Etsy Inc. called on its crafty sellers during the first week of April to make face masks after the White House announced guidelines that U.S. consumer should cover their mouths outside of their homes to protect themselves and stop the spread of COVID-19. Since then, the marketplace for handcrafted goods has sold 12 million, or $133 million worth, of fabric face masks from 60,000 sellers in April alone.
Gross merchandise sales (GMS), or the total value of goods sold on Etsy.com, grew 100% year over year to $780 million in April, executives said on a call discussing first-quarter earnings results with investors. Of that, masks were 17% of Etsy’s sales for the month, executives said, according to a SeekingAlpha transcript. Etsy’s first quarter ends March 31 so it does not include April’s sales.
“In early April, the CDC changed its guidelines to recommend that Americans wear fabric face masks, and we saw a tremendous surge of demand for fabric face masks right away on our site,” CEO Joshua Silverman said on the call. “In fact, it was like waking up and discovering that it was Cyber Monday, except that everyone [in] the world wanted just one product and that one product was in extremely limited supply.”
Etsy had to adjust a few things on its site to adapt to changing circumstances. First, the marketplace had to change its search results algorithm, so when a customer searched for masks, she would actually see fabric masks. Previously, they would see other items such as Halloween masks or skin care masks, Silverman said. Second, it needed to increase supply to meet demand so Etsy sent a push notification to every crafts seller on its website in the U.S.: “Calling all sellers. Start making face masks.”
Face masks were the second-highest “category” during April, Etsy says. The “home and living” category, as Etsy terms it, was No. 1. April was the highest month of sales for Etsy since 2015, and it had the two highest sales days of all time in the last week of April. Not including face masks sales, Etsy.com grew GMS 79% year over year in April.
Etsy, No. 18 in the Digital Commerce 360 Top 100 Online Marketplace ranking, acquired nearly 4 million new buyers in April, up 160% year over year. Comparatively, sales from new buyers grew 5% during Q1, executives said on the call. Additionally, 32% of buyers who purchased a face mask returned within 14 days to make an additional purchase. The marketplace also re-engaged 2.5 million buyers that haven’t purchased for more than a year, which is a 186% increase year over year.
Thus far in Q2, Etsy says it has spent more on marketing, particularly television marketing, than it had planned. The marketplace points to more people being at home and possibly engaging in more screen time as a reason for the increased investment.
“The big opportunity in this moment is there’s a lot of people who maybe have never shopped on Etsy before or who have shopped only very occasionally on Etsy,” Silverman said on the call. “They might think of us only for one very specific product category. Now, they’re thinking about us and coming for other product categories.”
On Etsy-owned Reverb.com, an online marketplace for musical instruments and products, sales are up 50% in April. This is a result of more first-time buyers turning to Reverb while bricks-and-mortar stores are closed.
During the first quarter ended March 31, sales on Etsy.com and Reverb.com grew 32.4% to $1.35 million from $1.02 million in Q1 2019. Total revenue, which Etsy generates from listing fees, seller services and commissions, grew 34.7% to $228.0 million from $169.3 million. Net income during the quarter was $12.52 million, down from $31.58 million a year ago. The decline is likely because of foreign exchange rate fluctuations, which resulted in a loss of $9.3 million, the company says.Favorite