🎨 How Etsy built an $8B empire by hand

Over 460M users visit Etsy.com every month. 

What’s crazy?

Etsy does next to nothing to get them there…

Only 7% of Etsy’s traffic comes from paid ads.

The rest? All from word of mouth.

How did Etsy become popular? Build a company so good that it advertises itself? And how can you do the same?

Here’s what we got for ya:

• 💵 From $0 to Market Leader

• 🛍️ An $8B Shopping Experience

• 💪 Surviving Amazon

Read time: 4 min 20 sec

💵 From $0 to Market Leader

It all started in 2005, inside a dingy Brooklyn apartment.

There were 4 guys who looked more ready to build a boy band than an $8B company. 

We’ve got Rob Kalin, Chris Maguire, Jared Tarbell, and Haim Schoppiik. 

At the time they were running a freelance web design company.

But with one idea, their lives changed forever…

They were hired to work on a website called GetCrafty.com.

While reading the discussion pages, they stumbled upon a gold mine. 

A missed opportunity just waiting to be seized.

Artists were complaining because there was no place to sell their work. 

So what did the guys do?

They made one. 

Inside their Brooklyn apartment, Etsy was born.

If you build it, they will come. 

Before launching, Etsy already had thousands of eager artists from GetCrafty.com. And those artists told their other artist friends, who told their friends, who told their mom, who… well, you get the point.

Etsy didn’t need to do a lot of marketing. The artists marketed themselves. 

That’s how Etsy grew and made $1M in sales in their first year. 

But what made Etsy attractive enough to get people to stay?

Etsy is designed to feel like a real market.

Buyers know who the artists are.

This relationship holds the artists accountable for making quality products. And keeps customers coming back. 

Today there are over 7M active sellers on Etsy.com. And over 96M Etsy buyers. 

Could Etsy keep this intimate marketplace culture after growing into a corporate-sized business? 

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🛍️ An $8B Shopping Experience

Etsy’s secret to $8B is not some complicated business strategy. 

It’s 3 words.

And it’s been their motto since the beginning.

Keep commerce human.

Etsy runs on people who want to support a person, not a big business. 

40% of buyers are loyal customers, who return to Etsy time and time again.

Here are 3 strategies Etsy uses to grow their community:

#1- Connection. Buyers read sellers' unique stories on the Etsy blog, social media, and in personal interviews. This shows the sellers are authentic people.

This personal connection makes Etsy unique in a world full of Amazons.

#2- Web design. Etsy’s creative and user-friendly design makes it fun to explore. It’s not the same as strolling through stalls in a market, but it’s the next best thing.

And there is something everyone can identify with. With categories from Boho Beauty to Beer Expert, you’ll find what you’re looking for, and stumble upon things you didn’t know you needed. 

#3- Communication. Etsy’s discussion page is a place where users build a sense of community. Sellers seek advice from other sellers. Buyers write what they would like to see more of. Users want to see their community succeed.

But is Etsy’s strong community enough to survive a giant like Amazon?

💪 Surviving Amazon

In 2013, Etsy made a bold move.

Sellers started complaining because they couldn’t scale their business. Nobody can personally crochet 25 bags per day… 

So Etsy changed their conditions to allow “partial production assistance.”

Basically, they changed “handmade” to mean the idea and vision is yours, but the product isn’t necessarily made by you.

Not everyone was happy with this change.

People feared this could ruin the marketplace feel of Etsy… 

In 2015, Amazon launched Handmade. Open only for artisans hand-crafting their products. It was a target on Etsy’s new weakness.

Would this be the death of Etsy?

Or was Etsy strong enough to withstand the Amazon empire?

It all came down to these 3 factors:

#1- Price for sellers: Amazon Handmade charges sellers a 15% transaction fee. Etsy’s is 6.5%. Etsy’s lower price is more attractive for sellers.

#2- Visibility: When buyers go to Etsy, they are seeking out handmade products. But on Amazon, that’s not the case. So you’d think Amazon would advertise Handmade on their homepage…

But there’s nothing. Handmade products often get lost in the long list of search results.

#3- Loyalty: Etsy worked hard to make their company feel like a community. Some Etsy sellers make Amazon Handmade accounts as an “add-on.” But not many completely left Etsy. 

In 2023, 1M products were listed on Amazon Handmade. Etsy lists millions each month. 

So Etsy survives. 

Good user experience and a strong community make Etsy the best market for handmade goods.