Etsy will survive a consolidation in commerce, predicted CEO Josh Silverman, who painted a picture of the ecommerce landscape ahead.
Silverman was speaking at a Wall Street conference last week and said there were hundreds of billions of dollars invested in a thesis that there will be a million different places to buy things. But he believes massive fragmentation is exceptionally unlikely.
“Commerce is consolidating around fewer and fewer brands. I think there’s going to be Amazon, there’s going to be maybe one Amazon look-alike that’s strong enough to compete with them over time. And then there’s going to be a very small number of alternatives to Amazon that are true alternatives to Amazon.”
The CEO said Etsy and its subsidiary marketplaces Depop and Reverb are all very well positioned to be one of those “very few alternatives to Amazon.”
“The opportunity for those few true alternatives to Amazon, I believe is massive,” he said.
During the presentation at Citi’s 2021 Global Technology Conference on September 14th, Silverman and Etsy Chief Financial Officer Rachel Glaser talked on a wide range of issues including Etsy’s brand awareness, its focus on India (“Indian sellers are bringing really unique inventory at good prices on to the marketplace”), search, the Star Seller program, its Offsite Ads advertising program, and the company’s “experiments.”
Glaser talked about Etsy’s cost-per-acquisition Offsite Ads program and said 2% of sellers have opted out of the program. She made no mention of the fact the program is mandatory for serious sellers. She did mention that Etsy extended it to its affiliate program, which means Etsy is getting sellers to fund a portion of its affiliate program – how much, we don’t know.
Glaser said Etsy invests in product and engineering and experiments with everything. “Most of the experiments fail, but we have a very good framework for knowing what’s a win, what’s a neutral, and what’s a fail, and we only go forward with those that are either neutral or winners.”
In discussing Etsy’s acquisition strategy, she mentioned service providers when she cited an example of “opportunistic” acquisitions (as opposed to acquisitions around geographic or category expansion, which it also explores):
“Another example might be investments in seller services or the seller platform itself, that gives some service back to the sellers that is easier for us to buy, rather than build.”
Silverman said quite a bit about the thinking that goes into decisions around possible acquisitions, saying the company has a very clear set of criteria, mentioning the following:
- It needs to fit with Etsy’s mission and vision about keeping commerce human.
- It needs to be about non-commoditized inventory, special inventory.
- It needs to be a true peer-to-peer marketplace, where a very wide number of sellers are selling to a very large number of buyers.
- It needs to be a capital-light model, where Etsy is not taking possession of the inventory.
- Etsy needs to believe that it has the ability to add real value through its know-how.
- Etsy needs to think it can get it at a fair price.
- And, “we think we’ve got the capacity to actually take that on.”
“We’re patient and we’re picky” about acquisitions, Silverman said, and proceeded to talk about levers for growth.
You can find the webcast on the Etsy Investor Relations website. And there’s a transcript at SeekingAlpha.com. And if there’s a tool you use to help you sell, how would you feel if Etsy acquired it? More on that in this AuctionBytes Blog post.
