Etsy is more than just an online marketplace; it is an iconic, globally recognized brand used by over 96.3 million active buyers. Drawn by buzzwords like “vintage,” “ethical,” and “handmade,” consumers from 234 countries have flocked to the Etsy website in droves since it was founded in 2005.
What’s most impressive about Etsy’s success is that it serves a niche market. Limiting its product offerings to handcrafted and vintage goods was risky, but it has more than paid off.
Historically, consumers have been more than happy to pay the higher prices that come with handmade products, and Etsy has been able to consolidate its position as the leading marketplace for such items.
However, some sell-side financial forecasts expect Etsy’s revenue growth will slow significantly from +110.9% in FY20 and +35.0% in FY21 to +6.2% in the current fiscal year, leaving the company more vulnerable to competition.
This Etsy competitors analysis explores how Etsy stands out against rival companies in the e-commerce industry.
The Bottom Line Up Front
Let’s face it: Etsy is up against some stiff competition from Amazon and eBay. It brings in less revenue than them, but you’d expect that since Etsy’s target demographic is niche. It is still the go-to marketplace for sellers creating unique, handmade items and buyers looking for something different.
Yes, the threat from Amazon has been more significant since the introduction of Amazon Handmade, but I think the thing that sets Etsy apart is its sense of authenticity. Everything, down to the design of its website, is tailored to appeal to creative people and to reflect the handmade products they sell.
List of Etsy’s Main Competitors
Etsy Business Strategy
Etsy, Inc. is an e-commerce marketplace for craft supplies and handmade or vintage items. It was founded in 2005, and its headquarters are in Brooklyn, New York. Items sold on Etsy include jewelry, clothing, toys, furniture, art, and bags.
With over 120 million items created by 7.5 million sellers and bought by people in 293 countries, it’s clear that Etsy is targeting an in-demand niche.
Etsy primarily uses a commission revenue model, but the company’s revenue comes from three sources:
- A 6.5% fee of final sale value is taken from sellers for each item sold and a listing fee of 20 cents per item.
- Seller services, including fees for things like promoted listings.
- Other revenue encompasses things like fees from third-party payment processors.
According to its website, Etsy’s mission is to “reimagine commerce in ways that build a more lasting and fulfilling world.”
The company snowballed after it was founded, gaining investment from Union Square Ventures, Albert Wenger, and the founders of Flickr and Delicious, among others. Etsy added many new tools to its marketplace within its first year, including categories with tags and Adobe flash-based visualizations.
Two years later, Etsy passed $1.7 million in revenue. You can find a detailed explanation of the business model that allowed Etsy to achieve this impressive figure here.
What distinguishes Etsy from eBay and allows it to compete effectively is its sense of community; this is something that eBay lacks.
In 2012, Etsy completed a round of Series F funding, raising $40 million, which went toward expanding the business into international markets, including Germany, France, and Australia.
To continue its impressive growth, Etsy started permitting factory-made goods and drop shipping in 2013, as long as the seller designed the products and discloses the factory to Etsy. The following year, it also acquired A Little Market, a French site for food, wine, and handmade goods, for a mix of stocks and cash at less than $100 million.
Etsy went public in April 2015, selling 13.3 million shares; the company’s valuation was $4 billion.
Since the IPO in 2015, strategic acquisitions have formed a crucial part of Etsy’s business plan. For example, in 2016, it acquired Blackbird Technologies, an artificial intelligence startup focused on shopping context, for $32.5 million.
The most significant acquisition of recent years was that of Depop, a fashion reselling marketplace, for $1.63 billion.
While many businesses struggled or even had to shut down during the pandemic, Etsy was able to thrive. While this would likely have been the case anyway since e-commerce sites generally did quite well during 2020, Etsy was determined to make the best of a bad situation; it encouraged sellers to start making cloth face masks to protect against Covid.
As a result, masks accounted for roughly 11% of gross-merchandise sales in the third quarter, with approximately 24 million sold. That year, shares in Etsy more than quadrupled.
Etsy reported $2.32 billion in revenue in 2021, a 34.97% increase compared to 2020.
Etsy Competitors Analysis
Etsy competes against rival marketplaces like Alibaba and Amazon in the e-commerce industry.
Amazon is a multinational technology company that focuses primarily on e-commerce. It was founded in 1994 by Jeff Bezos, and its headquarters are in Seattle, Washington, and Arlington, Virginia.
Despite the many subsidiaries that Amazon has today, it started life as an online marketplace for books. Today, books are just a tiny part of Amazon’s portfolio; it is known as “the everything store” and is most people’s go-to for online shopping.
Amazon is the world’s largest online marketplace, retailer, smart speaker provider, live-streaming service (Twitch), cloud-computing provider (AWS), and internet company based on revenue and market share in 2021. It is the second-largest private employer in the US.
Amazon’s handmade shop – Amazon Handmade, which was launched in 2015 – competes directly with Etsy, and it is one of Etsy’s biggest rivals. When Amazon announced a new gift shop for Amazon Handmade in 2017, it sent Etsy shares down more than 3% in midday trading.
Amazon Handmade sells goods like stationary, jewelry, clothing, and party supplies in 30 countries.
While anyone can become a seller on Etsy, becoming a verified seller on Amazon Handmade is a little more complicated. You have to fill out an application and wait to be approved.
Amazon Handmade uses a subscription revenue model to make money from sellers. For a professional account, the monthly fee is $39.99, and you have to pay a 15% commission and a $1 referral fee per sale.
For users without a professional account, referral fees are between 8% and 45%, depending on the product category.
There are over 2.5 million sellers on Amazon Handmade. In the five years following its launch, the marketplace saw a 2000% increase in the worldwide selection of its products, and the number of active makers increased by nearly 750%.
Amazon reported $469.822 billion in revenue in 2021, a 21.7% increase from the previous year, though only a tiny portion of this will have come from Amazon Handmade.
Find out more about Amazon’s strengths, weaknesses, opportunities, and threats in this detailed SWOT analysis, or check out our complete Amazon competitors analysis.
Alibaba Group Holding Limited, known commonly as Alibaba, is a multinational technology company founded in 1999 with headquarters in Zhejiang, China. It specializes in e-commerce, providing business-to-consumer (B2C), consumer-to-consumer (C2C), and business-to-business (B2B) sales services.
Alibaba’s initial public offering in 2014 on the New York Stock Exchange raised $25 billion, giving the company a value of $231 billion. At the time, this was the largest IPO in world history.
In 2020, Forbes named Alibaba the 31st largest public company in the world, and it is one of the top ten most valuable corporations. You can find out about Alibaba’s mission statement in this article.
Alibaba Group has several e-commerce and retail service platforms. Alibaba.com handles sales between exporters and importers from over 250 regions; 1688.com manages domestic B2B trade in China; AliExpress is a transaction-based retail site which allows small buyers to buy goods at wholesale prices.
In 2014, Alibaba also launched a US shopping site called 11Main, which hosts over 1000 merchants in categories like fashion accessories, clothing, jewellery, and interior goods. 11Main is the closest competitor to Etsy, though it has achieved nowhere near the same level of brand recognition.
11Main’s estimated annual revenue is $16.8 million.
eBay Inc. is a multinational e-commerce company founded in 1995 and headquartered in San Jose, California. It facilitates C2C and B2B sales through its online shopping and auction website, where businesses and people sell various products, from clothing to household appliances and everything in between.
eBay is free to use for buyers; however, sellers are charged a fee for listing items and an additional fee when those items sell.
The company’s overarching business strategy focuses on leveraging technology to enhance the marketplace experience of customers, thereby driving gross merchandise volume (GMV) growth. To achieve this, the company has made several strategic acquisitions.
In 2022, eBay acquired KnownOrigin, a Manchester-based non-fungible token (NFT) marketplace, for an undisclosed amount. NFTs have been in the spotlight recently, receiving significant media attention, so this is a smart move.
While eBay is famous for its auctions, it has expanded to include “buy it now” options and various other services.
eBay is available in 180 countries, and in 2021, it had 18 million active sellers. There are over 109 million visitors to its website each month.
The company went public in 1998. Its target of $18 per share was blown out of the water; the price went to $53.50 immediately.
In 2022, eBay is pursuing its so-called “focus category strategy”, which is about selling higher-end products like sneakers and watches. This new direction makes it a less threatening competitor for Etsy.
eBay reported annual revenue of $10.42 billion in 2021, a 17.2% increase compared to the previous year.
IndieMade is an e-commerce platform and website builder designed to help independent artists and makers sell their products, including handmade goods. It was founded in 2009, and its headquarters are in Evanston, Illinois.
The company recognizes on its website that many customers also sell on Etsy. Still, IndieMade provides tools that are useful for people who sell offline as well as online.
Its mission is “to give small independent businesses the ability to easily create a website with the tools to sell their products online.”
IndieMade operates using a subscription revenue model with a freemium option to draw potential customers in – all subscription options come with a 30-day free trial, with no cancellation or sign-up fees.
- Basic – $4.95/month – includes a custom domain, store, ten products, five images per product, coupons and discounts, blogs, and SEO optimization.
- Standard – $12.95/month – includes everything from basic plus 250 products and ten images per product.
- Pro – $14.95/month – includes everything from standard plus 500 products and 20 images per product.
- Plus – $19.95/month – includes everything from pro plus unlimited products and unlimited images.
The thing that sets IndieMade apart from its larger competitors is the level of support available to its customers, which is exceptionally good.
The company’s strategy is to expand its customer base to include small businesses, artists, and creators.
IndieMade’s annual revenue is an estimated $6 million.
Bonanza, Inc. is an online marketplace designed to help entrepreneurs build sustainable businesses based on repeat customers. It was founded in 2007 by Bill Harding, and its headquarters are in Seattle, Washington.
The Bonanza website receives over 5 million visitors a month, leading some industry experts to claim that it is quickly becoming the best alternative to eBay. Roughly 40,000 sellers have set up an online store using the platform.
In 2021, the EcommerceBytes Sellers Choice Awards ranked Bonanza first for “communication,” “customer service,” and “most recommended marketplace”, ahead of Amazon, eBay, Etsy, and all other similar companies.
Bonanza uses a subscription revenue model with a 14-day free trial. The monthly cost is $25. It charges a $0.25 transaction fee on all sales made using the site for sellers who don’t have an active subscription.
In 2016, Entrepreneur Magazine awarded Bonanza “Best Entrepreneurial Company in America,” and its success has also been recognized by CNN, Time, and Bloomberg Businessweek.
Bonanza’s annual revenue is an estimated $180 million.
Etsy SWOT Analysis
This Etsy SWOT analysis discusses the company’s strengths, weaknesses, opportunities, and threats.
- High customer satisfaction
- Community of sellers
- History of successful acquisitions
- Diversified revenue streams from the marketplace and other services
- Unique product portfolio
- Strong global brand recognition
- The marketplace has a global reach
- Rare handmade products are attractive to consumers
- A user-friendly website that is easy to sell and buy on
- Vulnerable to data breaches and cyber attacks
- Reliance on third-party services makes the company vulnerable to operational failures
- Risk of counterfeits, copyrighted images, and illegal goods
- Delivery can sometimes be slow due to widespread geographical locations
- Shipping costs can be expensive
- Items are generally quite expensive due to their handmade status
- Dependent on sellers for profit
- Low barriers to entry in the industry
- E-commerce is increasingly popular following the global pandemic
- More people want to be self-employed and work from home; Etsy provides an ideal platform to do so
- Invest in additional marketing to attract more sellers
- Technology is evolving all the time; new developments could be used to improve Etsy’s website and overall offering
- Fierce competition from large companies like Amazon and eBay
- Economic uncertainty following the pandemic and war in Ukraine has made people less willing to spend money
- Rivals may be able to offer lower prices and a more comprehensive range of items, which will attract more consumers
Etsy Competitors Analysis FAQs
Question: Who is Etsy’s biggest competitor?
Answer: Regarding revenue, Etsy’s biggest competitor is Amazon, with a total of $469.822 billion. Since the launch of Amazon Handmade, which directly competes with Etsy by targeting an almost identical demographic, this is especially true.
Question: Which is the best e-commerce platform?
Answer: The answer to this question depends on your needs as a seller. If you sell handmade or vintage items, Etsy is still the best option, in my opinion, because Amazon Handmade hasn’t reached the same brand recognition yet.
However, if you’re looking to sell a range of general items, eBay and Amazon are two of the best platforms with plenty of support and millions of visitors each week.
Question: What is Etsy’s competitive advantage?
Answer: Etsy’s competitive advantage is the quality, variety, and uniqueness of the products sold on its platform. Handmade items are often rare and can be customized, making them appealing to many people.
Rather than targeting a broad demographic, Etsy has tailored its marketplace to niche gifts and products. As a result, it is still the go-to website for handmade items.
Etsy’s growth has slowed over the past couple of years; for some people, that’s cause for concern. However, this is only half the picture. In 2021, active sellers on Etsy increased their sales by 23% compared to 2019, and the company invested $40 million in the teams and technology needed to ensure its marketplace is constantly evolving for the better.
If I had to use just one word to sum up Etsy, I’d say “authentic”. From the beginning, Etsy has always catered to creative people; it has always known its target audience, so it is and probably always will be the go-to website for handmade and vintage items.
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