“What’s striking is that Etsy’s growth has been organic from word of mouth,” notes Leonard Lodish, professor of marketing at Wharton. “Etsy delights its customers so they tell their friends, and they become enthusiastic proselytizers. That’s the secret.” Etsy’s success is due to the convergence of two big trends, one technological and the other cultural. On the technology side, experts say that Etsy has benefitted from a number of advancements that have fueled an online boom in entrepreneurship. Socially speaking, Etsy’s offerings fulfill deep desires on the part of shoppers seeking one-of-a-kind, handmade goods that speak to their own personal aesthetic.
Ubiquitous access to the Internet has made it easier for micro-manufacturing and person-to-person commerce to take place, according to Bryan Pearce, Americas director of Ernst & Young’s Entrepreneur Of The Year program. “The explosion in mobile and tablet computers means that we can shop and browse even when we’re just killing time,” he says.
The ability to capture high-quality images and pictures is another factor contributing to Etsy’s growth. Etsy merchants are able to design their virtual storefronts with sleek and stylized photographs and designs. “It’s easy to take a high-resolution picture with your tablet, mobile phone or digital camera. It looks professional, and it has leveled the playing field [for stores like Etsy] with catalogs and traditional retailers,” Pearce notes.
Pearce also cites the increase in simple online payment systems, which make it affordable to do transactions. The increased number of outlets that enable easy shipping and logistical assistance have also accelerated growth. “Even the post office has one size/one price options that make everything easier,” he says.
Another factor driving Etsy’s success is the economy, adds Pearce. While hardly any of the company’s merchants can claim their Etsy shops as a full-time job, the site offers tinkerers and hobbyists — some of whom may be stay-at-home parents or even those already employed full time — the opportunity to earn a little extra income. “They are converting a hobby into a source of cash flow,” he says. “These types of businesses do not require a lot of capital. It’s not like going out and building a semiconductor company. Today, there are so many resources for people to learn about getting into business, [that they] are much more willing to give it a try.”
Etsy offers all the traditional retailing categories — furniture, homewares, clothing and paper goods — as well as some unusual categories such as dolls and miniatures. The site also has a category called Geekery, which features playful items such as dangly earrings made out of Lego pieces, hand soap shaped like a croissant that smells of warm baked bread, and silver-studded iPhone cases.
Items like these appeal to shoppers who are looking for uniqueness rather than sameness, notes Ian Cross, senior lecturer in marketing at McCallum Graduate School of Business at Bentley University in Waltham, Mass. “People are bored with the mall. They are unimpressed with the same stores selling the same stuff…. There’s very little exciting in the stores today, so consumers are looking to the web for reasonably-priced alternatives. No one wants to shop at Gap anymore.”
Indeed, mainstream retailers are increasingly looking to private labels and exclusive lines in order to differentiate themselves in a crowded market. Faced with increased competition from Etsy and other e-retailers, some department stores and big box chains are searching for ways to retool store design and product mix, and to improve the multi-channel customer service experience.
Cross adds that Etsy also plays to consumers’ romantic notion of shopping in ways that are supporting local artisans. Shoppers on Etsy are able to “buy nearby” and find sellers close to them. “Etsy is popular for the same reasons that you buy fresh fish caught [near to where you live] at Whole Foods. You feel good supporting the local economy.”
Leah Russell, an Etsy storeowner based out of Largo, Fla., who sells mod children’s clothing, says she was inspired to start sewing after her daughter was born and she couldn’t find dresses that weren’t “ruffled or floral…. I’m a big believer in the handmade market,” she notes. “When you go to a big box store and buy a girl’s dress for $15, that dress was probably mass-produced in a factory in China. And you’re going to see 15 or 20 other little kids in that exact same dress.”
Too Much of a Good Thing?
Etsy is already a successful company, but it has had its fair share of growing pains, including a number of privacy hiccups. For example, last March, after the company instituted some changes to make the site function more like a social network, some buyers found that their activity on Etsy — including their purchase histories and, in some cases, their real names – was publicly available. In reaction to the outcry, Etsy further changed its system so such personal details would remain private.