Etsy IPO'd today and the company is an incredible story of empowering over a million small business men and women to sell unique and one of a kind goods online.
In aggregate, these entrepreneurs sold over $1.93 billion in goods last year, as revealed by Etsy's S1 filing. And while it took Etsy 10 years to get there, its growth is nevertheless astonishing. When Etsy acquired my startup Adtuitive in late 2009, the marketplace sold about $180 million in total goods that year. When I left after three awesome years there, the marketplace was doing an annual run rate of over $1 billion.
Etsy has always been a fairly transparent company, and for many years, they published something called the Weather Report in which they made public several core business metrics including gross sales, marketplace page view counts, and more.
So while this $180 million 2009 gross merchandise sales (total value of goods sold on Etsy, or GMS) isn't published in the S1, this figure (and more) is in the public domain. And with the help of some friends of mine from the mechanical turk, I've compiled a complete history of Etsy's weather report data since it was first published in October of 2007.
Read on for more Etsy growth figures and statistics.
Etsy's business is highly seasonal
This isn't terribly surprising as it's both inline with e-commerce trends and many people shop Etsy to buy gifts.
November sales are 40% higher than an average month, and December sales are a whopping 62% higher than average.
New members aren't a huge driver of revenue growth
From 2008 to 2013, average listing value is up 49% from $14.54 to $21.66. During this same time period, GMS increased by 15x yet page views only increased by 5x.
If you look at a conversion efficiency metric like pages viewed per item purchased, you'll see that this number decreased 633 pages per purchase to only 328 from 2008 to 2013. In other words, for every single page viewed on Etsy.com, they're able to sell twice as much stuff as they once were able to.
Similarly, for the last five months before Etsy stopped publishing their weather report (towards the end of 2013), year over year member growth dipped to around 20%.
It's hard to figure out exactly how member growth trended after this period. Cumulative users through October 2013 totaled just over 34 million, yet the S1 shows 19.8 active buyers. So it's unclear what fraction of these 34 million were active at the time, thus making it hard to infer member growth over the past 18 months.
Etsy's top-line growth is impressive, but not exponential
If you look at Etsy's year over year growth since 2008, it starts at 115% per year and decreases down to 43% by 2014 compared to 2013.
Growth here is certainly impressive, but it's not exponential. Growth does however appear to fit a quadratic curve quite nicely. I don't have a good explanation for why this is the case, but empirically it fits. And extrapolating out to 2020 shows GMS of almost $9 billion.
That's big numbers for crafts. Woot!
The big picture
So should we really believe that Etsy one day might sell $9 billion in crafts?
Financially speaking, Etsy's biggest challenge is its relatively small addressable market. When Rob Kalin founded the marketplace in 2005, no one ever dreamed that this would be a $1 billion business. Today, folks are skeptical that it can yet again double down on its scale.
But who knows. Either way, that's a lot of crafts!