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Note: The term ‘Etsy’ is a trademark of Etsy, Inc. This article is not endorsed by Etsy.
Now that vaccinations are becoming more accessible, consumers are quickly turning their attention back to in-person shopping. The stock market shows—some of the biggest beneficiaries of last year’s stay-at-home behavior are losing steam, so the question arises—is selling on online marketplaces still worth it?
Etsy’s Q2 financial report suggests that online marketplace popularity is still high, showing a strong year-over-year (YoY) growth, with gross merchandise sales (GMS) and revenue up approximately 13% and 23% respectively.
In this post, we’ll take a deep dive into Etsy’s Q2 financial results to provide you with guidance on growing your online store on this marketplace and to better understand what the future holds.
Etsy’s rapid growth rate is straightening after its face mask-fueled sales boom in 2020. According to Forrester, consumers will continue to rely on in-store shopping options for ease, speed, and community. Around 40% of US consumers no longer go out of their way to avoid in-store shopping, nor will they refrain from post-pandemic in-store shopping.
That said, Etsy’s Q2 2021 financial results topped the analyst expectations.
Etsy’s consolidated GMS increased by 13.1% to $3 billion, while its marketplace GMS was $2.8 billion, up 14.2% YoY.
Regarding Etsy’s revenue, it mainly comes from its marketplace, which includes the fees sellers pay for listing products on the platform, transaction fees between buyers and sellers, and the fees sellers pay for using Etsy Payments. Etsy also generates revenue from services they provide to sellers, e.g., promoted listings, Etsy shipping labels, and Pattern by Etsy.
Etsy ended its Q2 2021 with total revenue of $528.9 million, up 23.4% in comparison to Q2 2020. More specifically, Etsy’s marketplace revenue was $395.4 million, and services revenue was $133.4 million.
By the end of June 2021, Etsy had over 5 million active sellers. These sellers are based all over the world with the majority located in the US.
According to Etsy’s 2020 Global Seller Census, 83% of sellers are one-person businesses, and 97% run their stores from their homes.
Etsy also shared that in 2020, about 40% of its sellers doubled their orders in the marketplace. New sellers in 2020 received over 2x more orders on average in the first 30 days after opening a shop than those in 2019.
Etsy is an attractive marketplace for many people to make money and build an online business. However, as more sellers join this marketplace, the competition gets tougher. To become a successful Etsy seller, you need to take a strategic approach and learn who shops on Etsy.
Etsy defines an active buyer as a user who’s made at least one purchase in the past 12 months. By the end of Q2 2021, Etsy had 89.6 million active buyers, compared to about 60.3 million in Q2 2020. Rachel Glaser, Etsy Chief Financial Officer, shared in a report that “GMS per active buyer on a trailing twelve-month basis was up 22% as compared to the second quarter of 2020.”
Etsy relies on widely-adopted third-party platforms, such as popular mobile, social, search, and advertising platforms to reach their customers. In Q2, Etsy acquired about 3.9 million reactivated buyers who didn’t purchase in a year or more and approximately 8 million new buyers. Habitual buyers, those who have spent $200 or more and made purchases on 6 or more days in the previous 12 months, grew by 150% YoY, reaching 7.9 million. Habitual buyers are Etsy’s fastest-growing buyer segment.
Regarding new buyers, Etsy also shared that the growth rate of this segment may continue to decrease in 2021. The reasons include retail businesses reopening, increased consumer spending on travel and other discretionary items, and continued contraction of mask sales after the pandemic, as specified in Etsy’s quarterly report.
That said, Etsy commits to investing in marketing efforts to “bring more new buyers to the marketplace and create more habitual buyers by inspiring more frequent purchases across multiple categories and purchase occasions.”
According to ThredUp’s 2021 Resale Fashion Market and Trend Report, the US second-hand market is projected to double in the next 5 years to $77 billion. Resale, the sector of second-hand that includes curated apparel assortments, is expected to grow 11 times faster than the broader retail clothing sector by 2025.
Additionally, more consumers are shopping on niche marketplaces like Etsy. Bizrate Insights and Digital Commerce 360’s 2021 survey found that 42% of US online shoppers purchased from a specialty marketplace that focused on a unique category in the past year.
In an interview with Mad Money, Etsy CEO Josh Silverman also emphasized that “this is a moment when Etsy is really top of mind for millions of consumers and it’s the perfect time for Etsy to be leaning in and really investing in marketing.”
All things considered, now’s a great time to start selling on Etsy. Here are some things to keep in mind before setting up your store.
An easy way to start selling on Etsy is to partner with a print-on-demand dropshipping company like Printful, which allows you to integrate directly and seamlessly with Etsy and choose from hundreds of customizable products to add to your store. You won’t have to carry the inventory yourself because Printful will handle fulfillment and shipping, giving you more time brainstorming, designing, and promoting products.
You can set up a store on Etsy for free, but you’ll need to cover other fees. Check out this official guide from Etsy to learn more about its pricing policy.
Printful also offers product personalization services, meaning your customers can personalize products right from product listings on your Etsy store.
Watch the video below to learn how to get started with Etsy and Printful in detail.
Analysts suggest that the role of ecommerce shows no signs of decreasing, though some moderation in the rate of growth is expected, given that the pandemic accelerated consumers’ shift to online shopping.
Josh Silverman, Etsy, Inc. CEO is optimistic: “We’re demonstrating just how many purchase occasions Etsy sellers can meet in truly delightful ways, attracting millions of new buyers and engaging our customers more than ever before. We’re seeing measurable results from deepened investments in our ‘Right to Win’ strategy, which provides a clear roadmap for product and marketing investments to make it easier to shop on Etsy, build top of mind awareness, and solidify buyer trust.”
Where are you on your Etsy journey? Are you already selling on Etsy or just eyeing this marketplace? Let us know in the comments below!
Madara is a content marketer for the Printful Blog. Her background in linguistics and belief in the power of SEO come in handy when she’s creating content that inspires ecommerce store owners and helps them grow their business.
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