I think last quarter we said, I think, grew 64%. Etsy defines habitual buyers as customers who come to the site six or more times in a year or spend more than $200.Īnd they - that cohort grew 100% in the third quarter. And they said, oh gosh I just didn't think of it." ~ Josh Silverman, CEO Etsy.įor Etsy to become the leading marketplace for handmade products - in the mind of people - it needs to convert new buyers into habitual buyers. I thought, I bought more often and we tell them, no, you actually haven't been in the last 12 months. Etsy is no Amazon ( AMZN), Etsy is no Google, Etsy is no Facebook, Etsy is no Pinterest, people forget about Etsy, and it needs to advertise to keep a presence in their mind:Īnd so when we reach out to them and say, why have you not bought in the last 12 months? The most common answer we get is what do you mean? I love Etsy. Historically, Etsy struggled to make happy customers frequent buyers it is the reason why Etsy needs to invest more than a quarter of its revenue into marketing. According to Josh Silverman, the biggest factor that's driving this increase in cohort behaviour is the reactivation of lapsed buyers. For example, its 2018 cohort has spent 50% more in Q3 2020 than in Q3 2019. In Q3 2020, 75% of the GMS was from cohorts prior to 2020, so one of Etsy's biggest growth catalysts during COVID-19 is greater spend levels across its existing buyer base.
To determine how sustainable Etsy's growth is, we first need to know what actually drives Etsy's huge growth. However, with vaccines supposedly ready to be distributed in the coming months, one needs to wonder whether Etsy can sustain its growth in a post-COVID-19 era. With people stuck indoors, they flock to online marketplaces for their customer goods. (Source: Visualized and calculated in Excel, data from Seeking Alpha) Post-COVID-19 EraĮtsy is currently experiencing a huge surge in demand for unique and creative goods, driven by the COVID-19 crisis. When the world returns to normal, I deem it as very likely Etsy will struggle to maintain margins while preserving its market share, which is similar to what we saw in 20. But during the last few years, Etsy struggled to maintain a healthy return on invested capital, partially driven by growing marketing expenses. I do believe that Etsy's marketing budgets are value-driven, and the investments currently make sense from a business perspective. I can conclude that marketing as a % of GMS makes up 4.8% - a sharp rise in comparison to the previous quarters. In Q3 2020, Etsy's GMS was $2,633,927, and Etsy's marketing expenses accounted for $126,779. I suspect that marketing costs in relation to GMS will grow quite meaningfully going forward. On the other hand, Etsy's TAC is actually increasing - showcased by its rising marketing expenses as a % of GMS.
Etsy multipass covid drivers#
Sellers can start selling their products directly on Facebook and Instagram at much lower commissions, and these platforms are huge traffic drivers to Etsy's website.Ĭompanies like Facebook and Alphabet have been able to lower their traffic acquisition costs, TAC, significantly over the years due to their moats.
In short, platforms like Pinterest ( PINS), Facebook (FB) and Google ( GOOG) ( GOOGL) are Etsy's biggest traffic sources and Etsy's biggest competitors at the same time. (Source: Data from Seeking Alpha, visualized in Excel) Marketing costsĪs discussed in-depth during my previous article addressing Etsy, I stated that the company would experience intensified competition in the long term. And I opinionate that returning to normal implies that Etsy returns to mediocrity: a company that is struggling to maintain margins while growing its revenues. With BioNTech's ( BNTX) vaccine showing an effectiveness rate of 90%, more than ever, the world seems to be ready to return to normal. Due to the COVID-19 crisis, people stayed at home significantly more often than in the pre-COVID-19 era this obviously benefits an online marketplace like Etsy.
(Source: Seeking Alpha) Great growth during COVID-19Įtsy's standalone marketplace grew gross merchandise value - GMS - by 116% YoY during Q3 2020. Etsy's ( NASDAQ: ETSY) stock has performed phenomenally during the COVID-19 crisis, though investors should be worried about how Etsy's business model will endure a post-COVID-19 world.
0 kommentar(er)
