Chart of the Week: Etsy Racks Up Triple-Digit Growth
February 26, 2021
When you think of e-commerce, you naturally think of Amazon.com Inc (NASDAQ: AMZN). The breadth of available everyday products on its platform, along with low prices, means consumers gravitate to it.
Yet for more specialized products that you can’t find on any other e-commerce platforms, many consumers are increasingly turning to Etsy Inc (NASDAQ: ETSY).
That’s because the e-commerce platform is a specialised marketplace where sellers craft artisan and tailor-made products that are sold to consumers.
That’s backed up by buyers on the platform – 88% of whom, according to a 2019 survey by Etsy, agreed that Etsy has items you can’t find anywhere else.
Etsy’s latest earnings for its fourth quarter (released on Thursday after the market close) highlighted just how big its appeal is getting.
Revenue growth in the fourth quarter was up an astonishing 129% year-on-year to US$617 million while its gross merchandise sales (GMS) figure came in at US$3.6 billion – up 118% year-on-year.
Even more impressive, Etsy is already a profitable platform on an adjusted EBITDA level (see below).
Again, the appeal of Etsy is the uniqueness of the products found on its site. Having been founded in 2005, the company has a strong following in the US and is also starting to broaden its appeal overseas.
For the final three months of 2020, 40% of its GMS came from international markets as substantial marketing efforts in the UK and Germany, to raise its profile, paid dividends over the holiday period.
Etsy’s investment in growing both its number of active buyers and active sellers is also delivering a noticeable expansion.
Active buyers on the platform were at 81 million at the end of 2020 compared to 46 million at the end of 2019, a 77% year-on-year increase.
Meanwhile, active sellers expanded to 4.1 million at the end of 2020, up 64% year-on-year from the end of 2019.
With a unique product and a community that loves what it offers – as well as an estimated US$100 billion market – Etsy looks like it’s just getting started.
Source: Etsy Q4 2020 earnings presentation
Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of Etsy Inc.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.