HomeWorld NewsUS NewsEtsy shares his hit record as to gets tough with artisans

Etsy shares his hit record as to gets tough with artisans

Analysts say that Etsy’s nascent recovery offers hope to all retailers looking to survive in a landscape dominated by Amazon and a few other big players. “You’re going to have those mega players that have the money to do everything. The next tier will be specialised companies that do one or two things really well,” said Mr Raghuraman, pointing to Etsy or Warby Parker, the hip glasses retailer. “Walmart is never going to want to be an expert in wool shoes.”

Under Mr Silverman, Etsy retains at least some of its original ethos. The company has also slashed “general and administrative expenses” back to 16 per cent of revenue, from 23 per cent last year.

” A lot of us did think they were going to die,” said Anand Raghuraman, a retail consultant. “It’s been impressive and shows there is hope for the non-Amazon players. There is a space for an Etsy.”

Etsy has pledged to increase its marketing budget by 40 per cent this year and last month it revealed a deal with DaWanda, the German online marketplace, to expand in Europe. DaWanda, often described as Germany’s Etsy, is shutting down in August and has agreed to refer its 70,000 sellers to Etsy’s platform.

Etsy now charges 5 per cent commission for sales made through its platform, up from 3.5 per cent– a move that angered some merchants. Total expenses for sellers, including listing fees, now hover around 10 per cent– still well below the 15 per cent charged by Amazon and Ebay. Since Etsy will keep a bigger share of sales, the company expects its own revenues to grow between 22 and 24 per cent this year, up from previous forecasts of 21 to 23 per cent.

Etsy’s problems boiled over last May when TPG and Dragoneer revealed they had bought stakes and called for a discussion of “strategic alternatives”. Mr Dickerson was ousted, along with 80 employees.

The 13-year-old company only began running sitewide sales last summer, and it was only last month that it increased the cut it takes from merchants, to bring it closer to commissions taken by other platforms.

Etsy has increased gross merchandise sales, or GMS, the dollar value of goods sold on its platform, at an accelerating pace for three straight quarters. Sellers made a record $1bn in GMS in the fourth quarter last year, covering the holiday shopping season– a milestone that Linda Findley Kozlowski, chief operating officer, called “a moment of reflection”.

After months of drama– activist pressure, lay-offs and a change in chief executive– Etsy appears to have turned itself around. The results suggest that Etsy’s biggest problem was not the threat from a Seattle ecommerce giant but rather its own mismanagement.

Shares have tripled since May last year when the board brought in Josh Silverman as chief executive. Mr Silverman, who has a history of corporate turnrounds from stints at Skype, Ebay and American Express, set out with a basic goal: lure more people to Etsy.com and make it easier for them to find things to buy.

” Chad was a technical person, he was not a capitalist business CEO,” said Rohit Kulkarni, analyst at SharesPost. “It’s a classic management problem. They had lightning in a bottle and attracted a lot of people. Beyond that initial success, it takes work to attract the next 1,000 sellers.”

Mr Silverman, 49, marks a clear departure from Etsy’s previous leadership. Chad Dickerson, his predecessor, came from a technology background and built the company from an idealistic start-up into a billion-dollar public offering in 2015.

Analysts say Mr Silverman also prioritised keeping consumers happy– hence the discounts– over pandering to the artisans peddling their trinkets on the site.

A year ago, observers had all but written off the eccentric crafts marketplace as another victim of Amazon.

Life as a public company proved tough for Etsy. Sales growth on the site decelerated, angering Wall Street, while the company continued to spend heavily.

Cutting back on a swath of peripheral projects, he reallocated engineers towards improving the website and using artificial intelligence to fix the search function, which Black and White Capital, a shareholder, had slammed as “horrendous”.

A few weeks ago, visitors to Etsy were being offered discounts on everything from handmade moonstone rings, reclaimed wood chopping boards to vegan tote bags across its website. Markdowns are par for the course in the retail industry, but for Etsy, the basics of retailing have not come easy.


” What Josh brought was focus,” she said. “He brought the whole company behind a single direction and said: here’s what we’re going to work on.”

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