Etsy (business)

In business and e-commerce, Etsy is an online marketplace where artisans, crafters, and designers can sell handmade and vintage goods. Independent sellers can open their own stores on Etsy's website, Etsy.com, and sell their products directly to consumers.

The Brooklyn-based company was founded in 2005. Within a decade, the fast-growing start-up transformed into an internet giant, becoming a publicly traded company. Etsy recorded $2.84 billion in gross merchandise sales in 2016 and $13.16 billion in 2023.

During the Great Recession in the late 2000s, consumers turned to Etsy to purchase more affordable homemade gifts. Those who lost their jobs also flocked to Etsy to make money from their hobbies and artistic talents. Full-time workers have supplemented their incomes by selling their handcrafted goods on the website, while others have turned their side businesses into their primary jobs.

As the company has grown, Etsy has come under fire for its claims of homespun authenticity. Sellers have also been criticized for changing production methods to meet demand.

Background

Etsy has been described as the eBay of the craft world. Artists make and sell handcrafted jewelry, clothing, purses, pottery, candles, soaps, and more on the website. They can sell craft supplies, such as tools for doll making and woodworking. The marketplace also provides a venue for secondhand heirlooms, such as collectibles and antiques.

Unlike the online auction site eBay, Etsy does not utilize a bidding process. Etsy's online community allows consumers to buy items directly from the artists themselves. According to its website, Etsy's mission is to "reimagine commerce in ways that build a more fulfilling and lasting world."

The company is the brainchild of Brooklyn entrepreneur Robert Kalin. During the early 2000s, independent craft shows, such as the Maker Faire and the Renegade Craft Fair, were becoming popular. In 2005, Kalin wanted to create a website where artisans could sell their goods on the Internet and make a living from it. The company sought to develop a community-oriented platform that brought together buyers and sellers.

Etsy benefitted from the do-it-yourself movement, appealing to crafters seeking online exposure for their wares. In May of 2006, the company reported $170,000 in sales. Just a year later, its monthly sales jumped to $1.7 million. In 2014, the company boasted an online community of 54 million registered members and $1.94 billion in gross merchandise sales, which excludes shipping costs and returns.

In September 2017, Etsy offered 45 million items for sale in its marketplace, with 1.8 million active sellers and 30.6 million active buyers. The company employed 877 employees in July 2017. In 2024, Etsy offered approximately 100 million items, with 9 million active sellers and 91.6 million buyers.

The successful start-up has diversified its offerings over time. The company launched a wholesale business, Etsy Wholesale, in 2014. Through the venture, the company formed partnerships with big-box retailers, including luxury department store chain Nordstrom.

In 2015, Etsy made the leap from a private to public company. At the time, the company, was valued at $1.8 billion and started trading at $16 a share in its initial public offering on the NASDAQ stock exchange. In November 2024, the company was valued at just over $6 billion and one share cost around $55 on the NASDAQ stock exchange.

Overview

Etsy's success stemmed from a simple business model that attracted sellers to its marketplace, placing an emphasis on authenticity. Then, the Great Recession further fueled Etsy's growth. But the website's high-volume sellers have come under scrutiny for their production methods.

To sell their products on Etsy, crafty entrepreneurs—nicknamed Etsians—create a profile and list their items on the website. Sellers pay 20 cents to list each item, and Etsy collects 3.5 percent of each sale. Each product listing includes a description and photographs, which sellers upload to the site.

Buyers can search the website's inventory by categories, including clothing and accessories, weddings, and home and living. Consumers can submit feedback by leaving reviews of the seller and the product.

The recession from 2007 to 2009 affected consumers' attitudes. Many Americans were hit hard by the economic downturn, and they searched for ways to cut costs. Instead of pricey, mass-produced gifts from retail chains, consumers began looking for unique, handcrafted items that were less expensive. Many consumers found what they were looking for among the diverse selection of vendors on Etsy.

The recession not only drove consumers to Etsy but also sellers. During the downturn, many Americans lost their jobs. Those with hobbies such as jewelry making or embroidery found a moneymaking venue for their creative talents on Etsy. By opening an Etsy store, unemployed individuals could offset their lost income while they searched for new jobs.

Individuals with full-time jobs have also turned to Etsy. By turning their hobbies into a side business, they can earn extra cash and make ends meet.

Some entrepreneurs found so much success on Etsy that they left their full-time jobs to focus solely on their craft business. The company profiled these merchants in a blog on the website, "Quit Your Day Job." Other sellers have criticized the company for exaggerating how much money its top sellers rake in. In 2009, the company acknowledged most of its vendors use the website as an alternate, rather than primary, source of income.

As stores' orders poured in, sellers complained to Etsy how difficult it had become for one person to make enough items to keep up with demand. In 2013, Etsy changed its rules to allow merchants to hire employees or work with manufacturers to produce their goods. Critics argue the policy change goes against the company's insistence on authenticity, hurting its credibility.

Etsy's sellers have also faced allegations of mass-producing goods. Alicia Shaffer operates the clothing and accessories store Three Bird Nest on Etsy. In 2015, she was making $70,000 per month in sales, with the assistance of twenty-five seamstresses. Shaffer was accused of obtaining mass-manufactured products from China to sell on the website, which she denied at the time.

In February 2023, Citron Research accused Etsy of being one of the world's largest platforms for selling counterfeit goods and further alleged that Etsy allowed sellers to buy ad words for the brands they were counterfeiting and yet designated those sellers as trusted websites. Etsy responded to the allegations by stating that it explicitly prohibited counterfeits and other such illicit products and practices on its marketplaces, and that it had increased the number of staff tasked with enforcing these prohibitions. Despite these allegations, by 2024, 9 million active sellers and 91.6 million buyers were using Etsy online marketplaces, which included the main Etsy platform as well as Reverb for musical instruments, elo7 in Brazil, and Depop, a fashion resale marketplace.

An internet juggernaut, Etsy reigns as a niche marketplace for handmade goods where independent sellers can thrive. Despite controversy over its merchants' production methods, the company continues to grow its online community.

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