Etsy, Inc. is an e-commerce corporation based in the United States that sells handmade or vintage items and creative materials. These items can be classified into a variety of categories, including:
- Bags
- Jewelry
- Clothing
- Furniture and home décor
- Art
- Craft supplies and tools
Items must be at a minimum of 20 years old to be considered vintage. For a cost of US$0.20 per item, the site follows the tradition of open craft fairs, providing merchants with their own storefronts where they can list their products.
Etsy had more than 60 million products in its marketplace as of December 31, 2018, and the online marketplace for vintage and handmade goods had linked 2.1 million sellers with 39.4 million consumers.
Etsy’s Marketplace revenue comes from a fee of 5% of the final sale value, which an Etsy seller pays for each finalized transaction, on top of a listing fee of 20 cents per item. Seller Services, Etsy’s fastest-growing revenue stream, includes fees for services like “Promoted Listings” and the purchase of shipping labs. Fees from third-party payment processors are among the Other sources of revenue.
Etsy’s Marketing Strategy: Social Media Influencers
Earlier this year, Etsy CEO Josh Silverman told CNBC that the company intends to delve into the network of social media influencers to draw new customers to its e-commerce platform.
CEO Josh Silverman told Jim Cramer of Mad Money:
“So many influencers who love Etsy, who are passionate about Etsy and talk about Etsy to their community already, we’ve created a tool where those influencers can curate their own collection of their favorites on Etsy and then broadcast that out to their community and say, ‘Here’s what I love on Etsy.'”
Etsy’s two-sided marketplace, according to Silverman, fosters confidence between consumers and sellers, which will be critical in differentiating them from other e-commerce companies and propelling long-term growth.
Etsy Completely Offsets Shipping-Related Carbon Emissions
Etsy has long been concerned about its environmental impact. They committed in 2016 to run their activities entirely on renewable energy by 2020. They were on schedule to accomplish that objective because of their ground-breaking Power Purchase Agreement, which enabled the creation of a new solar farm, migration to the Google Cloud Platform, and the installation of solar panels at their headquarters.
In 2018, the company met its objective of operating zero-waste operations internationally, two years ahead of plan.
Items sent from Etsy’s merchants to their buyers account for 98% of its total emissions. Even though they do not actively supervise the shipping process, they reduced the environmental impact. As a result, Etsy became the first global eCommerce company to offset 100% of shipping-related carbon emissions in 2019.
When someone purchases something on Etsy, the company will buy verifiable carbon reductions, sometimes known as “offsets,” through its partner 3Degrees. These purchases help fund environmental projects such as preserving trees that enhance air quality and absorb carbon, supporting wind and solar farms that produce clean energy, replacing fossil fuels, and creating greener auto parts manufacturing methods.
Ecological Impact Goals 2021
Etsy announced its new target to achieve net-zero emissions by 2030 earlier this year, reaffirming its commitment to a sustainable future.
Their reduction goals will be based on the Science Based Targets Initiative methodology. They will include a 50% reduction in Scope 1 and 2 greenhouse gas emissions and a 13.5% decrease in Scope 3 emissions.
Etsy set out to ensure they are decreasing both their direct and indirect carbon footprint. This is why they’re tackling not only their Scope 1 and 2 emissions, such as office operations and purchased energy, but also their Scope 3 emissions, such as shipping and packaging.
- By procuring 100% renewable electricity, lowering the intensity of their energy use, and conducting zero-waste operations, they can achieve best-in-class sustainable operations.
- They are developing their markets into destinations for environmentally concerned customers and conscientious living.
Economic Impact Goals 2021
The following are some of Etsy’s economic impact goals and targets for 2021:
- Create and develop opportunities for creative entrepreneurs to make money: Set a new target for giving their sellers economic empowerment and define a baseline for doing so.
- Encourage their stakeholders’ economic and personal empowerment: Invest in social programs that encourage creative entrepreneurs to start businesses and provide musical instruction to underserved students.
- Support public policies that advance the company’s economic empowerment, fairness, and environmental sustainability goals: Advance public policies that help creative enterprises gain economic stability and eliminate administrative hassles.
Social Impact Goals 2021
A long-established commitment to equity, diversity, and inclusion is at the heart of Etsy’s business. They believe that embracing and encouraging different points of view makes them a stronger and more resilient company.
- Create an inclusive and diverse workforce that reflects the diversity of their communities.
- To support their operations and deliver value to Etsy and its merchants, they need to build a diverse, inclusive, and sustainable supply chain.
- Make their marketplaces inviting, varied, and inclusive places to buy and sell.
Etsy CEO, Josh Silverman
Etsy’s CEO, Josh Silverman, is heading Etsy as it develops a platform that supports creative entrepreneurs all over the world. He is also a member of the Etsy board of directors.
Silverman has spent the last two decades building consumer technology companies and establishing global markets. He formerly worked for American Express as President of Consumer Products and Services, Skype as CEO, and shopping.com as CEO and other management positions at eBay. Silverman co-founded Evite, Inc. earlier in his career and is presently a member of the Shake Shack board of directors.
Silverman is deeply committed to civic and community participation. He is presently Chairman of Code Nation, a non-profit that provides essential coding skills and professional experiences to children in under-resourced schools.
Etsy (NASDAQ: ETSY) Latest Stock and Dividend News
Etsy (ETSY) stock is trading at $202.28 as of August 25, 2021, and does not pay dividends to its shareholders.
In April 2015, Etsy raised $267 million in its initial public offering (IPO), priced at 16 cents per share. On its first day of trade, Etsy stock jumped 72%. But it was all downhill from there, with Etsy stock dropping to an all-time low of 6.04 in the following nine months.
However, after a reorganization of management and introducing new items, Etsy stock began to rise again. Etsy had redesigned its ad platform. By making the site more personalized and dynamic, it made significant progress in search and discovery. It also improved its mobile app and moved some of its computer functions to the cloud.
Second Quarter Earnings Results – 2021
Etsy recently released its second-quarter 2021 results. Here are the highlights from the report:
- The combined GMS was $3.0 billion, up 13.1% year over year (YoY), while the Etsy marketplace GMS was $2.8 billion, up 14.2% YoY.
- On a year-over-year basis, GMS per active buyer on the Etsy marketplace increased by 22%.
- Consolidated revenue was $528.9 million, up 23.4% from quarter 2 of 2020, with a 17.4% take rate (i.e., total revenue divided by total GMS).
- With diluted earnings per share of $0.68, net income was $98.3 million, up 1.9% YoY.
- Non-GAAP Adjusted EBITDA was $139.5 million, with a Non-GAAP Adjusted EBITDA margin of 26%, down 900 basis points from quarter 2 of 2020, as the company invested in the business.
Operating Highlights Q2 2021
- Etsy made progress in the discovering experience by redesigning their home and landing pages using personalization, machine learning, and recommendations in a way that made the material more engaging and enticing to customers.
- Etsy designed a new seller program that measures success by recognizing and rewarding their top-rated sellers, establishing standards, and providing them with the motivation, support, and agency they need to grow their Etsy businesses. On July 28, 2021, their seller community formally got introduced to the “Star Seller” program.
- With enhanced algorithms and new machine learning-based models, they increased their ranking skills for Etsy Ads to increase seller returns, deliver more relevant inventory for buyers, and raise click-through rates and income for Etsy.
Financial Forecast
Etsy forecasts revenue to increase only 11% to 16% year over year in the third quarter, opposed to a consensus expectation of 17% growth.
According to their management, the company’s GMS is expected to expand roughly 12.5% YoY in the third quarter, while Etsy’s stand-alone operation will only achieve “mid-single digit” GMS growth. However, it forecasts Etsy’s stand-alone GMS to rise by the “mid-teens” if face mask sales are excluded from both periods.
According to analysts, Etsy’s sales are expected to jump 33% this year, then 20% next year as the company’s business returns to normal in the post-pandemic market. They anticipate a 16% increase in earnings this year and a 22% increase next year.