Online shoppers once relished talking about the kitschy oddities sold on Etsy: Uno card earrings, a coffee pot lamp, hemp baby clothes. Today, Etsy’s sleek homepage touts minimalist ceramics, trendy gold jewelry and celebrity partnerships (currently, you can find Nicole Richie beaming up at you in a caftan). Both the goods and the branding could easily be mistaken for Amazon, Wayfair, or Net-a-Porter.
Etsy’s makeover reflects how, over the last 16 years, the company has transformed from an online craft store to an e-commerce powerhouse with a $20 billion valuation and counting. In 2020, Etsy doubled their revenue thanks to the pandemic’s e-commerce, home redecoration and crafting booms, reaching their 2023 sales goal of $10.3 billion, a 106.7% jump from 2019. Etsy’s daily pageviews per million, and share price each remain double their pre-pandemic numbers.
Recently, Etsy showed it has bigger plans still. On June 2, the company announced its acquisition of Depop for $1.625 million, giving it access to and influence over two highly coveted markets: Gen-Z and resale. It also comes shortly after it bought used instrument website Reverb, indicating plans to build out an empire of niche e-commerce brands under one roof. Investors seem to like that idea. But Etsy’s growing pains — such as finding the right leaders to steer grow company and convincing its knitting citizens to get on board with its super-scaled vision — have been substantial.
Hand-coded in Brooklyn
Robert Kalin was a 24-year-old NYU classics graduate, working part-time construction and moonlighting at The Strand when he founded Etsy out of his Brooklyn apartment. Looking for a way to sell his handmade furniture on the side, he got the idea for an online craft marketplace after meeting Jean Railla, the founder of GetCrafty.com, one of the first crafting blogs. While helping redesign her website, Kalin identified the burgeoning internet subculture of crafters. He tapped a couple of friends, future co-founders Chris Maguire and Haim Schoppik to build a website and some cash from local investors (AKA real estate developers he’d done carpentry for) to fund it. Two months later, Etsy went live in summer, 2005.
The timing was perfect. People were getting accustomed to shopping online on Ebay and Amazon. Etsy became a quirky, idealistic younger sister. Simultaneous with the online crafting world, ideas about artisanal culture and ethical consumption plus millennials obsession with old-timey, twee aesthetics were blowing up. Etsy helped solidify and profited off of these trends, within three years, achieving 200,000 sellers, a million buyers and exponential sales growth, with venture capital money pouring from the likes of Union Square Ventures and Accel’s Jim Breyer. Just like during the pandemic, Etsy flourished amist the 2008 recession, which, as New York Times reports, fueled the need for side-hustles and, for those who could afford it, an appetite for ethical shopping. In November of 2008, Etsy sold $10.8 million worth of crafts, up from $4.2 million the prior year. The company was profitable by 2009.
A shopping website with anti-capitalist roots?
Etsy’s founders imagined it as a political project that would serve artists, and promote human-centric, sustainable commerce. “The industrial revolution and consolidation of corporations are making it hard for independent artisans to distribute their goods,” Kalin said in an interview shortly after Etsy’s launch. “We want to change this.”
Almost instantly, however, Kalin’s vision began to feel irreconcilable with the reality that he was the CEO of a growing company run off increasing chunks of VC funding. In 2008, Kalin compared Etsy to the plot of the children’s book Swimmy. “We do not want Etsy itself to be a big tuna fish," he proclaimed. "Those tuna are the big companies that all us small businesses are teaming up against." He’d been a novelty in the business world, with his homemade underwear and idealism. Eventually, he came to be seen as incompetent, not eccentric, telling told Inc. in an infamous 2011 profile (“Holy Moly Did Inc. Just Publish a Brutal Profile of Etsy CEO Rob Kalin,” gawked Business Insider), that he thinks maximizing shareholder is “ridiculous.”
Pressure built as funding grew for Etsy to embrace a growth and profit-driven strategy. Kalin stepped down as CEO in 2008 to work on a small business incubator called Parachute, handing his job over to former NPR executive Maria Thomas. He returned to the job in 2011, but he was fired by his own board that year and replaced by the CTO, Chad Dickerson.
Sellers versus shareholders
For years, Etsy couldn’t figure out how to please investors or sellers. However, among the latter cohort, there’s never been big picture consensus about what Etsy is doing wrong. Some have resisted each step that Etsy has taken away from its homespun origins. Others have been hungry to grow alongside it. For instance, in 2013, Dickerson attempted to address seller frustrations that, because of Etsy’s policy that all goods had to be verifiably handmade, anyone who got too popular hit a bottleneck — you can only knit so many sweaters in a week. He changed Etsy’s policy, allowing artists to contract with manufacturers so long as designs were original. Those who wanted to scale up were happy, while others grumbled that manufactured goods were undercutting handmade ones, and a sign of Etsy’s moral decay. “Does Etsy’s new definition mean a brave new world, or the death of handmade?” wrote seller Abby Glassenberg on her blog.
Rounds of conflict between Etsy and its sellers continued throughout the 2010s. The next major one came in 2015 when Etsy moved to IPO, partially driven by pressure from Handmade at Amazon, which launched that year. By this time, Etsy had 1.4 million sellers and nearly 20 million customers, hitting the market with a value of $1.8 billion. Though Etsy earmarked small shares for community investors, the cries of “sell-out” hit a fever pitch. In critics eyes, Etsy had been founded to help artists. Now, the company would answer first to shareholders, for whom sellers would generate profit.
Dissatisfaction with Etsy’s increasingly corporate policies didn’t go far beyond Etsy’s most invested users. The company’s online popularity largely hasn’t wavered. Since 2015, Etsy has added 2.4 million Facebook likes, an increase 114%. Meanwhile, on Instagram — the 2010-launched platform has become central in the online crafting world — Etsy’s following has more than doubled, growing 275% since 2016.
Sellers or buyers who dislike Etsy’s turn towards the corporate might be spending time on Twitter, however. Etsy’s Twitter following has been shrinking since 2018, with 230,000 or 11% fewer fans on Twitter than they did in 2015.
For the first 12 years, Kalin and his successors attempted to have it both ways: rapid growth while clinging to a community-oriented vision. The waffling ended when Josh Silverman, an alum of Ebay and Skype, took over as CEO in 2017 after shareholders complained that Etsy still wasn’t sufficiently focused on growth.
Silveman’s strategy was to return Etsy’s focus to its “core marketplace.” He swiftly ended all programs he didn’t see as sales-driving and laid off quarter of the company, 230 people. His biggest reform was his most controversial. In 2019, Etsy announced that sellers would be encouraged to offer free shipping on orders over $35 (i.e. include shipping in the price) and that sellers who didn’t would be de-prioritized by the site’s algorithm, which is crucial for attracting buyers amidst 4.7 million shops and 90 million items. The policy was justified by the fact that customers often abandon a purchase after seeing the shipping fee. Uproar was immediate. Announced in June, Etsy’s Facebook chatter spiked nearly 4000%, as sellers balked at being asked to raise their prices or cover shipping themselves.
“Etsy is now fully participating in the current structure, ready and willing to compete on the same terms as retail behemoth Amazon,” vocal seller Glassenberg put it on on her blog. Indeed, Etsy’s mission statement has also since been trimmed down to “Keep commerce human.” Gone is the pledge “to reimagine commerce in ways that build a more fulfilling and lasting world.”
Building a handmade empire
Etsy 2.0’s gloss and recent, conventional MBA-style management has hurt their reputation among fans of its original homespun ethos. Ultimately, it hasn’t hurt their bottom line. As Etsy comes off its biggest year in history, its strategy for maintaining momentum is hard to argue with. Used clothing is the fastest-growing apparel category, poised to more than double from $28 billion in 2019 to $64 billion in 2024, and overtake the fast fashion segment, according to a report from thredUP. Within the space, Depop has achieved a cult status that rivals haven’t. For example, Depop’s users are much more effusive on the App store than their competitors. Currently, Depop’s 370,000 reviews dwarf Poshmark’s 257,000, the closest of any rivals. The RealReal, Vestiaire Collective and Curtsy all have less than 30,000. Reviews for Curtsy, a concept delivery thrifting app, notably, have grown fast.
The resale boom feels like a modern descendent the handmade craze, driven by an appetite for sustainability, uniqueness and community-based consumption. It remains to be seen if Depop’s teen customers will embrace Etsy, or how the platforms will integrate. But the deal is the epigraph for Etsy’s next chapter, which if Silverman has is way, will be an online, multi-platform empire of vintage, handmade and secondhand goods.
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