In its 10 years of facilitating the peer-to-peer sale of bespoke bric-a-brac, Etsy has defied the odds by scaling while remaining largely true to its brand. The online marketplace for handmade and vintage items is set to go public in one of the most closely watched IPOs this year. And with a fundraising target of $100 million, its cutesy-meets-artisanal essence hangs in the balance.
But even if Etsy’s twee nature clashes with the bull and bear intensity of Wall Street, it seems poised to pull off the transition. Here are four key lessons other brands can take away from Etsy, a decade after its launch in a Brooklyn loft.
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Identify and target your niche.
In its preliminary IPO prospectus, Etsy wrote that its mission is “to reimagine commerce in ways that build a more fulfilling and lasting world.” The company recognized the value in a handmade item or antique collectible, and created a new type of online marketplace that allowed artists, crafters and vintage dealers to set up shop on their global platform.
Once it identified its niche, the growth of the Etsy brand has been “organic,” according to Claire Capeci, global president of retail at J. Walter Thompson.
“I don’t remember seeing anything commercial when [they were] putting it out there,” said Capeci. “The reality is, they created this brand that has been created in a good part by the vendors they have on the site.”
Etsy declined to comment for this story since the company is in its quiet period.
As Etsy and its storefronts (as their 1.4 million registered online shops are referred) grow, the company still generally functions the way it intended: as the antithesis of corporate retail. Brand growth may be inevitable, but keeping in touch and growing with the initial niche community that launched the brand harbors a loyal following.
Build a brand that people can get behind.
The core values that exist at the center of the Etsy brand appeal to two certain types of shoppers: the shopper who seeks something unique in a retail sea of mass manufacture, and the shopper who would rather support the small-scale entrepreneur than the giant corporation.
“Etsy is a champion of the small manufacturer,” said Andrew Holland, engagement manager at Vivaldi Partners Group. “Its mission drives the brand, and centralizes it.”
By having a greater purpose behind its branding, and continuing to advocate for it, Etsy has successfully built a loyal community of vendors and buyers that continues to grow. All brands need to identify why people should rally around their mission, product or identity – and then focus on building an active community comprised of the customers who respond, said Holland.
However, where brands’ social missions are concerned, Holland cautioned against faking it. “It’s not something you can just introduce.”
Maintain a digital presence that speaks to (and for) your brand.
For Etsy, this means using its blog and social platforms to champion individual storefronts. Etsy uses its Twitter (2.5 million followers), Facebook (1.9 million likes) and Instagram (292,000 followers) accounts to promote products from the community of vendors. Etsy is, of course, trying to profit off of what the community is producing. (Vendors are charged 20 cents for every four months each item is listed on the site, and a 3.5 percent cut of each transaction goes to Etsy, resulting in a merchandise revenue of $1.93 billion in 2014.) But the company manages to push sales dollars on social in creative, eye-catching and sometimes trend-driven ways that fit the brand.
— Etsy (@Etsy) February 27, 2015
“Etsy has to listen to [the vendors] to grow well and provide a win-win situation for both sides,” said Holland.
Etsy’s not just listening; it’s engaging and promoting. As a result, the company has managed to grow its brand without forfeiting its established identity in the social media shuffle.
Make changes the core community can adapt to.
Etsy is largely powered by a passionate community of artists and crafters who create the goods they’re selling with their own hands. The storefronts are also where the business makes bank (Etsy boasts a valuation that’s nearing $2 billion, according to Bloomberg).
So in 2013, when Etsy announced that the company would allow vendors who identified as designers to partner with outside manufacturers, some DIY vendors weren’t happy. However, the change failed to shake Etsy’s community identity, and in 2014, the top-three-selling Etsy shops (Think Pink Bowtique with 119,180 sales, Rivermill Embroidery with 114,220 sales and Thevelvetacorn with 96,605 sales) were privately operated businesses, according to a ranking culled by Handmadeology.
After Etsy goes public, there are visible benefits for vendors who might initially feel uncomfortable with the change. Capeci points out that, with 20 million buyers, storefronts average 20 buyers each – not a great figure for those trying to run a small business.
“It feels like, up until this point, they’ve provided a great place for the vendors,” said Capeci. “But as businesses, they’re going to want traffic, people to buy [their products] and the transaction to make money off of it. Now, Etsy has to figure it out, on Wall Street, how to keep those values in check.”
Image courtesy of Vdovichenko Denis / Shutterstock.com
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