipping. Buyers didn’t care about free shipping as long as the quality and quantity of diverse unique, handmade items stay on Etsy, and on the other side, sellers didn’t like the idea of making them follow what big corporate giants can afford.
In 2020, Etsy had one more controversial direction when the company announced new updates to its advertising model. With the new updates, Etsy announced a new “Offsite Ads” model. Shortly, when a shopper clicks on one of the online ads for some products and makes a purchase from that shop within 30 days, the seller had to pay an advertising fee.
In addition to this problem, Etsy automatically enrolled each of its sellers into the Offsite Ads program, making it an “opt-out” service, rather than an optional “opt-in” service.
Unsurprisingly, sellers were livid at the thought of being forced to pay an advertising fee they did not agree to and were in fact were really disappointed with this decision from Etsy, so many of them went working on building their standalone e-commerce sites.
Etsy growth in 2020.
From the beginning of the COVID-19 Pandemic, Etsy has been one of the biggest beneficiaries of the pandemic-fueled surge in online shopping.
Like most other companies during the early stages of the pandemic, Etsy warned the virus was dramatically disrupting business trends. However, as things turned out, the demand for essentials on Etsy exploded.
Shopping-from-home shoppers turned to Etsy and other online retailers like Amazon and eBay for both essential and non-essential items.
As the virus caused dramatic changes to daily living, Etsy sellers moved quickly to help consumers deal with the rapidly evolving needs, which included the creation of face masks, at a time when they were hard to get. The masks alone accounted for hundreds of millions in Etsy sales. All of this resulted in dramatic growth across all of our buyer segments.
So, in 2020 Etsy recorded twice the growth as in 2019, in both new buyers and sellers. In fact, there were many weeks in 2020 where Etsy added more than 1 million new buyers per week. Moreover, about 22 million former buyers who hadn’t shopped at Etsy for more than a year, returned to the site.
In addition to that, by the end of 2020, Etsy had 81.9 million active buyers, up 77% from the year-ago period and the number of people selling goods on Etsy jumped 62% to 4.4 million.
Etsy’s key factor in attracting so many new sellers and compete with eBay, Amazon, Overstock.com, and Wayfair is that it helps sellers to produce and sell unique, one-of-a-kind products.
Another factor in Etsy’s exponential growth is the management reshuffling, the development of new products, and its advertising platform. The company made meaningful strides in search and discovery by making the homepage more personalized and dynamic. It also made progress improving its mobile app and transferred computing operations to the cloud.
Also, Etsy nowadays does have associated costs, though it’s worth noting that the listing and transaction fees are lower than other platforms, like Amazon and eBay.
So, it’s clear that Etsy is growing. It’s also growing even faster than predicted. Online shopping has increased over the past twelve months with the COVID-19 pandemic, and Etsy is seeing those results. Also, most experts are predicting that the boost in online sales will stick around, too, which is promising for Etsy’s continued growth—and sellers.
Technology behind Etsy
An e-commerce platform of Etsy’s proportions could not possibly operate without an excellent tech stack behind it. However, as Etsy’s CTO at the time – Kellan Elliott-McCrea admited in an interview with TechCrunch
“One thing that’s inevitable is change. We haven’t figured out every solution and probably will never do.
Sometimes the things we think are true will be wrong the next day, and vice versa.”
In other words, one of Etsy’s biggest challenges is to stay on top of its technological requirements, and always keep up with change, for the sake of their millions of users and for the sake of the company.
It’s no wonder that a large portion of Etsy’s staff consists of developers. Not only that the developers need to maintain the website, but they are also in charge of updating and upgrading it constantly.
Simply put, e-commerce platforms face the highest up-time expectations from users and the harshest criticism. But at the same time, their users also keep demanding better and more sophisticated features to help them and make their lives easier. And the developers are the ones who find a way to comply.
Moreover, Etsy’s website is both user-friendly, as well as highly customizable, making it a fierce competitor for both players like Etsy – eBay, Amazon, etc. – as well as the idea of opening a personal shop.
Etsy has also used machine learning and AI technology to enable shoppers to better navigate the platform and sellers to differentiate their unique products.
In 2016, as a part of their investment into this ever-developing tech, Etsy acquired Blackbird Technologies, which focused heavily on Deep Learning and Artificial Intelligence.
“We plan to leverage their advanced technology to deliver even more relevant search results and a shopping experience that can be even more tailored to individual buyers”.
But Etsy also focuses on other emerging areas like speech recognition. For example, the Blackbird Technologies team developed NLP or natural language processing algorithms much like the ones Google and Amazon use, as well as image recognition, and analytics.
However, that is only the tip of the iceberg. Under the surface, Etsy uses a whole array of tools such as:
Content and Customer Relations Management
As most of Etsy’s backend is already built using PHP, it’s no wonder they also use WordPress as a content management system in some parts. For CRM, they integrated Zendesk, which also helps with data collection and data analysis.
Client-side Programming Language
Web Servers and Web Hosting
For their servers, Etsy relies on Apache, an open-source HTTP web server, Nginx, and a Cloudflare Server. As for their hosting providers, Etsy uses various Google cloud solutions, as well as WP Engine for the WordPress-managed sections of the platform.
Data Center Providers
Aside from hosting, Esty uses Google’s data centers to also host and maintain their data, but also several Amazon services. Both Google and Amazon have massive data centers, that are known as some of the most secure in the world, so it’s no surprise Etsy decided to go with them.
Reverse Proxy Services and Content Delivery Networks (CDN)
Reverse proxy servers are in charge of directing client requests to the correct server. In turn, a content delivery network or CDN is a distributed server network that works together based on geographical location to provide content better and faster.
For their proxy servers solutions, Etsy uses Fastly, Akamai, Cloudflare, and Amazon’s CloudFront. In turn, for CND solutions they rely on Google Hosted Libraries and CDNJS.
SSL Certificate Authorities
Another important part of everyday operations is security, or in this case, the SSL certificates Etsy uses, which are GlobalSign, DigiCert, and IdenTrust.
For Etsy’s product management, they use the services of Amazon CloudFront, Amazon S3, Apache Web Server, Appbot, Chef, Dyn DNS, Flowplayer, GeoTrust SSL, GitHub, jQuery, New Relic, and RequireJS. These services help store information, images, and every other data that goes with the product, as well as serve them based on searches and more.
For the non-technical everyday operations, Etsy uses:
- Marketing: Appboy, Gengo, Good Audience, Signal
- Analytics: Adjust, Concurrent, Looker, Google Analytics
- HR: Culture Amp, Jobvite, Workday, Working Not Working
- Finance: AnyPerk, PayPal, Workday, Worldpay
- Productivity: Google Apps for Work, Superfeedr, Vidyo
Fun facts about Etsy
How Etsy got its name
The guys wanted to have a unique brand name that was build from scratch.
In one interview for Reader’s Digest (via Rewind & Capture) in 2010, Robert Kalin explained how Etsy got its name:
“I was watching director Federico Fellini’s movie 8 ½ and writing down what I was hearing. In Italian, you say ‘etsi’ a lot. It means ‘oh, yes.’ And in Latin, it means ‘and if.'”
So the word Etsy is taken from three languages. In French and Latin, it is interpreted as “what if.” while in Italian, it’s a variation of eh si, which means “oh yes.”
But they also wanted a nonsense word so that potential customers would not have formed associations with the name and would strengthen the brand. And so, the name Etsy was born.
There are more than 4.1 million sellers on Etsy and more than 81 people using Etsy as a service platform and more than 60 million products available on Etsy. So we can say, it’s a handmade dream!
More than 86% of sellers on Etsy are female. Typically, Etsy visitors and buyers are females aged between 25 and 40 years and over half of them have a college degree and a mid-range household income.
There are 243 countries around the world that have sellers on Etsy. Etsy has sellers from 234 countries but the majority are based in the United States, which represented 62 percent of all Etsy sellers as of June 2020. The UK ranked second with 13 percent of sellers, followed by Canada and Australia – a truly global phenomenon.
Total revenue for Etsy in 2020 reached $1.725 billion, proving what a lucrative market the handmade industry has become!
Finally, 67% of Etsy shoppers prefer to browse and shop via mobile devices, with over 60% purchasing on the go.
What distinguishes Etsy from eBay and Amazon
Etsy has strict parameters on items being handmade or vintage, which sets it apart from platforms like eBay and Amazon. Still, the products available on Etsy vary widely. So much more than chunky scarves and kitschy signs!
With that many options, sellers can get their products and shop more visible, especially with keyword research on the platform and optimized listing. They can carve out a niche when adding new inventory, and, most importantly, they can use storytelling. A compelling brand story on your Etsy shop page can personalize the business, drawing in new and returning customers.
Target audience and sellers on Etsy
From the beginning of Etsy until now, buyers are exclusively young. But with an expansion of products, e-commerce shops, and a stronger presence across the US and internationally, Etsy attracts all kinds of buyers.
The key is to make a seamless customer experience with high-quality products, informative listings, and quick shipping to capture those repeat buyers for the buyer’s store.
Despite being founded by a group of men, the majority of Etsy’s seller community was made up of women. In fact, 86 percent of Etsy’s sellers were women, according to the 2015 report.
So, what sets Etsy’s small businesses apart from the others? Well, the people buying from Etsy have a lot in common with the individuals selling on Etsy. After all, women are twice as likely to buy handmade goods online than are men.
Furthermore, Etsy is also one of the few tech-based companies with gender parity. Half of Etsy’s workforce, board, and leadership team is made up of women. So Etsy is a company largely run by women, used mostly by female entrepreneurs, to sell to a mostly female consumer base.
Etsy a great place to work
Etsy’s community is mostly made up of sellers — people who handcraft goods and/or source unique, vintage finds — and buyers — people who purchase said handcrafted goods and unique, vintage finds. Etsy employs a team of people who work behind the scenes, making sure the website runs as smoothly as possible. And, being an Etsy employee seems very much like a dream job.
As we told at the beginning of this article, Etsy’s Brooklyn headquarters was firstly designed to “inspire creative thinking.” Etsy today also nurtures this way of working and the company’s headquarters boasts indoor and outdoor meeting spaces as well as workshops used for employee “crafternoon” sessions.
“The overwhelming majority of employees are not only proud to work for Etsy, but would also recommend us as a great place to work.” – said Raina Moskowitz, Etsy’s Senior Vice President of People, Strategy, and Services told once Forbes.
Product photography as work of art
Sellers on Etsy pay a lot of attention to product photos. A great product photo is a key to winning a sale, and Etsy says that poor product photography is one of the biggest mistakes that they need to avoid. In Etsy’s customer research, shoppers have told that product photos are critical to their purchase decision.
In fact, it’s their most important factor in deciding to buy, even more, important than the shipping cost, customer reviews, or even the price of the item itself.
So, whether sellers want to catch buyer’s attention on Etsy they need to take compelling photos of their products which is critical to success. And a bad photo could prevent sellers from making a sale, no matter how amazing the product is.
Etsy has become one of the kind online website platforms for people who are looking to find one-of-a-kind gifts and items. Etsy offers almost everything you can imagine buying. Think about anything you want to buy and chances are that you can definitely buy it on Etsy — no matter how odd. From handmade to vintage products, sellers believe it worth expanding and start selling on Etsy.
Etsy is a huge commerce platform, with an especially strong US presence. Nowadays, most sellers are multi-channel retailers, and they are selling their products on marketplaces like Amazon and Shopify sites—which suggests that the platform isn’t just for amateur makers. It’s for e-commerce businesses.
Etsy has strict parameters on items being handmade or vintage, which sets it apart from platforms like eBay and Amazon. Still, the products available on Etsy vary widely.
Etsy is nowadays growing faster than predicted. Online shopping has increased over the past twelve months with the COVID-19 pandemic, and Etsy is seeing those results.
Most experts are predicting that the boost in online sales and buying will be increasing the most, which is promising for Etsy’s continued growth—and sellers.
With this growing platform of millions of loyal Etsy buyers and increasingly more sophisticated sellers, the sky’s the limit.