I first wrote about Etsy eight months ago,
Don't Call It A Comeback, Etsy Been Doing It For Years
I truly thought Etsy was going to be Amazon’s next meal and because Ebay was also in the marketplace, seriously considered shorting Etsy at the time.
But this still doesn’t explain why didn’t Amazon eat Etsy for lunch? Then after digging into the matter more, I found the following:
Sellers like Etsy because they release the funds immediately to the seller after the sale closes. Amazon Handmade holds the funds until the order ships.
Etsy has no seller fees and only changes by product listing after the first 40 listings. The seller fees for Amazon Handmade start at $40 per month.
Many of the things that sell on Etsy are made to order. Amazon warehouses everything and can ship next day.
What I realized is Amazon isn’t eating Etsy for lunch because Etsy isn’t on the menu. Meaning Etsy has figured out a way to create a competitive advantage in a way that it brings value to the buyers and the sellers that Amazon can’t match.
Etsy announce earnings this past week and proved that their niche business model warrants their own lane in the ecommerce world.
Etsy Inc.’s fourth-quarter sales surpassed expectations, sending shares to their highest level since the company’s 2015 initial public offering with several analysts raising their price targets to the $70-$80 range.
Results were driven by a 41.7% year-over-year jump in seller services revenue (revenue from services offered to sellers, including promoted listings, shipping services, and Etsy Plus). I talked about this in my post eight months ago.
Silverman brought consumer technology businesses and global marketplaces experience to Etsy. He focused on streamlining the business and put more resources and energy into the initiative that would generate more revenue
A former executive at eBay and American Express, Silverman brought consumer technology businesses and global marketplaces experience to Etsy. He focused on streamlining the business and put more resources and energy into the initiative that would generate more revenue.
This show Etsy’s ability to execute on what they said they were going to do. Silverman later went on to say he believes the company is "well-positioned for continued growth in 2019."
Etsy is proving that their niche business model is sticky and shutting up all the doubters, including myself. For now I will continue to keep Etsy on my watch list of potential short, which might be more viable when consumer spending slows down.
The level to pay attention to is the $80 level if and when price gets there.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
