July 23, 2016

Handmade Business Industry Sees Robust Growth, Judging From Etsy Results


etsy article

Etsy announced strong 2015 results, a reflection of the overall robust interest in the handmade business industry today.

Etsy reported 21.3 percent growth in merchandise sales year over year for 2015 and 35.4 percent revenue growth.

“In the fourth quarter, our GMS [gross merchandise sales] was more than $741 million and our revenue was nearly $88 million. For the full year GMS reached nearly $2.4 billion and revenue was more than $273 million,” said Chad Dickerson, Etsy CEO.

Much of that was due to organic growth of the Etsy platform. In part it also was helped by marketing. Dickerson said in a previous earnings call last year “… prior to 2014, we hardly marketed at all.”  But 2015 saw more marketing activity from Etsy to boost sales.  For example, Etsy launched its first large holiday marketing campaign in 2015.

“For the first time ever, we ran a global holiday campaign that featured merchandised pages and gift guides across key categories and was coordinated across mobile apps, desktop and global Web. We ran a cost effective video ad on Facebook and YouTube and were featured on Ellen Degeneres Show’s 12 days of Christmas segment,” said Dickerson.

The company projects double digit growth each year for the next three years. “Specifically, we expect our three year revenue CAGR [compound annual growth rate] to be in the 20 to 25 percent range and our three year GMS CAGR to be in the 13 to 17 percent range,” added CFO Kristina Salen.

Buyers are loyal to Etsy, according to company officials.  For 2015, 81 percent of sales “came from repeat purchases made by new, retained, and reactivated buyers. This was up from 78 percent in 2014,” added Dickerson.

Grumbling by some unhappy handmade-business sellers doesn’t seem to have dampened sales. Buyers bought more than ever through Etsy during 2015.

Mobile is having a major impact on handmade business sales through Etsy. The company reported 61 percent of Etsy visits come from people on mobile devices. And it turns out 44 percent of the company’s gross merchandise sales are coming from these customers too.  The company plans to invest more in its mobile platform and products.

Etsy officials emphasized their commitment to supporting sales of the platform’s 1.6 million active, handmade business sellers. The company is working on tools to help sellers process sales through multiple channels such as on their own websites and at craft fairs.  “[B]ased on our surveys and research, we know that more than 50 percent of our sellers sell in channels other than Etsy even though Etsy is their largest source of income. Other channels include craft fairs, their own websites and retail outlets just to name a few. In the same way that these other channels provide new opportunities for them to sell their products, they also add to the administrative workload. We believe we can develop tools and services to help our sellers better manage these multiple sales channels,” said Dickerson.

However, Etsy’s growth plans over the next three years include a direction that some would argue takes Etsy further away from its handmade business roots.  The company launched Etsy Manufacturing, to help sellers find production partners.  Etsy Manufacturing connects sellers with manufacturers.  Etsy officials reported the company had received “around 700 applications” by manufacturers to join Etsy Manufacturing. About one fourth of those are from current Etsy sellers who today offer to help other sellers produce their products.

Some Etsy sellers have been vocal in criticizing Etsy for practices such as enabling sales of mass produced goods. Other sellers have welcomed help to manufacture their visions.

Etsy earlier this month also launched a physical Etsy store in New York City.

Image: Etsy executives Dickerson and Salen (remix by Small Business Trends)

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Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

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