Etsy CEO: We aim to fight 'consumer fatigue'
SAN FRANCISCO – As we all rush into the holiday shopping season, it’s safe to say a large part of what’s being purchased looks familiar. A giant TV here, a video game console there. Maybe a hoverboard if you’re lucky.
Chad Dickerson thinks you can do better than that.
As CEO of Etsy (ETSY), the 10-year-old New York-based e-commerce platform focused on unique and handmade items, Dickerson is all about helping people stand out from the crowd.
“We think there’s consumer fatigue out there, people tiring of having the same look as everyone else,” Dickerson says during a recent visit to USA TODAY’s bureau. “With us, you can build a home or wardrobe that expresses your taste.”
With that anti-generic salvo, Dickerson rattles off a list of artisanal items on his person. Cuff links, shirt, socks, leather bag, all courtesy of some of the 1.6 million sellers peddling 30 million items to Etsy’s 23 million customers worldwide.
“If you wanted a well-crafted desk, you wouldn’t go to an office supply store, you’d want a place that respects craftsmanship,” he says. “This isn’t a side project for us, it’s our whole business. It’s our identity.”
Actually, Etsy’s mission is morphing, due in part to growing competition — Handmade at Amazon launched in October — as well as the demands of being, since April, a public company.
Public life started with a bang, with IPO-day shares quickly doubling to $30. Suddenly, the crafts company was worth $3.3 billion. But the stock has steadily fallen to a little over $9 and a market cap of $1 billion. The company continues to be unprofitable.
Dickerson remains bullish about his company’s long-term potential.
He points to sales — they increased 38% year-over-year in the third quarter, to $66 million — and touts two new initiatives that aim to expand Etsy’s marketplace and grow its sellers’ businesses.
The first is called Etsy Manufacturing. Announced in October, it provides Etsy designers with access to vetted small-scale manufacturers who can ramp up production while retaining manufacturing quality.
Dickerson points to his leather satchel. “This designer developed a relationship with a leather-working shop in New Jersey, and that’s allowed him to increase his sales while keeping the bags special,” he says.
And in November, Etsy unveiled a set of Etsy Retailer Commitments that chains participating in the Etsy Wholesale network — which include Whole Foods and Land of Nod — had to agree to if they wanted to serve as outlets for Etsy seller goods. These include quick payment of seller-determined list prices and “respecting the Etsy seller’s intellectual property.”
Counterfeit goods have proven to be a thorn in the side of the site, although Dickerson says his company is aggressively policing the problem. In a recent report covering 2014 activity, Etsy removed or disabled access to 176,000 listings from 42,000 sellers and closed nearly 4,000 Etsy site shops for repeat intellectual property violations.
MOBILE, INTERNATIONAL BUYERS
Dickerson says growth will come from two areas, mobile and international. “Our near-term hurdle is the migration of users to a smartphone shopping experience, where the rate at which people buy is lower (compared to a desktop site visit),” he says.
Although 70% of Etsy’s business takes place in the U.S., it hopes to eventually reach an even split between domestic and foreign sales, a shift that hinges partly on improved language translation software. Etsy also can boost its numbers if it managed to attract more male shoppers to the site. Currently, 90% of buyers are women.
“Going forward I think we need to bring out the personality of our sellers more,” says Dickerson, echoing a theme that resonated at a fall gathering of eBay sellers, who were promised help growing their businesses by incoming eBay CEO Devin Wenig. “We have a community, and that needs to shine through.”
E-commerce analysts differ when it comes to weighing Etsy’s decade-long journey from niche site to public company. But they tend to agree that with a known brand name and the coming boom in online spending ($3.5 trillion globally by 2020, up from $1.6 trillion this year, according to eMarketer), Etsy still has potential to be a powerful player.
Wedbush Securities analyst Gil Luria thinks Etsy’s stock has taken a hit because it has increasingly strayed from its original mission.
“For the first eight years, Etsy was purely a handmade marketplace with a great sense of community for sellers,” Luria says. “It developed a niche and served it well. But two years before the IPO, it started diluting that brand by adding manufactured goods, and some sellers don’t want to be on a site competing with that.”
That said, Luria adds that “it’s not too late, and the right solution is for Etsy to go back to its roots and make its sellers happy. It’ll be painful in the short run, but it’ll become a more viable company in the long run.”
Forrester Research e-commerce analyst Sucharita Mulpuru-Kodali is less concerned about Etsy’s prospects. The precipitous stock price drop has echoes “in companies like LinkedIn and Facebook, which dropped early on as well,” she says. “Can (Etsy) own their space? Absolutely.”
Mulpuru-Kodali says she recently shopped on Etsy for unique décor for her living room as well as a Maleficent Halloween costume for her daughter. “Etsy is not an eToys or Pets.com, with questionable value and a high burn rate,” she says, citing examples of early dot-com commerce failures. “Etsy should be very profitable. They’ll surprise people.”
It goes without saying that Dickerson will be keeping a close eye on sales this holiday season.
“There are a lot of very creative people out there designing very unique goods,” he says, fingering his cuff links, which are made from old New York subway tokens. “If we can help those people start sustainable businesses with their talent, then we’re doing our job.”
In many ways, what Etsy is aiming to do is bring back the 19th century, a time when bespoke goods were produced by skilled artisans. In those days, their wares were for the very rich. But these days, with everything from 3D printers to small manufacturing plants looking to profit off excess line capacity, those same unique items can flow to the masses.
“We’re reimagining manufacturing, keeping the human element in it,” Dickerson says. “Most e-commerce companies are all about price and convenience. Those are fine, but Etsy is aiming more for authorship, community and shared success.”
Follow USA TODAY technology and culture reporter Marco della Cava:@marcodellacava