The pandemic-related “tidal wave of growth” has subsided, CEO Josh Silverman said to investors during a May 4 earnings call for arts-and-crafts marketplace Etsy Inc.
Silverman addressed the recent Etsy seller strike after the marketplace increased transaction fees, its plans to bring in new buyers and concessions for sellers in Ukraine.
For the period ending Mar. 31, online marketplace Etsy reported revenue was $579.3 million, up 5.2% year over year. Gross merchandise sales (GMS) were $3.25 billion, up 3.5% year over year from the same period in 2021.
Etsy reported net income of $86.1 million, a decrease of 40.1% year over year. The decline in net income was attributed primarily due to increased employee compensation-related expenses due in part to a 71% increase in new employee hires. That includes acquisitions of U.K.-based peer-to-peer fashion marketplace app Depop, and Brazilian arts-and-crafts marketplace Elo7.
The online marketplace reported it added 7 million new buyers in Q1 2022, with 89 million active buyers in nearly 250 countries. The company currently has about 5.5 million sellers. Etsy plans to focus on attracting male shoppers, as 70% of its customer base identify as women.
Looking ahead, Etsy said it expects Q2 revenue to fall between $540 million and $590 million. GMS is expected to be between $2.9 billion to $3.2 billion.
Etsy seller strike
In April, Etsy raised transaction fees for sellers from 5% to 6.5%. Some Etsy sellers protested the rate hike, citing a 42% fee increase in 2018 to improve the seller experience. The group said the company did not deliver.
The group also noted dissatisfaction with Etsy’s Offsite Ads program, which charges sellers a 12% to 15% fee. That’s in addition to existing fees and is charged for items sold through one of Offsite’s ads. Offsite Ads is an advertising service that promotes sellers’ items to multiple high-traffic sites including Google, Facebook, Instagram, Pinterest and Bing. Sellers can opt out if they make less than $10,000 a year but not if they make more.
Silverman told investors during the earnings call on May 4 that the 2022 fee increase was necessary to bring in more buyers. One way the company is approaching new buyers is its investment in brand marketing with its “Why Buy Boring” campaign in the U.S. and U.K.
Etsy also noted it has recruited social media influencers and sellers to its “Creator Collector” program, “which encourages content creation and monetization on social media through our affiliate marketing channels.” The program focused on TikTok, which resulted in 20 million views to Etsy.com and accounted for approximately 27% of all purchases from the program during the first quarter of 2022, according to the company.
“No one likes it when prices go up,” Silverman told investors.
He said bringing in more buyers is challenging because more people are spending on travel, dining out and shopping in stores. Silverman noted to investors that during the seller strike, Etsy saw “no material impact to sales for the week, much less for the quarter, and we saw to material impact to churn.”
Ukraine sellers on Etsy.com
Etsy noted that concessions for Ukraine sellers included canceled balances and listing credits totaling $4.6 million. The company is also featuring Ukrainian sellers’ digital downloads in its marketplace Editors’ Picks and buyer marketing. Ukraine sellers made over $11 million in sales in March 2022, an average of approximately $1,400 per seller with a sale, according to Etsy.
For the three months ended Mar. 31, Etsy Inc. reported:
- Revenue of $579.3 million, an increase of 3.5% year over year compared with $550.6 million in 2021.
- Net income of $86.1 million, a decrease of 40.1% compared with $143.8 million year over year.
Percentage changes may not align exactly with dollar figures due to rounding.
Etsy Inc. is No. 18 in Digital Commerce 360’s 2022 Global Online Marketplaces ranking.
Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.