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cindylouwho-2 · 2 months

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Etsy Fourth Quarter Earnings 2023 - Still Banking on Improving Marketplace Sales, But Not Revealing Many Plans

Slide 23 from Etsy's 4th quarter 2023 earning report, © Etsy. it shows what percentage of sales each major category has, with performance in the quarter.

Etsy’s fourth quarter results for 2023 were as uninspiring as expected, but despite revealing few plans, the corporation is convinced it can increase gross marketplace sales through its gifting and other initiatives. There was a lot of interesting information for shop owners, though, so let’s get right to it.

First, here are the resources that you should read/watch yourself, if you want to know more:

the press release

transcript of the conference call

slides from the conference call

video of the call (click on “Webcast” under “Latest Quarterly Results”)

my summaries of the fourth quarter 2022, and the third quarter 2023 for comparison

Then, the basic numbers (covering October to December 2023, compared to the same period in 2022):

Sales on Etsy were $3.6 billion, down 1.4% year over year

Total sales for all 3 marketplaces (Etsy, Reverb, and Depop) were $4.0 billion, down 0.7%. [Elo7 was officially sold in mid August; its numbers were still included in the comparison totals of 2022]

Etsy’s revenue (including all 3 sites) was $842.3 million, up 4.3%

Seller service revenue was up 9.4% to $226.5 million, while marketplace revenue was up 2.6% to $615.8 million

Net income was $83.3 million, down 24% (mostly due to the layoff costs of $27 million in the quarter)

Active buyers on Etsy alone stand at 92 million, a third consecutive all-time high

Active sellers on Etsy alone are now 7 million, the fourth large jump in a row compared to the previous quarter; numbers had been stagnant through the end of 2021 and all of 2022 [Note that “active” means one charge or transaction in the past 12 months; many “active” shops currently have nothing for sale.]

Sales where the buyer and/or the seller was not in the United States were 45%, up from 44% last year, but down from 47% in the previous quarter

Sales on mobile are 68%, up from 67% last year [this includes both the buyer app and mobile browsers]

As always, I am reporting what Etsy’s representatives said in the main text, with my commentary in square brackets.

Etsy Search

At the moment, Etsy’s search algorithms aim to show shoppers things they are most likely to buy. They are currently working on changing that to showing what buyers are most likely to love after the purchase. They refer to items that consistently get high reviews, have good photography, and whose shop owner provides good customer service, has quality return policies and ships on time, as “quality” items, or, “the best stuff.”

This is all a work in progress, so search may not change drastically any time soon. Past calls and interviews have related this to the increase in Etsy Picks assigned in the past few months; they plan on using those Picks to train the algorithm to find “quality”, especially quality photos. The items staff identify as “quality” convert twice as well as other listings, so there is obvious benefit to Etsy showing them higher up in search results.

Etsy has added some of the features in its “neural ranking model” to non-US searches; previously it was only in the US searches.

Advertising

Offsite Ad spending was down 4% in the quarter vs. 2022, in part due to competition bidding higher than Etsy thought was worthwhile. At the time of the call, that spending was back to normal. Per slide 21, money from Offsite Ads fees covered about 35% of what Etsy spent on the ads during the quarter.

CEO Josh Silverman explained why the performance marketing (Offsite Ads) spend can be unpredictable.

“So performance is dynamic on a, really, hour-to-hour basis depending on the ROI we're seeing on every dollar we're spending. And we've got pretty sophisticated algorithms that work on, is this bid -- is this click worth this much right now and how much should we bid. And so to the extent that CPCs rise, we naturally pull back, or to the extent that CPCs lower, we naturally lean in. The other thing, by the way, it's not just CPCs, it's also conversion rates. So in times when people are really budget constrained, we see them actually -- we see conversion rate across the industry go down. We see people comparison shop a lot more. And so we are looking at all of that. And not humans, but machines using AI are looking at a very sophisticated way of what's happening with conversion rate right now, what's happening with CPCs right now.”

Etsy also does testing twice a year where they stop running ad such as Google Shopping ads in part of the country, and then compare with the areas still advertising to see if the buyer still would have bought. Silverman admitted that the data shows “often the answer may be yes.”

Overall marketing costs went up 7% in the year.

The Gifting Initiative

Etsy is now aiming to brand itself as the place to go to buy gifts. Gift Mode is just the start of this campaign. Their surveys report that more than half of US gift giving is based on personal occasions that occur year round, such as birthdays, or “just because”. People in the US spend an average of $1600 a year on gifts, but Etsy’s US buyers only average $38 spent per year on gifts from Etsy. They estimate that less than half of Etsy buyers in 2023 used the site to buy at least one gift. There is obviously an opportunity to do better.

The percentage of US residents thinking of Etsy as a good place to buy a gift is now down to 10%. [Previously, the company reported it was 12%, and I commented last quarter that I’d like to see a more recent survey to judge if they have used this knowledge to improve.

“Only 12% of buyers will name Etsy top of mind as the place to shop for gifts.” They don’t seem to have any updated numbers showing how they’ve been improving that situation. [It’s time to go after that “enormous opportunity”, Josh!]”

So despite wanting to grab a bigger gifting share before now, Etsy has managed to lose ground. This is my biggest fear about the gift push: the market was there before now, and Etsy’s own research demonstrated that. Are they only going all in now that they have run out of other ideas?]

There were 6 million visits to Gift Mode in the first 2 weeks. [I am not really impressed, given that they promoted it very heavily, and I was personally responsible for over 100 of those visits while researching my Gift Mode blog post.]

Other plans to bring in buyers

Silverman stated “[o]ur focus will be to make Etsy even more Etsy”, and to differentiate the marketplace from sites that sell everyday needs. The following quote deserves to be read in full:

“Most other players are competing head-to-head to sell the exact same merchandise, focused on selling at $0.02 cheaper or shipping it two hours faster, and this has resulted in the commoditization of the entire experience. But that's just not Etsy.”

[This seemed to be a completely unironically-intended comment, with no recognition of the fact that he actually discussed speeding up shipping times in the same presentation, nor of the well-known fact that so much on Etsy these days can usually be bought cheaper on Aliexpress or Shein.]

He also said that the “special” aspect of Etsy is what sometimes holds the site back, as buyers might consider Etsy limited to specific items, or might “worry about the post-purchase experience”. Bringing people back more often is a goal. [They’ve been saying that for years now, though.]

The company is currently doing buyer loyalty program research, but gave no further details. He also cited “shortening our estimated delivery dates this year by at least 2 days” as something that buyers should like, but it is unclear to me reading this if the work done last year (the year discussed in this call) already shaved 2 days off of delivery dates, or if the statement is this year’s goal. I think it is the latter [but the only ways to do that are to improve the accuracy of their tools - and I am not sure that they are currently 2 days longer than reality on average - or to pressure sellers to ship faster. Since Etsy is once again updating shop settings to add weekends to shop processing times without notifying us, I guess we can assume the latter? UPDATE (Mar 19): Silverman clarified at a recent talk that "we think we can cut shipping times on Etsy by at least two days this year."]

Other things sellers need to know

Etsy Ads now involve some localization outside of the US, which increased conversion rates. [If your ad performance changed in non-US countries during the quarter, this is the most likely reason.]

Neither sales or Etsy’s revenue are expected to increase until the second quarter, and they expect revenue to grow faster than sales this year. [Revenue is almost certain to increase, as the corporation has been surveying sellers on what they would be willing to pay more for.]

“In 2023, we removed approximately 140% more listings for violations of our Handmade Policy than in 2022.” [No word on how many of them were removed erroneously, though, as we know the “Temu” bots pulled a lot of truly handmade items that had photos stolen and listed on other sites.]

Silverman promised “innovation planned to improve the predictability of shipping costs for both buyers and sellers”, but provided no details. [I am not sure what would make my personal costs more predictable, given they change every single week with Canada Post’s fuel surcharge right now. Is it going to be forcing people to use Etsy Labels with calculated shipping? Or is this more calculated shipping options for countries outside of the US, and for new carriers? Restricting the amount a listing can charge for shipping? I really have no idea, but I hope all those people they hired for “fulfillment” jobs a few years back are coming up with something that is actually useful.]

Miscellaneous

Depop had a decent quarter in sales and revenue.

Reverb sales were flat. “The Reverb team made some organizational changes late in the year” which are expected to be profitable [i.e., they laid off over 30 people in October].

The Etsy layoffs in December were referred to by CFO Rachel Glaser as “our recent workforce realignment”. [At least she didn’t call those former employees churn.] The call provided no details on the restructuring they previously said would be done by the end of this quarter.

October sales were not good, but November and December improved. January “was a little bumpy.”

Outside of the US, sales in Germany were mostly steady, while the UK, Netherlands, Switzerland and Austria improved.

The upcoming $15 fee for newly-opened shops will largely go to paying the costs of the technology for vetting sellers; it is not expected to result in much profit.

My thoughts: this is going to be a rough year for many Etsy sellers

As I discussed last quarter, Etsy’s upper brass didn't seem to think they were responsible for the lackluster sales performance of their marketplace, and this quarter that extended to not admitting they overhired since early 2022, and not acknowledging that Etsy’s reputation as a gift site actually dropped over the past few years. The last one is particularly galling. Why keep talking about how there was great room for improvement in Etsy brand recognition for gift buyers and then fail to improve even a tiny bit? What were these folks doing the past 2 years?

It’s clear they think bravado will get them through this, including the bold move of claiming everything will improve in the second quarter and throughout the year without revealing any real details. No wonder the stock dropped yet again.

That said, they likely have some reasons for thinking that revenue will pick up at least, if not sales. As mentioned above, they have been extensively surveying sellers about raising fees and/or charging us for things we currently get for free (or mostly do not want). Possible downsides for Etsy include the fact that the Indie Sellers Guild and the Artisans Cooperative (among others) are likely to get more negative press for Etsy if fees are raised yet again, just as happened in 2022. It does not help that Etsy didn’t really follow through on improved services the last time they raised fees.

And the more I think about the comment on shipping costs, the more I believe they are considering making Etsy Labels compulsory for at least some in the US, with set shipping charges sellers won’t be able to change. Bonanza did this last year, charging its US sellers $2 per order extra if they didn’t use Bonanza labels and didn’t get an exemption from the program. Most Etsy sellers using the labels and being forced to show that price as the shipping cost for buyers is the only way I can think of making shipping prices more predictable for buyers, other than capping shipping charges outright (and that sounds like a nightmare to implement). eBay does it, though. Am I missing something? [UPDATE Mar. 5, 2024: Etsy is surveying buyers about how much they like cheap shipping.]

Perhaps more importantly, the planned search changes have the potential to disrupt the status quo a great deal. We know that Etsy frequently takes a lot longer to develop these types of technologies than they expect, so it may not happen this year, but the work on promoting “quality” listings will continue, and that is already affecting some shops that used to do better in Etsy search. Do everything you can to make sure your images are "high-quality". If you rely on internal search to get most of your Etsy sales, this is a very good time to follow my usual advice and diversify your traffic sources.

Etsy’s branding pivot to being the place to get gifts could also have a big impact on some shops and categories, if it is successful - and that is a big “if”. I’m not thoroughly convinced Etsy can manage this change in consumer consciousness, considering that the site’s reputation continues to be hammered by controversies around scams and non-handmade items. Kitkats, anyone?

Many other comments do not bode well for most shop owners: a continuing push for discounting, emphasis on faster shipping times, and financial restrictions/impositions on “newly-opened” shops all indicate that traffic may flow away from small business owners who choose not to comply, or are unable to comply.

Last quarter I said “[d]on’t be surprised if there are major site changes in 2024”, and I appear to have been correct. But really, anyone reading these reports over the past few years could have seen it coming.

Stay well informed, everyone! It’s the best weapon we have.

Reminder that you can sign up to receive my Tumblr and website blog posts via email.

UPDATED March 19, 2024

#ecommerce #EtsySellerNews #etsy #microbusiness #cindylouwho2

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paleopanthera · 1 year

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Pewter Drop Coming Nov 26th - Small Business Saturday!

You'll find these for sale over at PaleoPanthera.com this coming Saturday! One off rabbit and tiger, three gem eyed coyotes, restocked lion women figurines, coelacanth figurines, dire wolf skulls, vulture skulls, raven skulls, cave lion skulls, and new large coyote molar pins.

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officialluvmilk · 1 year

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Some end of the year scents are now available for Patrons to my Patreon based on some of my favourite characters from the popular manga/anime Chainsaw Man. These scents will be available the rest of this month as well as through January for Patreon Patrons only. Please note that no orders placed now will be received in time for Christmas but I am continuing to work all week so you will receive shipping notifications! 💝🐰

Out of Touch: Creamy strawberry ice cream and red bean paste surrounded in sweet shortcake.

Out of Time: Baked apples with a sprinkle of cinnamon; tobacco, vetiver, smoke, and warm bourbon.

Check out my Patreon at patreon.com/luvmilk

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forestspiritcreations · 1 year

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A little more done on the “Magic Hut” for the shop area. It’s coming together… slowly, but surely. My husband, @rpm_amore is so supportive and great at helping me see my vision come to life ❤️ #witchyshop #witchybusiness #witch #forestwitch #vancouverisland #magic #apothercary #microbusiness #smallbusiness https://www.instagram.com/p/CoWIJlor-qV/?igshid=NGJjMDIxMWI=

#witchyshop #witchybusiness #witch #forestwitch #vancouverisland #magic #apothercary #microbusiness #smallbusiness

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htrimble95 · 9 hours

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Week 7 START UP VENTURE PROGRESS

here I will share a little about how the start up of my micro-business is currently going

what is working & is not working

IS:

finding wood for my signs that is recycled rather than bought new creating a more affordable price point for my customer base and creating a solid marketing strategy for "environmental sustainability"

getting the word out in the community that I will be attending the vendor blenders and craft sales in the community in the near future utilizing social media and my current connections as a known face in the community as a business leader

ensuring that I post sneak peaks; targeting my customers and getting people excited about my products

using materials that are affordable example paint and stencils that will last but wont break the bank ( dollarama in Kenora is a life safer; i made a larger investment in supplies initially to avoid multiple trips as we don't have a dollarama here)

planning and execution

IS NOT

well you see i come by it honestly; but i am horrible about procrastination and leaving thigs to the last minute and then basically whipping it all out last minute SOME HOW; this is one trait of my ADHD that continues to get worse the older I get

soooo

finding time to make the signs for my upcoming vendor has been challenging around part time school, full time work running a business and full time single mumming

i underestimated the interest i would have from the get go so i feel that my initial predictions for what i need to produce are inaccurate and i do not want to have the reputation for selling out and then disappointed customers that come to see me

reminding myself quality over quantity; and making sure to set aside a bit of time every day to work on my products

how do you feel the project is coming?

i feel that my project is coming along nicely; i have always been complimented on the decor in my home and people are telling me theyd buy my things so now that i am venturing out i believe that i will be successful in sharing my passion with the world. I also am learning to make sure not to overinvest from the get go; i dont want to dump too much into the business until i start generating some revenue but i also want to have selection so learning to find that healthy balance is essential. I feel pretty confident about people accepting me into the small business community in my town and am excited to share something i truly enjoy doing in my free time.

what are you learning about running a business?

i am learning so much about running a business; and i find it extremely unique that i can take some things that i already know about running a large scale business and adjust to my micro-business so that i can make the most profit possible

i have learned that small business's are a Nickle and dime game and every dollar counts especially when starting out; combating this by reusing paint brushes, ensuring caps are on my paints and cans, using less paint more often when putting multiple colors out on my palette are all cost saving things i am applying now that i am transitioning from a craft for myself mindset to a craft for a business mindset

i am learning that it can be a lot of fun but its also alot of work and there really are obstacles around every corner

what are you learning about yourself?

i am learning that i need to work harder to overcome my struggles with time management; however this is something i already knew

i am learning that although i currently run a business for someone else its very fulfilling starting and running a business for myself

i am learning that its extremely fulfilling when your passionate about the things your selling in your business

i am reminding myself that i am not perfect and learning that i will always face things that are discouraging but its important not to give up on your dreams

#startupventure #seneca college #entreprenuership #microbusiness #crafting

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stick2gether · 18 days

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#stick together #sticker business #microbusiness #mental health

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historylaura · 1 year

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I love going to ARM and am a proud trader there. The Artisans and Reenactors Market happens twice a year in March and November. Next weeks will be my third. It is a great place to get kit and meet a lot of like-minded people. I always take my notebook and will be writing when I can. Also sewing. I am going to try and do the hand sewing for my new pelisse. (Expect to see my characters in something similar soon.)

#artisansandreenactorsmarket #creative writing #sewing #embroidery #microbusiness #napoleonicreenactment #regencyreenactment #regency #regency era

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art-istin-seeberge · 1 year

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Flamingo . #flamingo#flamingolove #birdpainting #birdart #natureillustration #animaldrawing #wildlifeart #organiccottontshirt #organiccottonclothing #styleforwomen #microbusiness # #tshirtbusiness #trendyoutfit #aestheticoutfit #discoverunder50k #biostyle #biofashion #organicfashion #organicfashionforkids #callforsubmission #onlineart #callforartist#artistinseeberger #openforsubmissions #icolorupyourlife (hier: Ruhrgebiet) https://www.instagram.com/p/CodNw0jLeAn/?igshid=NGJjMDIxMWI=

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akhileshmishra · 1 year

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5 𝑹𝒆𝒂𝒔𝒐𝒏𝒔 𝑾𝒉𝒚 𝑮𝒓𝒂𝒑𝒉𝒊𝒄 𝑫𝒆𝒔𝒊𝒈𝒏 𝒊𝒔 𝑰𝒎𝒑𝒐𝒓𝒕𝒂𝒏𝒕 𝒇𝒐𝒓 𝑨𝒏𝒚 𝑩𝒖𝒔𝒊𝒏𝒆𝒔𝒔

Graphic design is more than just aesthetics — it’s a form of communication between your business and your audience. Businesses use graphics in every stage of the marketing funnel to inform, engage, and eventually persuade prospective customers to make a purchase or take a desired action.

𝑰𝒇 𝒚𝒐𝒖’𝒓𝒆 𝒊𝒏 𝒂 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔, 𝒚𝒐𝒖’𝒓𝒆 𝒊𝒏 𝒕𝒉𝒆 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔 𝒐𝒇 𝒈𝒓𝒂𝒑𝒉𝒊𝒄 𝒅𝒆𝒔𝒊𝒈𝒏.

Let’s explore five reasons why graphic design is important for any business (including yours!) to expand brand reach and turn more profit.

⭕ 𝐅𝐢𝐫𝐬𝐭 𝐈𝐦𝐩𝐫𝐞𝐬𝐬𝐢𝐨𝐧 𝐌𝐚𝐭𝐭𝐞𝐫: It is an important tool to help any business make a positive, lasting impression.

⭕ 𝐂𝐨𝐧𝐬𝐢𝐬𝐭𝐞𝐧𝐜𝐲 𝐄𝐪𝐮𝐚𝐥𝐬 𝐂𝐫𝐞𝐝𝐢𝐛𝐢𝐥𝐢𝐭𝐲: graphic design will help your business create credibility. When your creative content helps solve problems and relieve pain points, your customers are more likely to view you as a trustworthy authority in your field.

⭕ 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐭 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐈𝐝𝐞𝐚𝐬: Infographics are a great way to summarize information that your audience would otherwise skim over (or skip reading completely). Studies show that infographics — which combine visuals with text — are three times more engaging than text-only content.

⭕ 𝐂𝐫𝐞𝐚𝐭𝐢𝐯𝐢𝐭𝐲 𝐊𝐢𝐥𝐥𝐬 𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐨𝐧: Increasing your company’s competitive advantage is more important than ever, as competition continues to increase. Create content that puts forward new ideas, solves existing problems, or relieves customer pain points in innovative ways. Graphics can be used to empathize with your audience by literally showing them what life would look and feel like with their pain points solved by your product, service, or advice.

⭕ 𝐘𝐨𝐮𝐫 𝐌𝐞𝐬𝐬𝐚𝐠𝐞 𝐌𝐚𝐭𝐭𝐞𝐫: Graphic design is about communicating that unique brand story to your current and future customers. Simple design decisions like font choice and color scheme can help you deliver your messages with both feeling and clarity in a way that supports your brand message.

𝑵𝒆𝒆𝒅 𝒔𝒐𝒎𝒆 𝒉𝒆𝒍𝒑 𝒈𝒆𝒕𝒕𝒊𝒏𝒈 𝒈𝒓𝒂𝒑𝒉𝒊𝒄 𝒅𝒆𝒔𝒊𝒈𝒏 𝒇𝒐𝒓 𝒚𝒐𝒖𝒓 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔?

------------------------------- I am Akhilesh Mishra and I am here to help startups, micro, small, medium and large #entrepreneurs to put their Business stand out. DM me today to find out how we can use Graphic Design to grow your business. -------------------------------

𝐅𝐨𝐫 𝐦𝐨𝐫𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐚𝐛𝐨𝐮𝐭 𝐦𝐞 𝐩𝐥𝐞𝐚𝐬𝐞 𝐯𝐢𝐬𝐢𝐭: https://akhileshmishra.co.in/

#graphicdesign #freelancer #freelancerdesigner #startup #smallbusiness #microbusiness #mediumbusiness #largebusiness #enterpreneurs #branddesign #growthbusiness #graphicdesigner #importance of design #business help #helpfull

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