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Etsy is doing very well during the pandemic
After the Centers for Disease Control and Prevention suggested that all Americans start wearing face masks to be around other people, masks got pretty hard to find. A lot of shoppers turned to Etsy, the marketplace better known for selling bespoke crafts.
Etsy reported earnings this week and it said it sold more than 12 million masks last month, totaling $133 million. And people are buying other things there that they can’t get elsewhere, like garden plants and seeds, sewing materials and kitchen supplies. The question is, can Etsy keep all those customers once the pandemic ends?
I spoke with Josh Silverman, the CEO of Etsy, and asked him where all those masks came from. The following is an edited transcript of our conversation.
Josh Silverman: At the beginning of April, the CDC changed its guidelines and recommended that Americans wear fabric face masks. All of a sudden, we saw an explosion of demand, literally overnight, on Etsy. We put out a call to our sellers, saying, “Hey, if you have a sewing machine, please start making masks.” Within two weeks, we had 20,000 sellers making masks, and in fact, now we have 60,000 sellers who’ve made and sold masks. When you buy a mask from them, you’re really helping them out. Etsy could go from zero to hundreds of thousands of masks in days, just because of the dynamism of the Etsy seller base.
Molly Wood: Is there any precedent for asking sellers for something specific? Is it usual at all for you to use your incoming data to inform sellers about what might do well?
Silverman: I can’t think of a time that we’ve had a surge of demand for one specific product that was so strong that we needed to do a “calling all sellers” in this way. There are all kinds of product categories that are selling really well in Etsy today that didn’t even exist a month ago. For example, there are sellers that are creating pocket hugs. This is like a trinket that you send to someone you love to give them a virtual hug and let them know that you’re thinking of them. That’s one of thousands of examples of products that our sellers have created that create whole new categories kind of out of thin air.
Wood: Clearly, there’s a lot of inbound on the customer side. Is there also a lot of inbound on the seller side? Have you had a lot of people signing up to sell on the platform?
Silverman: We certainly have. We’ve had twice as many new shops open in the month of April as we did April one year ago. That feels great to us. The opportunity to be able to provide meaningful income to many, many people at a time when they’re feeling a lot of economic stress is a purpose that we all at Etsy hold really dear to our hearts.
Wood: How do you vet new sellers?
Silverman: Anyone with creativity and 20 cents can open a shop on Etsy. We think we are the easiest, fastest path to entrepreneurship. By the way, 86% of our sellers are women, 91% are businesses of one, working from their home. One woman with a sewing machine from her home can create a global business and sell to the world. We love having a very low barrier to entry so that we can provide economic opportunity for many people. For that seller to succeed, she’s got to create a really good product, she’s got to take good photos, it’s got to be a product that people want. She’s got to earn gaining prominence in our search engine, which means that buyers have to like it, and buyers have to leave good reviews and it’s that ecosystem and positive feedback loop that allows the seller to gain more and more prominence in our search engine and then sell more and more product. We also screen the site very carefully using both automated filters and community flags for things like fraud or intellectual property violations. We have a large and really dedicated team in trust and safety that’s making sure that we have a really safe marketplace.
Wood: Tell me more about that because I could imagine that this is a time when scammers and fraudsters are attempting to also capitalize on interest and in some cases, desperation. How hard is that team working right now?
Silverman: Yeah, unfortunately, it is true that whenever there is a crisis, there will be bad actors that step in. Fortunately, the vast majority of people are really honest, but there are always bad actors. The trust and safety team is working 24/7 right now, no doubt, to keep the marketplace clean. I’m proud to say that all of the metrics suggest that Etsy stays a very safe and very clean marketplace. We have, over the past 14 years, developed automated filters that can very quickly flag suspicious listings or suspicious sellers and then have them go over for review. We’ve got millions and millions of buyers on the site every day, and they’re able to flag things very quickly for review that our team can screen those as well.
Wood: Clearly, you’re prioritizing certain categories now. Are you deprioritizing others? Do you have sellers who are saying, “Hey, I’ve all of a sudden lost a bunch of traffic here”?
Silverman: We don’t prioritize, but the marketplace does. You’ll see demand surge in some areas and decline in others. Right now would be a really big time for weddings, and Etsy sells such a great array of everything from engagement rings to bridal gifts to stationery and table cards and everything for the wedding. Right now that category is obviously very hard hit. Wedding-related items are down more than 50% year over year. But so many other categories are surging, particularly home furnishing and things that allow you to nest or make your home feel more cozy, and then activities and things to do at home, like crafts and games and self-care. Also, gifting is doing superwell on Etsy right now. The opportunity to send a care package or something to let a loved one know that you’re thinking about them. Those are all categories that are surging.
Wood: In your earnings call, the guidance, as with almost every company that has reported earnings, was uncertain for the future. How do you think you keep people coming back?
Silverman: We guided for only the second quarter, and what we said is we think that sales on the Etsy platform are going to grow between 80% and 100%, which we feel great about, but to your point, it’s very uncertain and that’s a very broad range to be giving, given that there’s only two months left in the quarter. We think that this is a moment when more and more people are turning to Etsy. We know that. The data shows people who’ve never shopped on Etsy, or people who haven’t been back in a while or haven’t been back very often, are suddenly coming to Etsy, and they’re coming to Etsy a lot more often. In fact, we shared that we had 6.5 million buyers, who are either first-time buyers or lapsed buyers, come back to Etsy in April. All of our data shows that they’re having a really good experience, that they’re delighted by the products they’re buying. We work really hard to earn their loyalty so that they’ll continue to form a habit shopping on Etsy in the months and years to come.
Wood: Do you think that your brand may evolve or shift as a result of this? Might people start to see Etsy as essential in a different way?
Silverman: We’re doing a lot of television advertising right now. Our TV ads are really featuring our sellers and told through the voice of our sellers, but there’s three messages in those TV ads. A) Etsy is open for business. B) When you support Etsy, you’re supporting small, independent business people. And C) Etsy is a place to go for everyday supplies. That last item is particularly, I think, maybe disruptive to how some people think about Etsy. They think about Etsy as special. Now, we’ve got that opportunity to prove to them that we can do that, and they’re coming to us for all kinds of everyday items that are available. I really hope that both through our brand messaging and through the actual experience on the site, people are going to learn that you can come to Etsy every day for everyday items and have a really great experience.
Wood: I will say, I went to Etsy and searched for toilet paper, just out of curiosity, and it was all reusable toilet paper, which might be a little too special.
Silverman: Yeah, but there’s all kinds of, let’s say, baking supplies, parchment paper that you would use for a baking project you can buy anywhere. On Etsy, the parchment paper will come with your grandmother’s recipe printed on it so that when you and your kids are doing a baking project together, your grandmother can be part of that project, even if she’s not with you physically. It’s that kind of thing that I think can inject special into what otherwise feels like an everyday item.
Wood: But the brand is not going to shift so much that you start selling toilet paper. Like that just wouldn’t be right?
Silverman: We’re never going to sell mass-produced items. We’re always going to sell items that are made just for you and where you have a direct connection with the person who actually made it. You can have that kind of special, you can have that kind of human connection even in everyday purchases.
Related links: More insight from Molly Wood
One thing Etsy sellers were not happy about before this pandemic started was its ad program in which the company started placing ads for products from its sellers on sites like Google, Facebook and Instagram. It neither asked sellers if they wanted the ads, nor did it let them immediately opt out. If someone clicked an ad to buy a product, Etsy took a 15% cut on the transaction. Etsy said this week it was waiving fees for the service during the COVID-19 pandemic, but it didn’t say how long that would last.
Here at Marketplace we conduct regular polls with Edison Research about the state of the economy and people’s personal economic anxiety. In the Marketplace-Edison Research Poll, we asked people how they’d made money in the past year — whether it was through gig work, freelancing, multilevel marketing, renting space in their house and so on. Not surprisingly, 25% of respondents said they were gig workers. About 60% of those people said that gig work was their primary income. Related to our interview here, 11% of people said they sell things on sites like eBay or Etsy to earn income. This data is from the last week in April, so probably does include any brand-new mask shops that popped up in the last month.
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