The story of Etsy: how American indie platform for selling handmade goods has grown to be an IPO

Online sales become an important source of income for millions of people. To simplify the task for everyone working in this field, created a sufficient number of platforms for e-Commerce. Such platforms greatly facilitate the work of salespeople, providing them with high-quality interface, a huge flow of customers, as well as advice and support in the early stages of existence of online business. Despite this approach, the existing platforms do not cover all market niches.

In the first place were able to have their own online store those who sell popular products, as some products still remained in the shadows. The latter category has long included the products created by their own hands. That all changed with the advent of Etsy. This is the e-Commerce platform, designed to help creative people to sell their own products.

Most of the merchants present on Etsy, handmade who are desperate to find a way to sell their products on other sites, but here has at its disposal a convenient tool for starting a business. At the moment the platform has more than 800 thousand online stores and 15 million products. Playground is so popular that the network can find a huge number of stories about how people who have lost their jobs, but knows well how to create something with their hands, had found the meaning of life and a stable income thanks to Etsy.

However, before the project has reached success, he had to go quite a long way, which has happened both victory and defeat. The idea of the project belongs to photographer and artist Rob Kalin, who in 2005 was thinking about that on the market there is a convenient website to sell things made with their own hands. According to Kalina, the idea of creating Etsy came to him when he lived in a wooden house with three cats and waited for the arrival of friends. At the time, Rob worked in his own small company called IoSpace.

Partners of the businessman were two of his friend Chris Maguire and Haim Schoppik — it is with them and he was eager to share a new idea. Rob Kalin. The originality of the idea, and the existence of free niches has led to the fact that the friends took over the project. None of them was expert in the it field, but was fond of creativity before and had no idea how to make money.

Three months was the prototype platform, named Etsy. According to Kalina, the website got its name because it sounds great and such around the original word it is convenient to build the brand. “Etsy” is derived from the Italian “e, si”. Robert, being a lover of Italian films, drew attention to this speech, and, slightly distorting his have nothing meaningful word.

Originally the site was conceived as a indie platform, created by creative people for other creators, but in the development process, Etsy began to lose this trait. The first two years the project has developed slowly, in addition, the team had to put a lot of effort to make the platform as easy as possible for users. Also was the model of a monetization of the project.

Etsy charges $0.20 for each item by product. The deadline for placing on the website of the product — four months, and then have to pay again. Each merchant submits the Commission, representing 3.5% of each sale. In this case the money is not removed with every transaction, and totaled for the month, and then comes to the merchant account.

Also for a fee the company offers to any of its dealers advertising and promotion. The cost of such services depends on how the scale is going to promote their goods client. It is worth noting that handmade products are not the only type of products available on the website, another important step of the development of the project was the ability to trade vintage. It is true that the goods sold were considered vintage, it must be over 20 years.

Gradually the service began to significantly increase the audience. In July 2007 Etsy was committed millionth sale. And in November of the same year the site was made more than 300 thousand purchases in excess of $4.3 million. A high rate of audience growth of the service soon attracted the attention of venture capital funds.

In January 2008, Etsy received $27 million from Accel Partners, Union Square Ventures and Hubert Burda Media. In 2008 new management companies. Rob Kalin left his position as General Director, the baton was passed to Mary Thomas, who had previously held the post of Director for work with personnel. Around the same time the company left, Chris Maguire and Haim Schoppik.

From this moment, an independent project is starting to turn into more standard e-Commerce platform, which, however, finally lost its personality. In addition, in 2008 in Etsy for the position of technology Director came Chad Dickerson, who held the same post at Yahoo! Another landmark in the development of the project in 2008 was provoked by the media story that a young company will soon be able to compete with the biggest player in the market — eBay.

This has started the strike a number of merchants giant of online sales, some of which started working at Etsy. However, the rampant transition of vendors for the project Rob Kalina is not reached. It turned out that on Etsy also quite many traders who are unhappy with the business model of the platform, but dont leave because of the lack of market for suitable alternatives. The main reasons for their complaints became unstable and uncomfortable service search.

In the end, Rob Kalin hastened to explain their positions to the press, saying in the first place, that in no case does not want tough competition with eBay, because it will likely lead to the death of his project. In his words, Etsy is a niche in which the company thrives and continues to thrive. Thus, a potential conflict with eBay has been settled. In 2009, there have been several important events that influenced the further successful development of the company.

The first was the acquisition of Adtuitive, the original project involved the invention of ad-tech. The assurances of Mary Thomas, the purchase was made mainly due to the fact that this company was excellent picked staff consists of top-notch programmers that have become part of the team Etsy. It is worth to talk about the projects approach to advertising. Actually Etsy does not use paid channels to promote its own brand and instead promotes the company organically.

According to Maria Thomas, Etsy successfully increases its own audience due to the fact that itself becomes a value, instead of spending tens of millions on advertising campaigns, while remaining an empty shell. Another method of promotion is the development of accounts in social networks. At the moment the company managed to start a page in Facebook, Twitter and Pinterest and gain on each of them several million subscribers. In addition, the service has a YouTube channel.

An important part of attracting traders and buyers was the presence on the platform the media component. Each author has the opportunity to create the sort of blog where he explains the motives of his work, explains what components it uses and how much time it takes to create some things. In may 2009, the monthly sales reached $13 million, meanwhile the audience continued to grow.

In many respects this progress is that the sites users have organized so-called Etsyday, which massively promoted the company on Twitter. In the same year, Rob Kalin returned to the position of General Director. The companys official statement on this occasion said that Etsy is now necessary his vision of further development of the project.

At this time, the company faced a new problem related to the appearance on the website of a number of traders who in the category of “handmade” selling other peoples creations as their own, which was forbidden by project rules. On Etsy it was not permitted the resale of the goods and the sellers found it, blocked. The sanctions would hit even those who used hired workers. This approach was associated not only with the individual characteristics of the project as a platform for creators, but also by the desire to give new traders a chance to grow on the website, as well as to create a sufficiently competitive environment.

This model of work has caused dissatisfaction of the audience and prevented the further development of the platform. Despite this, the growth dynamics of the project are preserved. In 2010 the turnover of goods on Etsy reached $314 million. A year later this number exceeded half a billion dollars ($538 million).

In August 2010 he completed another round of investment in the project, during which the company was able to raise $20 million. Revenue service for that year amounted to about $40 million. However, there were serious shocks. In 2011, the company was fired the founder and CEO Rob Kalin.

In the official wording it is due to the fact that Etsy requires a Director who can be an effective Manager, ensuring further development of the platform. In the press everywhere, it was stressed that Rob Kalin remains an extremely important figure for the company and service is still his baby. The Director took Chad Dickerson. While not sure of the real reasons for the resignation Kalina, but it is worth noting that all is not as rosy as I wanted to show behind this decision people.

By the time of the IPO Rob less than 1% of the shares, while in 2010 he was the winner of this package to 16%. Besides, he for some time was gone from the list of founders on the project site, although after this was brought to the attention of the users, everything is back to normal. The main innovation in 2011 was the creation of a special system to search for merchants and buyers with the ability to add them to the “favorites”category. With the advent of this social component of the process of sale and purchase on the website much simpler.

Office Etsy. At the moment, the project has gradually gained certain popularity in the CIS countries. For greater convenience of local users was created the Russian version of the site. But we should not overestimate the possibilities of integration of the project in other countries.

For example, Etsy has almost no chance in the Asian market, dominated by Chinese platforms-giants. In 2012 continued the rapid audience growth of the service. For example, in January alone, the site registered more than 600 thousand people, increasing production volume by 2.8 million units. Sales this year increased by 70.3% of.

The sum of all transactions for the year reached $895 million, while the website recorded more than 80% of new clients. In 2012 the audience of service increased by 10 million people. One of the catalysts for this success has been the mobile platform Etsy, in which was recorded the growth of the audience at 244%.

Even more successful for the site began in 2013. The total cost of goods sold reached us $1 billion. In addition, it partially repealed the rule of the website, prohibiting use of employees to vendors locating in the category “handmade”. However, the resale is still illegal, and the sellers found it, blocked by the administration.

In the same year started a training program, created at the initiative of the mayor of the city of Rockford in Illinois. Students were expected to obtain certain skills for entrepreneurship using Etsy as a kind of laboratory. The program has become international and is held in the cities of both the US and Europe. The project has continued to grow and in 2014.

Annual income reached $195,6 million. In total, the site recorded more than 54 million users, among which 1.4 million merchants and more than 19 million active buyers. The site includes more than 29 million items. Total turnover for the year amounted to $1,93 billion, 36% of them were obtained with the help of mobile applications.

According to Chad Dickerson Park, such a high speed development of the project stems from the fact that most sellers promote their own creations using social media and attracting the help of friends. In 2015, the company has grown to be an IPO, which raised $267 million in capitalization to $3 billion, which was a record for a new York technology startup. In addition, continued further development of the project. For the first quarter of 2015, the number of merchants increased to 1.4 million, and the site has 20.8 million active buyers.

The turnover for this period is $538 million and the total income reached $58 million. According to preliminary estimates of analysts, this year the service will beat its own record profits. According to experts, the platform is almost the best among peers — of course, after Amazon and eBay. The benefits of the project are a narrow niche, original approach to advertising and convenient platform.

At the moment on the website you can purchase a huge amount of handmade items. Although Etsy and makes a profit, its level is still very far from the income of the leaders of online sales. The main reason is that the project remains a niche and not actually counting on the global conquest of the market.

While Etsy is losing the traits of an indie project and becomes a typical representative of the sphere of e-Commerce. According to Rob Kalin, the project is becoming more sales and less creativity. At the moment the company is firmly entrenched in the USA and gradually moving towards a more persistent world integration. The Outlook remains foggy, because to enter the markets of other countries to the project of this type is quite difficult.

In any case, Etsy remains of the original service that has made a special contribution to the development of online sales, allowing many people to start a business using their skills and creativity.


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