Etsy has shown that it doesn’t need millions in face mask sales to keep growing.
But the big challenge Etsy is facing goes beyond the sale of last year’s coronavirus-fighting cash cow. The momentum Etsy gained is holding into 2021, but now the site has to figure out how to manage its growing platform.
The key takeaways:
- Etsy announced first-quarter revenues of $550.6 million, up 141.5% from the same quarter last year.
- Gross merchandise sales came in at $2.9 billion, up 144.1% year over year.
- The company also reported 4.7 million active sellers, an increase of 67% year over year, and 90.6 million active buyers, almost a 90% increase year over year.
- Etsy listing and transaction fees, payment and offsite ad fees brought in $413 million in revenue.
- Mask sales slacked off even further, making up just 2.5% of GMS. But non-mask GMS grew 20 percentage points compared to the last quarter.
When the CDC announced last year that Americans should wear masks to stop the spread of Covid-19, millions scrambled to find face coverings. Etsy sellers saw the demand, and started sewing. In 2020, sales of face masks on Etsy exceeded $740 million, with $346 million in Q2 and $264 million in Q3.
But with mask sales disappearing, Etsy is starting to focus more on other revenue sources, including marketplace fees and ads. This quarter, for example, Etsy expanded its Offsite ad placements to more affiliate channels such as Buzzfeed, Martha Stewart, Real Simple and Better Homes & Gardens. However, a vast majority of Offsite ads are on Google and Facebook, according to CFO Rachel Glaser.
Etsy also takes a cut of seller fees for new listings, transactions and when an Offsite ad results in a sale. And Etsy is now seeing more revenue through Etsy Payments. The move was pitched as a way to make the buying process easier for customers, giving them more ways to pay, but sellers in the U.S. face a fee equal to 3% of the sale price, plus a 25 cent fee per order.
The ad fees had two tiers. If a seller made less than $10,000 on Etsy in the last twelve months, they are charged a 15% fee for an order that came from an ad click.
For the first quarter, Offsite ads, listing fees and Etsy Payments accounted for 75% of total revenue, up 165% year over year. Etsy ads, buyers paying for shipping labels and other services accounted for 25% of revenue, up 90% year over year.
Mo listings, mo problems
Back in January, Etsy and other e-commerce platforms dealt with a rash of offensive product listings as a result of the attack on the capitol on January 6. As recently reported by Insider, Etsy is still selling hundreds of items that directly violate its prohibited item policy, including weapons, mummified animals and even nuclear material. Etsy has since deleted the posts flagged by Insider.
In 2020, Etsy received close to 4 million flags regarding potentially noncompliant listings, a 400% increase in flags from 2019, according to Etsy.
During yesterday’s call, Glaser said that the company expected some headwinds as more people become vaccinated and restrictions lift, possibly leading customers to spend less on Etsy in favor of travel and dining out.
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