Etsy is worth 15.2 billion dollars.
- 2.3 billion dollars was the companies 2021 revenue.
- 494 million dollars in profit also.
- A margin of 20.6%.
Which just to compare that with other e-commerce companies.
Amazon made 469 billion in 2021 revenue.
Profit was 33 billion.
A 7% profit margin.
Chewy made 7.1 billion in 2021 revenue.
They lost 92 million dollars.
Losses were 1.2%.
Wish made 2.1 billion in 2021 revenue.
They lost 361 million.
Losses were 17.2%.
E-commerce hasn’t been an extremely profitable industry, but Etsy has been an exception producing margins similar to data and social media companies.
And the reason for that is they function very little like an actual commerce company.
- Sellers on Etsy handle all shipping/handling.
- Buyers pay shipping and it isn’t included in sales.
- Etsy doesn’t do anything to market products from sellers.
Etsy has a platform, which charges 5% on sellers and creates an easier path for people to sell versus setting up their own site.
Which revenue’s for sellers aren’t so bad.
$46,000 is the average income for people pursuing Etsy full time.
$2,600 a year is how much stores make on average, when aggravating low performing or semi inactive stores.
The issue now is some sellers are going on strike, shutting down their stores for a day in protest to a 30% increase in commission Etsy takes, from 5% to 6.5%.
Normally, I’d look at something like this and say it’s needed for a company to grow and survive, but in Etsy’s case, it doesn’t feel needed.
- Etsy has a solid profit margin already.
- Etsy is growing, where they’ve had revenue grow 421% since 2017.
- Etsy also doesn’t seem likely to have any plans for this money to increase growth.
Which to be fair to Etsy, compared to other players, they don’t take that much currently.
- Amazon charges 8-15%.
- Walmart charges 8-15%.
- eBay’s average charge is 12.9%.
Etsy at 6.5% is still noticeably lower over most companies.
The problem though is they don’t seem to offer nearly as much for services, where a lot of logistics, handling and marketing is left to sellers, while Amazon and others are doing way more.
I also don’t think angering sellers is a good idea for Etsy at this point, due to Facebook and Shopify.
Facebook is getting more and more active in allowing creators to setup shops, which Instagram is the largest marketing tool for Etsy sellers currently. It would make sense eventually they’d skip that layer of Instagram to Etsy and just sell on Instagram.
Also, Shopify growth has been insane, where more and more people are creating cheap websites with Shopify and getting more data benefits than Etsy would ever give.
Etsy sellers have more options than ever and a company with a 20% margin trying to increase profits is probably a bad idea long term.
So is a strike needed?
The problem is only a handful of stores are doing this and they aren’t big enough to cause a serious problem for Etsy.
The bigger goal is at least one company needs to form Anchor for all things online.
For those who don’t know, Anchor is a platform which allows podcast creators to put their podcast on every channel, such as Spotify, Apple Music, YouTube and over a hundred more.
Ultimately, I think for creators be it Etsy sellers, content creators or even adult creators using platforms like OnlyFans, the mission needs to be being on 3-5 platforms which all make some revenue every month, so there’s a real option to leave.
So I wish the Etsy strikers well, but the bigger plan needs to be getting them on more platforms and finding ways to get them recurring revenue in other places.