Create a marketplace like Etsy: The handmade platform

Summary

Etsy is a marketplace for selling handmade items and crafts from individuals and professionals. While Amazon and Alibaba have managed to establish themselves as the reference marketplaces for mass-produced goods, Etsy has found its niche by investing in the handmade and non-industrial market. If you want to create a marketplace like Etsy, and get inspired by it check this out !

Genesis of the Etsy project

The Etsy platform was created by three young entrepreneurs (Robert Kalin, Chris Maguire and Haim Schoppik) in 2005. It all started when the three friends, amateur furniture makers, had enormous difficulties selling their wooden designs. To remedy their problem, they made their handmade products more attractive and thus attract more people. The principle is simple : create a marketplace that allows artisans from all over the world to display their creations and offer them for sale.

Once the idea was in place, Kalin decided to put a name to the project. The young entrepreneur was looking for an original and unique name. It was while watching the Italian movie “Eight and a half” by Fellini in its original version; the story movie deals with the creative process that artists face. It is from hearing the Italian phrase “eh si” in this movie that “Etsy” was born.

The founders prioritized a user-friendly platform, focusing on clear product listings, secure transactions, and a strong sense of community amongst sellers and buyers. Etsy’s early success can be attributed to its unique niche market and its commitment to creating a supportive space for handmade goods and vintage finds. Word-of-mouth recommendations and positive user experiences fueled Etsy’s growth, transforming it from a niche platform into a global online marketplace for creative entrepreneurs.

In 2024, Etsy boasts millions of active sellers offering a diverse range of products, from handcrafted jewelry and home décor to vintage clothing and art supplies. The platform has evolved beyond its initial focus, now encompassing a wider range of handmade, vintage, and manufactured goods that align with its core values of sustainability, responsible production, and supporting independent sellers. Etsy’s success story highlights the power of catering to a specific audience, fostering community, and providing a platform for unique and creative products to thrive.


Launch of Etsy: immediate success!


Like Craigslist in its first year, the site worked to continually improve and add new features to help sellers better display their products. After two years of existence, the success is there! Etsy has nearly 450,000 registered sellers who generate $26 million in annual sales. This craze for the platform can be explained by the originality of its concept. Indeed, even if its business model is simple, Etsy has some innovative features such as the authenticity of its products, the worldwide shipping of items sold or the presence of multiple payment methods: PayPal, credit card, Visa card, Etsy credits and Etsy gift cards, Apple Pay, Google Pay…etc..

As for the business model, in order for a seller to list his items on the site, he has to pay a listing fee which amounts to about $0.20 per item. In addition, Etsy takes a 6.5% commission on the amount of sales including VAT. Note that the commission is based on the total amount paid by the customer (including shipping and packaging) and not on the price of the product for sale, for more details you can read this article about Etsy strategy.


The community, one of the reasons for the success of Etsy.


Since its creation, Etsy has placed a particular importance on the notion of “community”. To reinforce its closeness to its users, the marketplace often organizes entrepreneurship workshops (how to build your global micro-brand), tells all its users about the “best practices” used by Etsy sellers and gives advice on how to write an effective press release. In addition, Robert Kalin, Etsy’s founder and CEO, has hired a half-dozen of the platform’s top sellers to work directly for the company, in positions designed to spread their skills to as many sellers as possible. Some help run Etsy Labs, a community-focused program held at the company’s headquarters that aims to teach craft skills.

Etsy’s communicators quickly realized that joining a community is about making people feel like they share the same interests. Consequently, users involved in a community trust each other more, since they find themselves around common values. Also, Etsy has taken advantage of this situation by broadcasting the positive experiences of some of its sellers and by offering help to users, who then become gateways to reach other new sellers. Thus, thanks to this “human” aspect, well highlighted by Etsy’s marketing strategy, the marketplace has gained credibility, visibility and notoriety.

It is of course difficult to say that the community was the only parameter of Etsy’s success. In sum, specialists agree that the success of Etsy is mainly due to 5 main factors:
– the simplicity of use
– freedom given to sellers,
– the follow-up: Etsy’s after-sales service offers different options to contact the support team (e-mail, chat and/or phone)
– the originality of the products sold (vintage products must be at least 20 years old)
– an active community.

Create a website like Etsy: The right Business model

Etsy’s business thrives on a freemium model with a twist. At its core, sellers can list items for free. However, to incentivize high-quality listings and curated product offerings, Etsy charges a small fee per item listed. This ensures a focus on valuable products for buyers and discourages excessive or low-quality listings.

Beyond the listing fee, Etsy generates additional revenue through optional premium features. This could include ad credits to increase product visibility within search results or promoted listings that showcase specific products more prominently. Essentially, sellers who want to maximize their exposure and sales potential can upgrade to these premium options within the platform. This freemium structure allows Etsy to cater to both casual sellers and those seeking a more professional, high-volume presence on the platform.

In a competitive US e-commerce market with Amazon and eBay, Etsy separated itself by combining a niche market focus, a strong sense of community, a user-centric approach, and a well-crafted freemium model, Etsy has carved out a unique space in the e-commerce world. Its commitment to innovation and staying ahead of the curve ensures Etsy remains a vibrant platform for both creative sellers and passionate shoppers seeking an alternative to mass-produced goods.

Where is Etsy in 2024 ?

The internationalization of its workforce can be seen in its salespeople. 97% of Etsy’s sellers manage their store from home, 38% of whom are not from the United States. In addition, following the Covid-19 pandemic, the number of sellers has increased by 60% from 2.7 million to 4.3 million people worldwide to reach 7.5 million in 2021.

Etsy’s market capitalization will reach more than 8.5 billion dollars in 2024, better than Zalando and Rakuten. However, Etsy is still far behind ecommerce giants such as Amazon, Alibaba, Meituan, Jingdong and Shopify. Moreover, Etsy’s traffic statistics have improved significantly during 2024, greatly increasing profits. As for the annual net income, the company reached $315 million in 2024.


Alternatives to Etsy

If you project to create a marketplace like Etsy, you have also to watch the alternatives like Society6 . This platform is a great option for artists who want to sell their work on a variety of products, such as prints, phone cases, and home decor. Society6 handles the printing, shipping, and customer service, so you can focus on creating great art. Amazon Handmade, a subsidiary of Amazon, allows artisans to sell their works made, modified or assembled by hand. We have also ArtFire which is perfect is for artisans and independent businesses. They offer a variety of features to help sellers succeed, such as SEO tools, social media integration, and marketing resources. ArtFire also has a strong community of artists and crafters, which can be a great source of support and inspiration.

In other hand, we have Bonanza, a combination of Etsy and eBay. They offer a wide variety of products, from handmade crafts to vintage collectibles. Bonanza has a lower listing fee than Etsy, which can be appealing to sellers who are just starting out. However, they also have less traffic than Etsy, so it may take longer to build a following. Big Cartel is also a great option for artists and designers who want to create a professional online store. They offer a variety of themes and customization options, so you can create a store that reflects your unique brand.

Conclusion


All in all, here is what you need to remember about Etsy:

create a marketplace like etsy

In spit of this success, Etsy hasn’t rested on its laurels. It has continuously innovated to cater to evolving user needs and market trends. This includes integrating mobile app experiences for seamless on-the-go shopping, implementing AI-powered search algorithms for improved product discovery, and exploring partnerships with shipping carriers to streamline fulfillment processes.

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