Etsy Growth Strategy – How They Launched and Grew Fast
In 2005, the popular online marketplace Etsy launched in Brooklyn. What was the Etsy growth strategy that allowed them to gain almost 30 million buyers so fast
Through the service, small sellers offer handmade goods and vintage items that are at least 20 years old.
Though the design of the site is slick and appealing, the tone is “crafty” with the feel of an upscale flea market or art fair that works brilliantly.
“In August 2013, the company reported a user base of 30 million, with 1 million sellers, and more than $1 billion in recorded transactions”.
The Etsy CEO, Chad Dickerson, insisted that the company focus on both product and corporate culture. His goal was to create a more authentic and personalized e-commerce experience.
As major competitor EBay moved farther away from support for small sellers, Etsy stepped in to fill the void. The market for handmade goods might be relatively limited, but it is also a thriving and popular one.
The corporate culture at Etsy evolved with the small seller in mind, providing favorable economics to the artisans it hoped to attract as users. On Etsy, sellers are charged 3.5% per sale, plus listing fees. On eBay, they pay 9% plus listing fees.
Also, Etsy uses a fixed price model rather than auctions, which gives artists a better chance of actually recouping the worth of their product. An ongoing frustration for eBay sellers who work with auctions are items that sell for low dollar amounts with free shipping offers. In these situations, the seller often loses money on the product.
In 2011, Etsy sellers moved $525 million in goods sold. By 2012, however, the marketplace grew 71% for $895.1 million in transactions. At the same time, more than 10 million new members signed on, boosting total membership to 22 million.
Etsy wisely offered more than just lower fees to sellers, who were also given access to educational materials to become savvy in creating good SEO for their shops and for promoting themselves on social media.
In 2012, Etsy launched a mobile app for both Android and the Apple iOS, which boosted the site’s market reach and increased user engagement and impulse buys.
The seller culture is highly personal. Each user has an inbox and sales include personal conversations that might be a simple thank you, or questions regarding customization of an order, like ring sizing or similar details.
The growth hacking “walk-aways” from Etsy are incredibly simple, but also incredibly effective.
- The company has excellent leadership that looked to culture and product over quarterly profits.
- The leadership identified and catered to an important cultural zeitgeist. Buyers wanted authentic commerce purchases in a true marketplace atmosphere.
While smaller than eBay or Amazon, Etsy focused on meeting the needs of its target audience. Consequently, eBay sees only about 18 percent annual growth and Amazon tallies about 34%.
Upstart Etsy with its crafty feel and marketplace culture has an annual growth rate of around 70% in an arguably small, but certainly booming niche.