Last night Etsy sent out an email that, though it didn’t quite break the internet (because I don’t think there’s much of a market for an oiled up Chad Dickerson popping bottles), definitely made some waves. You can read the whole message here if you’d like, but to cut to the chase, Etsy’s going public.
After we get past the fact that it’ll be adorable to see ETSY scrolling across the Nasdaq ticker, there’s a lot to dig into surrounding the Etsy IPO announcement…
Oh, and spoiler alert: I’ll be sticking around for the foreseeable future, so go check out my shop! 😉
10 Years Later: Success or Sellout?
Etsy was founded way back in 2005 by Rob Kalin, and in the ten years since then, the little handmade engine-that-could has grown far beyond its humble beginnings. They’ve done a great deal for the handmade and indie biz community, but they’ve also changed a lot over the years, oftentimes a good thing but in some ways not necessarily for the better.
Kalin, who had much different business views than Etsy’s current CEO, once told Inc. that he thought it was ridiculous to focus on trying to maximize shareholder value, saying, “I couldn’t run a company where you had to use that as an excuse for why it was doing things.” Naturally, he’s no longer running the company…
Etsy’s seller community has grown to 1.4 million people, with another 19.6 million buyers. Fortune refers to the marketplace as “a sort of eBay for everything from reclaimed wood furniture to hand-made terrariums.” I would argue, though, that Etsy started out with the intent of being exactly NOT eBay.
Overall, though, here’s the thing…
When a garage band starts getting radio play, its die-hard fans often write it off as a sellout. But even though that band started out playing dive bars, they worked hard to ensure that more people would hear their music, right?
I’m not comparing Etsy to Nirvana or anything, don’t get me wrong. Etsy doesn’t have much of a “badass” image anyway — a massive flock of knitters, painters, and baby-bow makers? Nah.
What does this mean for Etsy sellers?
Etsy itself has acknowledged that the IPO is a potential threat to its brand authenticity, the cornerstone upon which it was built, nothing that it could lead current members to leave the site. Though they don’t refer directly to sellers, I personally feel that sellers, with far more skin in the game here, are the ones more likely to be put off by any cracks in Etsy’s authenticity.
The good: Etsy has a pretty impressive level of customer loyalty. Repeat buyers account for almost 80% of site sales. With all the buzz around this latest announcement, Etsy is bound to see an uptick in traffic. To me, that sounds like a whole bunch of potential new customers to attract, and signs point to them sticking around!
The bad: Etsy already dealt small makers a blow in 2013 when they began to allow outsourcing for manufacturing and labor, and moves like that are only likelier in the future as the corporation struggles to meet investor demands and drive up revenues.
And the bad: We’re also bound to see more of the mass-market reseller crap that has been plaguing the sites for ages, which is my least favorite shift in recent years.
And the also bad: The marketplace only makes about half its revenue from seller listing and sales fees, with the other half[ish] coming from services, like payment processing, promoted listing, shipping labels, and direct checkout. These seller services have been added on here and there over the past several years, a trend that shows Etsy is trying to find more and more ways to squeeze money from its sellers instead of relying on buyers to drive revenue.