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Etsy Escapes the “Race to the Bottom” and Returns to Its Craft Roots
Josh Silverman, CEO of Etsy.
Adam Jeffery | CNBC
When Etsy Launched nearly two decades ago, the site attracted artisans and craft makers who finally had a place online where they could sell their niche products and reach a large audience. But in recent years, Etsy has found itself overrun with generic, mass-produced items from resellers who have learned to game the site and drive out handmade products.
Now, Etsy CEO Josh Silverman wants the company, whose declared mission is to “keep trade human”, to return to its roots.
The company on Tuesday is rolling out a major overhaul of the policies governing its site to make it “pretty clear” to shoppers which products belong on Etsy, Silverman said in an interview with CNBC. The changes include new labels on its site and app to show how each seller created a particular item.
“We’re positioning ourselves to answer the call for real products and real people by highlighting the things that make Etsy what it is,” Silverman said.
Etsy is launching a new marketing campaign around the policy changes, including a TV commercial that shows potters, clothing makers and other artists, followed by a crushed robotic arm. The platform’s new rules require that all items incorporate “a human touch,” as described by its creativity standards. Each product must fall into one of four categories: made by a seller (by hand or using automated tools), designed by a seller, handpicked by a seller or sourced by a seller.
With the changes, Etsy hopes it can bring buyers and sellers back to its site at a time when e-commerce is increasingly dominated by Amazonas and newcomers like China-linked Temu and Shein, which provide shoppers with cheap products delivered to their doors within days. The stakes are huge, as eMarketer Estimates the global e-commerce market is expected to surpass $6 trillion this year.
“I feel like there’s a race to the bottom in terms of commoditized commerce right now and almost everyone in e-commerce is playing that race,” Silverman said. “They’re selling the exact same product and they’re trying to sell it to you for 2 cents cheaper, or ship it two hours faster.”
Etsy has struggled to navigate changing market dynamics. In its most recent quarterGross merchandise sales, or the dollar value of items sold on its marketplace, fell 3.7% from a year earlier to $3 billion. The stock has lost more than 80% of its value since peaking in late 2021. It is down 32% in 2024, while the Nasdaq has gained 23% in that time and closed at a record high on Monday.
In December, Etsy fired 11% of its workforce, with Silverman citing the “very challenging macro and competitive environment” as reasons for the cuts.
The Etsy NYC headquarters building is seen in New York City. The online retailer recently announced that it will lay off 11% of its workforce as the company looks to restructure its business and streamline costs.
Michael M. Santiago | Getty Images News | Getty Images
The company is also Dealing with pressure of activist Elliott Management, which has amassed a roughly 13% stake in the company, making it Etsy’s largest investor. In February, Elliott partner Marc Steinberg joined Etsy frame.
The rollercoaster ride started earlier. Etsy went public in 2015, forcing the company to start responding to shareholders’ demands for growth, a contrast to its culture of well-being and social awareness.
Etsy’s business has exploded during the pandemic, spurred by a wave of mask buyers. Its stock price quadrupled in 2020, and the number of companies selling products on the site more than doubled to 9 million between 2020 and 2023.
So far, Etsy has used its “house rules” to police the site. The main policy was that “everything listed for sale on Etsy must be handmade, vintage, or a craft material.” Resellers were prohibited.
The new rules are more specific and updated to reflect today’s realities. For example, a 3D-printed sculpture is considered “seller-made.” It’s prohibited for a seller to add a single sticker to a commercially available face mask and pass it off as handmade. Regarding AI-generated content, the policies note that “seller-requested AI art,” such as a dog dressed in traditional costume, qualifies as “seller-designed,” but a digital download of “over 5,000 ChatGPT prompts” is not allowed.
The challenge of growth
Etsy has for years struggled to balance preserving its image as a place for unique, handmade goods with a push to beef up its selection of items to compete with its larger rivals. For pioneering sellers like Ashley Smith, the changes haven’t always been welcome.
Smith began selling custom wedding handkerchiefs on Etsy through her business, The Polka Dot Beein 2011. Smith said Etsy was once a place where you could “search endlessly for amazing things people were making,” and has morphed into a site increasingly dominated by generic products.
Ashley Smith has been selling her custom scarves on Etsy since 2011.
Ashley Smith
One of Etsy’s biggest changes came in 2013 when the company allowed sellers to use manufacturing partners. Instead of manufacturing products themselves, sellers could turn to contract manufacturers for help with their products.
Abby Glassenberg applauded the initiative. Glassenberg, who opened your handmade stuffed animal store on Etsy in 2005, she said it meant she only had to create a pattern once and could sell “endless copies,” reducing her workload. Her Etsy shop went from being a hobby business to a full-time career, she said.
However, Glassenberg understands the tension, as many Etsy consumers still want the handmade experience.
“Handmade doesn’t scale,” she said. “That’s why we like it, that’s why human beings like it.”
Glassenberg gave the example of a handcrafted fork that was forged and cut by human hands.
“I’m going to pay $120 for it, and I’m going to use it and love it forever,” she said. “There’s no way one person can make 100,000 of them a month, and that’s why we love it.”
Abby Glassenberg has been selling stuffed animals and sewing patterns on Etsy since 2005.
Lisa’s Neighbors
Competing on a larger stage is different, and Smith said the popular preference for cheap, fast products creates “an uphill battle for sellers and for Etsy.”
Temu and Shein have increased their presence in the U.S. in recent years, luring American shoppers with deep discounts on clothing, jewelry, home goods and other products. Silverman has previously acknowledged that the sites “are taking a little bit of share from everybody.”
Now he’s making it clear to vendors and customers that the company will compete on its own terms.
“The solution to this for Etsy is to not try to play that game,” Silverman said.
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The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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