Etsy, Inc. (Etsy) operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces - which collectively create a ‘House of Brands’ - share the company’s mission, common levers for growth, similar business models, and a strong commitment to use business and technology to strengthen communities and empower people.
The company’s primary Etsy marketplace is the global destination for unique, creative goods from independe...
Etsy, Inc. (Etsy) operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces - which collectively create a ‘House of Brands’ - share the company’s mission, common levers for growth, similar business models, and a strong commitment to use business and technology to strengthen communities and empower people.
The company’s primary Etsy marketplace is the global destination for unique, creative goods from independent sellers. It connects artisans and entrepreneurs with thoughtful consumers seeking items that reflect their tastes and values. It aims to create a virtuous cycle that benefits all of the company’s stakeholders.
In addition to the company’s core Etsy marketplace, the company’s ‘House of Brands’ consists of Reverb Holdings, Inc. (‘Reverb’), the company’s musical instrument marketplace acquired in 2019, and Depop Limited (‘Depop’), the company’s fashion resale marketplace acquired in 2021. On August 10, 2023, Etsy completed the sale of Elo7 Serviços de Informática S.A. (‘Elo7’), a Brazil-based marketplace for handmade and unique items.
The Etsy, Reverb, and Depop marketplaces collectively connected a total of 8.1 million active sellers to 95.5 million active buyers as of December 31, 2024.
The company’s top six retail categories on the Etsy marketplace in 2024 were homewares and home furnishings, jewelry and personal accessories, apparel, craft supplies, paper and party supplies, and toys and games.
Reverb provides a significant presence in the market for musical instruments, and Depop enhances the company’s apparel offering in the resale space. The company generates revenue primarily from marketplace activities, including transaction (inclusive of offsite advertising), payments processing, and listing fees, as well as from optional seller services, which include on-site advertising and shipping labels.
Strategy
The company’s strategy is focused around building a sustainable competitive advantage for the Etsy marketplace - the company’s ‘Right to Win;’ growing the Etsy marketplace in its six core geographies and globally; and leveraging the company’s marketplace playbook across its ‘House of Brands’.
The Etsy Marketplace
Buyers come to the Etsy marketplace for meaningful, one-of-a-kind items handcrafted and curated with passion and expertise by the company’s creative entrepreneurs.
Building buyer consideration by knocking down barriers and focusing on specific purchase occasions:
About half of the company’s active buyer base shops on Etsy one purchase day per year, with the other half purchasing an average of approximately five purchase days per year.
In 2024, the company continued to focus on driving buyer consideration by highlighting its sellers’ quality listings, at great value, that it believes company’s sellers can deliver in a way that is both reliable and dependable.
The Etsy marketplace is characterized by several unique qualities, including:
Right to Win: The company’s marketplace is focused on strengthening the power of its sellers’ unique items, its ability to develop best-in-class search and discovery, the power of human connection, and being a trusted brand.
A brand that stands for ‘Conscious Shopping:’ In a world of increasing automation and commoditization, Etsy.com is a marketplace where creativity lives and thrives because it’s powered by people. The company helps its community of sellers turn their ideas into successful businesses. The company’s platform connects them with millions of buyers looking for an alternative—something special that expresses their taste and values, providing a destination for conscious shopping that supports small business.
Global Reach: The company enables cross-border transactions, allowing buyers and sellers to easily connect despite language and currency differences. Using advanced ML, it translates listings, reviews, ads, and messages. By investing in localization, such as browse features, local payment methods, and fulfillment partnerships in key non-U.S. markets—the company works to foster a tailored experience to drive both domestic and international sales.
Organic Traffic Base: The unique nature of the company’s sellers’ inventory and power of the company’s brand have enabled the company to organically build a loyal, global base of Etsy buyers on the platform.
Connected Experience Across All Devices: The company wants to engage Etsy buyers wherever they are and provide an enjoyable and accessible shopping experience regardless of the device used. The company’s desktop and mobile web experiences, as well as the company’s Etsy mobile app for Etsy buyers (‘Buy on Etsy’) include search and discovery, curation, personalization, augmented reality, and social shopping features. The company has made product investments designed to drive buyers to the company’s app, which is beneficial to its conversion rate, as the company’s mobile app has the highest conversion rate among platforms. In addition, the company offers similar desktop, mobile web, and mobile app experiences to help sellers manage their shops and successfully serve buyers on Etsy.
Etsy Sellers
The company’s 5.6 million active sellers are the backbone of Etsy’s business and that what matters most to them is the company’s community of approximately 89.6 million buyers. The company serves creative artisans and entrepreneurs around the world who choose to pursue their passions, offering them excellent value compared with other channels they may have to sell their products, and a cohesive suite of powerful tools and services to help them run their business and drive sales. Etsy sellers range from hobbyists to professional merchants and have a broad range of personal and professional goals.
Etsy Buyers
The company’s efforts to engage new, lapsed, and existing buyers, as well as drive frequency, have helped support the health of the company’s buyer cohorts overall despite stiff reopening headwinds and challenging macroeconomic conditions. The performance the company has seen in its buyer cohorts is encouraging as trends remain healthy relative to pre-pandemic levels despite some degradation seen from pandemic period metrics.
The Reverb Marketplace
Reverb, headquartered in Chicago, is a two-sided marketplace launched in 2013 on the principle that buying and selling musical instruments should be easy. Reverb connects buyers and sellers of new, outlet, used, and vintage music gear from all over the world, uniting music makers with the gear that inspires them. As of December 31, 2024, the company’s Reverb marketplace had 785 thousand active buyers and 221 thousand active sellers. Reverb’s buyers and sellers range from beginners looking for their first instruments to professional musicians expanding their gear collections, local music stores that use Reverb to do more business online, and the largest music retailers in the world that use Reverb to reach an even larger audience. Reverb has a vibrant and engaged community.
In 2024, Reverb provided musicians with more options and better value by introducing the Reverb Outlet and launching a Certified Pre-Owned program with Fender, one of the world’s leading guitar manufacturers. Reverb also better highlighted affordable used and like-new gear throughout the marketplace to boost conversion. In 2024, Reverb also optimized its search algorithms to make price comparisons easier, enhanced seller tools, and drove awareness through video-first integrated marketing campaigns.
The Depop Marketplace
Depop is on a mission to ‘Make Fashion Circular.’ Depop has been a people-powered fashion marketplace where anyone can buy, sell, explore, and discover incredible secondhand fashion. Depop had approximately 43.5 million registered users, 5.1 million active buyers, and 2.3 million active sellers as of December 31, 2024.
Depop is a place for anyone to discover and share their style by selling items directly from their closets and buying secondhand garments from others whose style they admire. Depop’s circular ecosystem extends the life of millions of garments every year, providing a more sustainable way to enjoy fashion. The growth opportunity for Depop is meaningful due to its differentiated position in the fast-growing resale space; passionate and highly engaged community of buyers and sellers that advocate for the brand; strong affinity with the Generation Z (‘Gen Z’) and Millennial consumer demographics, who are adopting resale shopping faster than other demographics; and significant market share opportunity in the United States and the United Kingdom where Depop has meaningful brand awareness.
Primary Business Drivers
The company leverages technology to connect people around the world through commerce. Among other things, the company invests in its technology infrastructure, product development, marketing, trust and safety, member support and helping sellers grow as the company strives to continuously improve its marketplaces for the company’s buyers and sellers. While the discussion below focuses on the primary drivers of the Etsy marketplace, there are similar business drivers at each of the company’s marketplaces.
Technology Infrastructure
The company’s engineering team has built a sophisticated platform that enables millions of sellers and buyers to smoothly transact across borders, languages, and devices. This team writes, deploys, and operates the software and services that enable the company to run its business, including the web and mobile products the company deploys externally and internally, and maintains its cloud environment and local office networks, and more. Etsy makes significant investments in areas, such as foundational, data, and cybersecurity infrastructure, payments, experimentation, advertising, machine learning and recommendations platforms, internal information technology, system architecture, and inventory, fulfillment, and search systems.
The company collects and analyzes large volumes of data to enhance the performance of the company’s platform, personalize search and discovery, improve the company’s search experience, and test features on the company’s website. The company applies a combination of proprietary and non-proprietary machine learning (‘ML’) algorithms, large language models (‘LLM’), and neural networks, as well as human curation to personalize the search and discovery experiences and enable buyers to more easily browse, filter, and buy that perfect item, even when they may not have something specific in mind.
The company expects to continue investing in innovative ways to leverage advanced AI, Gen AI, and ML technologies to enhance customer experiences across its platform—improving both seller and buyer experiences while strengthening its infrastructure.
In addition, the company maintains an agile technology infrastructure, leveraging its operations in Google Cloud to dynamically flex computing power in sync with traffic. This infrastructure aids operational efficiencies, allowing a greater portion of its engineers to spend time working on customer-facing initiatives and less time on infrastructure activities.
In 2024, the company re-trained its search algorithms to better highlight higher-quality listings, and increase the diversity of merchandise shown, aiming to reduce the cognitive load for buyers when search results show too many similar items. It also began to focus more engineering resources toward making the BOE app the center of its customer experience.
The company’s other marketplaces Reverb and Depop also operate their marketplaces in the cloud and make similar technical development investments with Amazon Web Services (‘AWS’). In 2024, both Reverb and Depop continued to improve their deployment of ML and tools that allow for more rapid development and experimentation.
Product Development
Etsy’s product development and engineering organization is built around the core belief that the company can create connections between its sellers and buyers that are personal and fundamentally different from other platforms where you can shop or sell. The company has a novel approach to product development, which the company calls its Product Development Culture, an evolving set of key principles, mindsets, and habits that guide how the company’s teams work, experiment, and interact as the company develops experiences for its customers and business. The company’s teams are organized around a collection of initiatives that support a common strategy aligned with the company’s ‘Right to Win,’ with cross-functional teams focused on delivering a key customer outcome that the company measures by a set of objectives and key results, all meant to solve key customer friction points.
In 2024, significant product launches included expanded diversity of merchandise in search results, incorporating high-quality listing indicators into its search algorithms; the Etsy Search Visibility Page to provide sellers more insights into how they appear in search; revamped Etsy homepage, to index more heavily on inspiration; and significant product improvements to the ‘Gifting’ shopping experience and expanded marketing for this purchase occasion.
Etsy also shares aspects of its product development culture and strategies with the company’s other marketplaces. In 2024, Reverb and Depop focused on new ways to improve the customer experience and drive incremental GMS. For example, Reverb launched The Reverb Outlet and Fender’s first-ever Certified Pre-Owned program, making it easier for musicians to access budget-friendly used and like-new instruments, and Depop streamlined its selling process, with a continued focus on experimentation, search and discovery, and pricing.
Marketing
The company’s approach to investments in marketing are somewhat different from some other players in e-commerce, and the company continues to evolve and refine these activities as a core component of the company’s business.
Performance Marketing
The company’s investments in performance marketing, which the company defines as paid media spend related to the digital acquisition and re-engagement of buyers, adjusts according to demand and scale based on incremental return. The company continues to test the effectiveness of its performance marketing and expand into new channels and geographies and utilize new tactics.
For example, in 2024, the Etsy marketplace increased investments in paid social marketing — which it defines as paid media spend to promote Etsy content on social media platforms, such as Meta, Pinterest, and TikTok. In 2024, the company transitioned its paid-search investment, which encompasses its PLA and search engine marketing channels, in-house. The company now manages all of Etsy’s paid-search campaigns with an internal team of subject-matter experts enabling it to reallocate the significant external costs of managing these campaigns directly back into the campaigns themselves.
Offsite Ads. Offsite Ads is an advertising program for Etsy marketplace sellers, where Etsy pays the upfront costs to promote Etsy sellers’ listings on multiple internet platforms and takes a ‘success fee’ when a sale is made. The program works as follows: when a shopper clicks on an offsite ad featuring a seller’s listing and purchases from the seller’s shop within 30 days of that click, the seller pays Etsy an additional transaction fee on that sale. The company’s Offsite Ads program is a win-win for Etsy and the company’s sellers since the seller only pays a transaction fee when a sale is made; and the additional fee expands Etsy’s LTV, as outlined above, enabling the company to spend deeper for performance marketing to drive more visits to the company’s marketplace.
Customer Relationship Management (‘CRM’). In 2024, the company’s marketplace continued to enhance its sophisticated CRM capabilities that enable it to segment and target buyers for engagement on and off Etsy. CRM and mobile app push notifications are efficient tools to drive engagement with the company’s active and lapsed buyers, as well as meaningful drivers of its strong buyer reactivation levels. In 2024, the company introduced several key CRM features, including trigger notifications that led to connected landing experiences rather than just individual listings, personalized campaigns powered by ML, and more.
Promotional Events. As part of the Etsy marketplace’s focus on highlighting great value, and in addition to ongoing work to elevate items its sellers offer with discounts, the company held several site-wide promotional events in 2024 funded by a small allocation of Etsy’s marketing dollars.
Brand Marketing
Since 2018, Etsy has leaned more heavily into ‘upper funnel’ brand marketing strategies through TV, digital video, and out-of-home advertisements, such as billboards and public transportation signage, to create a flywheel designed to elevate the effectiveness of the company’s other marketing channels. The company’s regularly surveys buyers on ‘brand funnel’ metrics, such as awareness and loyalty and Etsy is a top-10 favorite website/app for online shopping in the United States, the United Kingdom, and Germany.
In 2024, the Etsy marketplace increased investments in Gifting, which spans multiple categories and represents a strong opportunity to boost brand consideration. Alongside several product launches related to Gifting, Etsy also ran multiple gifting-centric brand marketing campaigns.
Marketing Across Company’s House of Brands
The company’s subsidiaries also enhanced their marketing strategies in 2024. For example, Reverb continued to drive results through a video-first strategy across paid and organic channels. Depop delivered its best-ever year in paid GMS, driven by growth in performance marketing channels, ROI improvements, and the successful scaling of mid-funnel channels to broaden reach.
Trust & Safety
On Etsy.com the company strives to give the Etsy buyer comfort that they are purchasing goods from a shop that adheres to certain standards, which starts with the company’s policies. In 2024, the company reorganized its legacy permitted items policy into new Creativity Standards, which it believes more clearly convey the types of items that are allowed to be listed and sold on the Etsy marketplace, and better reflect the spirit of its creative inventory. The refreshed policy requires that items fall into one of the following categories: Made by a Seller, Designed by a Seller, Handpicked by a Seller, or Sourced by a seller.
Etsy is an unjuried marketplace, meaning sellers run their own shops, create, sell, and ship their own products, and are responsible for complying with its robust Seller Policy. Items on Etsy do not have barcodes or SKUs, and Etsy does not ever touch or possess the items for sale on the Etsy marketplace. The unique nature of Etsy sellers’ product inventory, combined with the constantly evolving nature of policy interpretation, necessitates expert, human involvement in content moderation, which it combines with the power of ML and other cutting-edge technology. The company focuses on detecting and removing prohibited content, equipping buyers with the information needed for informed purchases, and helping sellers understand and comply with its policies.
In 2024, the company also introduced a new seller onboarding fee to support enhanced security checks and seller verification and continued to expand proactive listing reviews and enforcement of its Creativity Standards to protect the integrity of its marketplace.
Trust & Safety also remained a top priority for Reverb and Depop in 2024. For example, Reverb continued to improve identity verification and Depop utilized AI to rapidly identify and remove bad actors.
Member Support
As the Etsy marketplace has scaled, so have the company’s investments in member support. As the primary touch point for the company’s vibrant community of buyers and sellers, the company’s Member Services team serves as both the voice of the Etsy brand and an important advocate for the company’s community. When an issue arises, or a user has a question, the company wants to ensure they get support quickly and easily.
In 2024, the company enhanced Member Support offerings by making it easier for buyers to access support through prominent links in user profiles, adding conversational AI within the Help Center for both buyers and sellers in the United States and Canada who are on desktops, and making Shop Manager chat available to all sellers in good standing.
The company’s subsidiaries also require similar member support activities. For example, Reverb expanded its chatbot integrations in 2024, enabling additional self-service solutions and reducing the overall time it takes for Reverb to resolve issues for their community; and Depop continued to invest in improving Member support efficiencies and the overall user experience.
Helping Sellers Grow
Beyond the Offsite Ads program, Etsy Ads (the company’s onsite advertising platform), and shipping labels, the company provides sellers with valuable insights, programs, and educational resources to support their growth. By combining these offerings with access to a global audience, the company aims to strengthen sellers' desire to continue building their businesses on Etsy. Other efforts include:
The Etsy Search Visibility Page, launched in the middle of 2024, is designed to give sellers more agency and control over their businesses. The page provides actionable tips to help sellers improve their search ranking on Etsy, covering key areas associated with quality, such as return policies, response times, and shipping charges. As sellers make changes to their listings, they have the ability to track improvements in real time.
The Etsy Purchase Protection program, designed to help buyers feel more confident making a purchase and allow sellers to keep their earnings on qualifying orders up to $250 when an item does not match the description, arrives late or damaged, or never arrives, continues to provide support for company’s sellers when a transaction goes wrong through no fault of their own.
The Etsy Share & Save program, a way for sellers to save on Etsy fees for sales they directly drive to their Etsy shop from their own channels.
The company’s subsidiaries also offer many features and services for their seller communities, including tips and tools for success, community events, and shipping carrier relationships and support. Both Reverb and Depop enhanced seller tools designed to boost sales; Reverb improved pricing data access and offer functionality, while Depop eliminated seller fees for the U.K. and the U.S. users, streamlined listing creation with AI-powered photo analysis, and upgraded offer negotiation tools with real-time market price information.
Fostering Engaged and Impactful Teams
Etsy marketplace’s People & Workplace mission is to foster engaged and impactful teams. The company’s know that attracting great talent is just the first step; equally important is to invest in programs that support the retention and growth of its employees. To achieve this, the company is committed to equal opportunities for employment, engagement, and development for all of its employees.
Seasonality
Etsy.com sellers experience increased sales and use more Etsy services during the fourth-quarter holiday shopping season. This has resulted in increased GMS and revenue for the company during the fourth quarter of each fiscal year (year ended December 2024). The company’s cost of revenue and marketing expenses also generally follow this trend, with the highest costs incurred in the fourth quarter of each fiscal year.
History
Etsy, Inc. was founded in 2005. The company was incorporated in Delaware in 2006.
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