SWOT Analysis of Etsy

Summary of Etsy SWOT Analysis

Etsy’s SWOT analysis reveals a dynamic e-commerce platform renowned for its focus on handmade, vintage, and unique goods. Among Etsy’s key strengths is its strong brand reputation. So strong, in fact, that it attracts a global community of over 8 million active sellers and 95 million buyers.

The platform excels in fostering creativity and entrepreneurship, offering user-friendly tools for sellers to customise digital storefronts and leverage advanced marketing features. Etsy’s marketplace is highly diverse, with a significant international presence and a strong mobile user base, as more than half of its traffic now comes from mobile devices. The platform’s continued revenue growth, driven by monetisation of advertising and payment services, further underscores its resilience and adaptability.

However, Etsy’s weaknesses are increasingly apparent. The company faces persistent declines in Gross Merchandise Sales (GMS), with negative growth reported in most recent quarters. Etsy also remains heavily reliant on the US market. Thus, the brand is vulnerable to currency fluctuations and limiting its appeal in regions with weaker currencies.

Competition from larger e-commerce platforms and niche marketplaces is intensifying. Meanwhile Etsy’s dependence on discretionary spending exposes it to economic downturns. Additionally, seller retention is a concern, as many sellers leave the platform, potentially seeking better opportunities elsewhere. These factors highlight the importance of strategic innovation and international expansion for Etsy’s future growth.

Introduction to SWOT Analysis of Etsy

To begin with, Etsy is a forward-looking and innovative company whose electronic commerce platform allows individuals to earn a living using craftsmanship, creativity, and entrepreneurship. Headquartered in Brooklyn, New York, Etsy began in 2005 as an electronic commerce company specialising in handmade custom crafts (Etsy, 2017). Etsy functions as a global peer-to-peer (P2P) digital network, where subscribers can interact, buy, and sell wares independently.

Through Etsy’s web-based portal, sellers can ultimately create unique digital storefronts to market and brand their products. Moreover, from the purchasers’ end, buyers can rate products, mark items or sellers as favourites, and ask direct questions to sellers (Krugh, 2014). While Etsy currently functions as a successful, well-branded, and globally connected-digital marketplace, it is now more exposed to a broader spectrum of opportunities and risks. As such, this essay encompasses a brief review of the internal and external factors Etsy ought to account for as it looks to the future.

Strengths

One of Etsy’s most significant strengths includes its ability to maintain solid domestic and international growth by the measure of gross merchandise sales (GMS). Specifically, Etsy’s GMS grew from $1.93 billion (USD) in 2014 to nearly $3 billion in 2016 (Etsy, 2017b, p. iii).

From a revenue perspective, Etsy nearly doubled its revenue of $196 million in 2014 to $365 million in 2016 (Etsy, 2017b, p. iii). The vibrant community comprising Etsy is extensively diverse, as buyers and sellers hail from six continents and almost every country in the world (Etsy, 2017a). The level of diversity characterising the Etsy community is also advantageous because it reflects a broader array of product offerings. Specifically, at the end of 2016, there were 1.7 million active sellers and 28.6 billion active buyers subscribing to Etsy (Etsy, 2017b). Worth mentioning is the fact Etsy garners nearly half of its GMS from mobile device purchases. Etsy’s interconnectivity and compatibility comprise another strength, as user activity across multiple devices and operating systems are synchronised seamlessly across devices and platforms (Erickson & Meyer, 2016).

Additionally, Etsy subscribers can also sign in and synchronise account activity with Facebook and Google, or make payments using Google Wallet, Apple iPay, and many others. Etsy’s platform constitutes another strength, especially because it affords users with a broad degree of customisation options for creating and designing unique digital storefronts (Krugh, 2014). The system comes with powerful organisation and marketing capabilities, especially regarding tagging and sorting features sellers can use to compartmentalise and display their product lines.

Weaknesses

A noteworthy weakness of Etsy stems from its reliance on gross merchandise sales in the United States because it diminishes the attractiveness of Etsy in foreign nations whose currency does not perform well against the USD (Kenney & Zysman, 2016). More specifically, this dependence restricts the marketability of Etsy in areas where existing sellers’ offerings might attract significant demand, were it not for disadvantageous exchange rates.

Disequilibrium among USD-based exchange rates may also reduce subscribership among sellers in foreign nations because they lack confidence in the income potential of Etsy as a viable source of primary or secondary income. While Etsy is diverse in terms of the countries its users occupy, the volume of Etsy subscribers in each foreign region is low, not to mention most Etsy users are females in young adulthood (Statista, 2017).

Opportunities

Global retail e-commerce sales rose from $1.5 trillion dollars in 2015 to $2 trillion in 2016. In short, that’s a massive 33% increase year over year (Etsy, 2017a). According to the global market research firm, eMarketer (2016), worldwide retail e-commerce sales will reach or surpass the $4 billion-dollar mark by 2020. Now that Etsy’s digital storefront, unique product offerings, and subscribers are more developed and well-known, an opportunity facing decision-makers is to diversify and expand their line of products. Presently, Etsy encompasses 45 million products in 50 retail categories. But it must look for ways to expand its brand beyond that of a special occasion marketplace to one people visit for more routine purchasing activities.

Developing efficient algorithms to detect products users show interest in could help Etsy accomplish this (Kenney & Zysman, 2016). Also, recent findings regarding the composition of Etsy’s sellers show 33% of sellers use Etsy as their sole occupation. Of that collection, 81% anticipate they will grow their future sales in the near future (Etsy, 2017a; 2017b). Full-time sellers use Etsy will most likely differ from part-time sellers. Therefore, another opportunity available to Etsy involves the acquisition of data regarding each type seller. This in contrast to reliance on data that reflects all sellers.

Threats

To begin with with, one threat Etsy faces pertains to the retention of its sellers. In essence, approximately 31% of Etsy’s sellers were deemed active by the end of 2016 that were active in 2013. Ultimately, that’s a 69% loss in seller subscribers (Etsy 2017a; 2017b). While it is unclear exactly what happened to Etsy sellers active at the end of 2013 but inactive at the end of 2016, Etsy should learn more about where sellers go, why they choose to leave, and whether retention strategies are worth exploring.

Sellers could be leaving Etsy because they want to shift their digital storefront to a competitors’ website, launch their own entrepreneurial enterprises, or find more reliable sources of income. In any case, sellers are the lifeblood of Etsy, and it is essential decision-makers delve into the reasons why certain Etsy subscribers stay and others go (Etsy, 2017b).

References for SWOT Analysis of Etsy

• eMarketer. (2016, Aug 16). Worldwide retail ecommerce sales: The eMarketer forecast for 2016. Available from https://www.emarketer.com/Report/Worldwide-Retail-Ecommerce-Sales-eMarketer-Forecast-2016/2001849 
• Erickson, A. & Meyer, I. (2016). Economic security for the gig economy [White paper]. Etsy. Available from https://extfiles.etsy.com/advocacy/Etsy_EconomicSecurity_2016.pdf 
• Etsy. (2017a). 2016 annual report. Available from https://investors.etsy.com/~/media/Files/E/Etsy-IR/annual-report-proxy-materials/etsy-ar2016.pdf 
• Etsy. (2017b). Notice of 2017 annual meeting of stockholders and proxy statement. Available from https://investors.etsy.com/~/media/Files/E/Etsy-IR/annual-report-proxy-materials/etsy-proxy-statement-2017.pdf 
• Hamari, J., Sjöklint, M., & Ukkonen, A. (2016). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67(9), pp. 2047–2059.
• Kenney, M. & Zysman, J. (2016). The rise of the platform economy. Issues in Science and Technology, 32(3), pp. 61–69.
• Krugh, M. (2014). Joy in labour: The politicisation of craft from the arts and crafts movement to Etsy. Canadian Review of American Studies, 44(2), pp. 281–301.
• Luckman, S. (2013). The aura of the analogue in a digital age: Women’s crafts, creative markets and home-based labour after Etsy. Cultural Studies Review, 19(1), pp. 249–70.
• Mancino, M. (2016). Cybersecurity otherwise: Seeking communicative insights. Pennsylvania Communication Annual, 72(2), pp. 34-58.
• Statista. (2017). Key demographics of Etsy sellers in the United States as of December 2016. Available from https://www.statista.com/statistics/447960/us-etsy-seller-demographics/
• Zhang, S. (2014). Successful internet entrepreneurs don’t have to be college dropouts: A model for nurturing college students to become successful internet entrepreneurs. International Journal of Information and Communication Technology Education, 10(4), pp. 53–69.