How does Etsy make money?

One of the most interesting players in the ecommerce marketplaces space is Etsy.com. It looks great, the search they have is sexy and visual, they sell lovely things, they’ve survived and thrived for more than a decade (no mean feat) and continue to grow. Etsy is a marketplace success story.

So it is surprising to learn that they make a significant chunk of their revenue not from direct transactional fees relating to items sold on the website, but from the services they provide to their global cohort of 1.7 million sellers to ensure they are completive and successful. There’s more to read in this article from Forbes.

As Jennifer Beugelmans, Vice President of Financial Planning & Analysis and Investor Relations for Etsy says this: “revenue stream has grown significantly thanks to services like Direct Checkout, our proprietary payments platform and most utilized service. Sellers that accept multiple payment options have, on average, nearly 50% higher sales compared with those who do not, so Direct Checkout is a powerful tool that can directly help increase sales for our sellers. Additionally, we support creative entrepreneurs in areas such as shipping, advertising, and customized websites, and we see a long runway for growth as we continue to build out our seller services platform.”

Perhaps the most interesting aspect of this approach (and indeed other points made in the longer article) is that investing in the success of Etsy sellers, and ensuring long term success, is mission critical for the company. That is doubtless a lesson that eBay and Amazon could learn.