Businessmodel of Etsy

Customer segment

Etsy mainly serves two customer segments:

• Sellers: These are mostly artists who use the Etsy marketplace to sell their handcrafts to earn a living and showcase their creative work.
• Buyers: These are the people who come to Etsy marketplace to shop for unique items to satisfy their love for art. ### Value proposition

Etsy renders an array of tools designed to meet the unique needs of the sellers and buyers on its marketplace.

• For sellers, there are tools that enable them to create personal shops and give them a unique identity. Sellers also have great flexibility in choosing prices for their items and deciding how they want to be paid for the items sold. Etsy sellers can also take advantage of the mobile app provided by the company to manage their listings on the platform.
• For buyers, Etsy has a wide range of art items to choose from and a broad option of payment methods that include PayPal and debit/credit cards among others. Those who buy items on Etsy marketplace can also choose to have their orders delivered to them, thus enhancing the convenience of shopping on the platform. Besides handmade items, customers can also buy vintage goods on the marketplace. ### Channels

Etsy’s sales organization uses a combination of digital tools that range from websites to mobile apps to forums to recruit and engage customers.

Customer relationship

Etsy operates a customer support desk that sellers and buyers can contact whenever they need help. The company also uses social media to address customer issues.

From time to time Etsy holds local events at which customers get to ask questions and obtain answers about issues they want to know.

Key activities

Etsy’s primary activity is operating a marketplace for handcrafts and vintage goods. But in addition to that, the company also manages payment and supports delivery for its sellers and buyers.

Etsy also connects sellers with manufacturers after it opened the doors for factory-made items to be sold on its marketplace.

Partners

Partners of Etsy include payments service providers such as PayPal and credit card companies that facilitate the checkout on its marketplace.

Though artists are widely seen as sellers on Etsy marketplace, they are also partners of the company because they have helped create a community of art enthusiasts that have continued to boost the growth of Etsy as an arts marketplace.

Key resources

The marketplace platform is a key resource for Etsy because it is through it that the company connects sellers and buyers and gets the opportunity to generate revenue by charging artists to list their items on the marketplace.

Etsy’s community of employees is also a key resource because they maintain the marketplace and recruit customers.

Cost structure

The major cost burdens for Etsy include expenses for maintaining the marketplace, which needs frequent improvements to ensure that the company stays competitive given the growing competitive threat.

Payroll and marketing are other major costs that Etsy has to cope with.

Revenue streams

Etsy’s revenue streams include the $0.20 listing fee per item for four months and the 3.5% commission on sales on the marketplace. The company also renders advertisement where it features shops for a fee.

The move to allow factory-manufactured items to be sold on Etsy paved the way for more rapid growth of the marketplace as it resulted in a broader product listing, a wider user base and more revenue for the company.

Annual merchandise sales volume on Etsy hit $2.39 billion in 2015, growing from $1.93 billion in 2014 and $1.35 billion in 2013.