It’s hard to believe that just one year-and-10-days ago, it was business as usual at Etsy under a CEO who had happily reigned for 6 years. But on May 2, 2017, the company’s Board of Directors abruptly turned things upside down by replacing Chad Dickerson with former eBay executive Josh Silverman, and much has changed since that time.
On Tuesday, with a full year under his belt, Silverman exuded confidence during a conference call with Wall Street analysts to discuss Etsy’s financial performance for the first three months of 2018. He pointed out the latest quarter was the 3rd consecutive quarter of sequential accelerating growth (they just happened to be the first full quarters of his tenure), and the company raised full-year 2018 guidance.
“This GMS growth is a testament of Etsy’s ability to execute on its strategic initiatives and rapidly launch new tests and experiments. In Q1, Etsy launched new products and tests expected to generate $75 million in incremental GMS in 2018,” a spokesperson told EcommerceBytes.
In the past year, Silverman has cut costs by laying off employees, outsourcing certain operations, and cutting programs, making the company leaner in party by relying on outside firms.
As we reported in March, Etsy cut a deal with Square so merchants can accept in-person payments (at craft fairs and flea markets, for example), in a move that Silverman called “retiring a home-grown product.”
In addition to moving from storing its own servers in data centers in favor of using Google’s Cloud services (a 2-year project), he revealed the company is using Zendesk to provide customer support.
“We launched an improved help center that benefits both buyers and sellers. We’re using Zendesk, a customer service software company, which allows us to deprecate a homegrown platform that consumed resources and attention from the engineering team. We’re able to deliver a better customer experience, lower costs as more customers are able to access self-service, and better agent productivity.”
He has also worked on monetizing the site with a focus on Seller Services – particularly Promoted Listing ads.
“We have also further optimized Promoted Listings by using context specific ranking to surface more relevant ads,” Etsy stated in its financial press release.
During the call with analysts, Silverman explained that “Context Specific Ranking” (CSR) makes ads more relevant. He provided an example: a search for “wedding dress” without CSR would bring back Promoted Listing ads or dresses and other items, such as clothes hangers and lace. But with CSR, Etsy would display Promoted Listing ads that show wedding dresses.
Another change worth noting: while Etsy used to include its payments service under Seller Services, it now classifies Etsy Payments as Marketplace revenue “because Etsy Payments is required to be used by Etsy sellers in the countries where it is available,” it explained.
Of special interest to sellers, Etsy Chief Financial Officer Rachel Glaser acknowledged that an upcoming change in how it collects fees would benefit the company economically. While Silverman kept the focus on how it would free up sellers’ valuable time, sellers had pointed out last month that the practice would negatively impact their cash flow and in some cases would cost them money (see this April 17th EcommerceBytes Blog post).
In Q1 2018, Etsy grew GMS nearly 20% to $861.1 million – that’s the value of goods sold on the site by sellers (or nearly 18% on foreign-exchange neutral basis). But Etsy’s own bottom line was even better – it grew its revenue by nearly 25%.
Sellers like to see more growth in buyers than in other sellers; Etsy reported 16.9% growth in active buyers for the first quarter of 2018, and it saw 9.4% growth in active sellers.
Silverman’s no-nonsense, go-lean approach to running the business is in stark contrast to the former feel-good vibe of the old Etsy. He’s made it clear he’s working to drive buyers back to the site for repeat purchases, and if he succeeds, it may take some of the sting out of the less popular changes with which sellers have had to deal.
I’ll take ANY sale on Etsy right now, whether it’s one of my repeat customers (and I have a few!) or a shopper who has just discovered my shop!
January thru March sales on Etsy were very good for me, but it’s like they shut the lights off in my shop on April 1st. Since then, I’ve not sold even $100 there!!! I have since listed things on eBay, but can’t say that stuff is selling very well there either. And H@A … fuggedaboutit!
Etsy’s “lean and mean” new policies don’t just impact their over pampered staff. They impact sellers too and include:
Sneaky and corrupt search manipulation whereby if buyers choose a “ships in 3 or less days” filter it defaults to the buyers own country. This means buyers in USA – a market which many international sellers rely upon – dont ever get to see international listings. This is the hated localization by the back door and means that sellers in countries with a small population are being squeezed into purchasing “promoted listings” in order to be seen internationally.
Etsy has the cheek to advertise itself as a global site. However international sellers are getting a deal that is worse by the day. Yet they pay the same fees.
This all sounds like it comes from eBay’s bag of tricks, doesn’t it? Outsourcing support, manipulated search, shifty reclassification of revenues, pushing promoted listings, forcing payment processors, changes to payments that disrupts seller cash flow, etc. Hardly surprising since this CEO is from eBay and brought others from eBay along for the ride.
I’m sure it wasn’t an intentional dig at Wenig and his former cohorts, but the “…ability to execute on its strategic initiatives and rapidly launch new tests and experiments” soundbite is practically a verbatim criticism of Wenig’s Achilles-heel oft expressed here.
eBay’s pattern of increasingly frequent and prolific botching of “tests” and changes hasn’t gone unnoticed by employees, customers, and investors.
Though I can’t comment on either buying or selling on Etsy at this point, It sounds like Silverman’s got a more than a few lessons-learned on how NOT to do things and is trying to focus on the “right” things while applying lean principles (yes! Finally!) resulting is positive growth for Etsy.
Sounds like Devin could learn a lot from this guy.
Josh Silverman was hired after investors decided to sue Etsy. A big part of that lawsuit was because Etsy’s search functionality was broken.
Josh and the promise to fix the search engine was a balm to investors and the lawsuit was dropped.
One year later. Josh has cut personnel and has implemented sales strategies. But search is still broken.
Rather than fixing the search, or even outsourcing it to a better algorithm, Etsy staff is relying on a poorly written search algorithm to figure out what people are wanting to buy.
For example, I had a customer in my shop last month who had searched for “story book dolls”. That search brought them into my shop on a listing for large silver hoop earrings.
I hope any Etsy investors that read this will understand that Etsy has not even tried to fix the search algorithm. And while in the short term profits are up (because sellers are desperately trying all the new tools for sales) those lack of sales will mean a depreciation in your stock value as sellers get fed up. I really hope the investors will step in and get this mess fixed, as ultimately their profits are on the line!
Even now sellers are looking at greener pastures like Amazon, EBay, and Artya in higher numbers than I have even seen.