Etsy: We're not about getting loo roll quickly

In a world where we've all become used to getting things quicker, you'd expect an e-commerce boss to be promising you your next delivery will arrive within hours or even minutes.

Not so Etsy's chief executive Josh Silverman, who rejects comparisons to the likes of Amazon Prime.

"I need toilet paper and socks. I want it to arrive right away," he told the BBC. "Something special needs time."

Sales on the platform doubled over the pandemic but growth has since slowed.

With shops shut and people stuck indoors during the lockdowns, many turned to online shopping on platforms such as Etsy. Sales of face masks, home furnishings and arts and crafts goods all boomed.

But since then, Etsy's growth has slowed, as it adapts to life post-lockdown.

Revenues rose by 11% year-on-year in the three months to the end of September, compared with the 18% growth recorded in the same period last year.

Meanwhile, its share price, which took off in March 2020, came crashing back down in the first half of this year.

Analysts warned that the company will find the path ahead harder, now that the world has opened back up.

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"Growth has inevitably slowed versus the Covid boom," said retail analyst Jonathan de Mello, who pointed out that other e-commerce firms have faced similar challenges.

"Near-term fortunes will depend on customers' willingness to spend on gifts over the holiday season. Given the increased cost of living, discretionary spend is set to drop further in 2023, which will undoubtedly impact Etsy given the relatively high price points of its products."

Etsy has also faced protests from sellers earlier this year, after it hiked the transaction fees it charges them from 5% to 6.5%.

The move sparked outrage and led some Etsy sellers to go on strike.

Mr Silverman defended the decision, though, arguing that 6.5% is still "super affordable".

"We've seen no seller churn as a result, and as we told sellers, we reinvested that back in the platform," he added.

He was also not fazed by the share price fall this year. Shares have since recovered some ground, but remain a long way off the high.

"The world is trying to figure out what to make of the pandemic," Mr Silverman said.

"We don't measure our success exclusively by the share price," he added.

With physical stores once again allowed to open, e-commerce has had to work harder to retain customers. But Mr Silverman says the people who came to Etsy during the lockdowns remain loyal to the brand.

"During the pandemic, millions of people had to come and try Etsy because they had very few other choices," he said.

"And what's been really delightful is that since the world [has] reopened, those people are coming back again and again."

Etsy boss Josh Silverman said people are "concerned" about the economic outlook

The cost-of-living crisis is another challenge for retailers, with soaring prices putting pressure on household budgets.

Consumer prices have been rising this year as energy, fuel and food costs soar, thanks to higher demand for energy since Covid lockdowns eased and due to the war in Ukraine.

In the UK, the rate at which prices are rising has dropped back slightly, but inflation remains near a 40-year high.

But Mr Silverman believes people will prioritise "affordable indulgences" in a tough economic climate.

"There's a lot going on in the economy that's very concerning for a lot of people. This holiday season... maybe they're going to buy fewer things, but those things are going to mean even more. And that's Etsy's sweet spot," he said.

Etsy, which was founded in Brooklyn, New York, 17 years ago, is known for its distinctive small sellers, who offer everything from crocheted penguins to furniture.

The UK is one of its key markets, where it has almost a million sellers, the vast majority of whom are women.

During the pandemic, it saw a new wave of sellers sign up to the platform, as people turned to side hustles to make extra cash while stuck at home.

But the return to offices has not dampened people's drive to set up their own businesses, he said.

"Etsy now has over 5 million sellers selling on our core platform, that's up from about 2.2 million sellers before the pandemic," he said.

In recent years Etsy has started acquiring other online marketplaces.

Last year, it snapped up Depop, a UK-based second-hand fashion app, in a bid to target younger shoppers.

At the time, Mr Silverman described Depop as "the resale home for Gen-Z consumers".

But retail analyst Mr De Mello warned the timing of the deal was "not ideal given the downturn in e-commerce spend" this year. "Time will tell" whether the acquisition works out for Etsy, he added.