Etsy CEO Josh Silverman
Credit: Heathcliff O'Malley
For most retailers, 2020 has been a year to forget. But, for Josh Silverman, chief executive of US e-commerce site Etsy, it has been spectacular.
The energetic 51-year-old took over as the boss of the Brooklyn, New York-based firm three years ago, taking the reins of a company known as a hub for those selling craft and vintage items.
Etsy, which employs more than 1,200 people, had been growing steadily since then – a favourite for those hunting for personalised wedding items or handmade jewellry.
Yet when the pandemic hit and millions of people were thrust into lockdown at home, the online marketplace found itself in a unique position.
It was, Silverman says, “something of a Dunkirk moment for Etsy, where cottage industry could come to the rescue”, referring to the vast numbers of people flocking to the site for the first time as they raced to snap up fabric face masks, which were being sold on the site.
Since April, more than 54 million masks have been sold on Etsy. Its revenue has more than doubled on last year, hitting $1.1bn in the first nine months of the year, whilst income has quadrupled to $201m. Such a surge in activity by both buyers and sellers has sent the Nasdaq-listed firm’s share price rocketing by 461pc since March.
Silverman shrugs off the hype: "I’m not really in the business of guessing what our share price should be.”
Still, he believes demand for Etsy’s services won’t be falling any time soon. Demand was not just only for masks, but a plethora of items as high streets remained closed, such as handcrafted jewellery, personalised gifts and bespoke paintings.
“This year, Etsy sellers have risen to the challenge, and buyers are loving what they’re seeing, so they’re coming back. It’s creating a new habit, which I think will continue through 2021.”
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Demand has certainly been booming as consumers have sought out new ways to buy goods they might otherwise have bought in specialist craft or vintage stores. In the second and third quarters of 2020, global sales of non-mask items were up 92pc year on year. In the UK, purchases were up 250pc year over year. “Etsy has really become a household name in the UK during this time, and we’re investing heavily here."
“More generally, though, I’d say this is really the year the world has come to see the potential we’ve felt in Etsy for a long time. People are buying more things from fewer and fewer online mass logistics providers, commoditised stuff that arrives quickly and cheaply, but then ends up in a landfill – and I think people are yearning for an alternative… Etsy sellers provide a really compelling alternative”.
What Silverman is hinting at is an alternative to industry giants like Amazon. In fact, he rankles at the suggestion that Etsy and Amazon are similar, given both allow small businesses to sell via their site and both take a cut of sales, in Etsy’s case 5pc and Amazon’s an estimated 30pc.
“We’re giving micro businesses a fair chance against the big guys, which is critical. What we’re trying to do is level the playing field and give them a fair chance.”
Arguments that have been levied at tech giants have also dogged Etsy. The company, for example, manages most of its international operations out of a subsidiary in Ireland, and pays tax on its profits there. Advocacy groups such as Americans for Tax Fairness have previously called for it to drop the scheme, which helps cut its tax payments.
“We believe everyone should pay their fair share,” Silverman says. “We’re working with regulators to make sure that we can come up with a tax system that’s harmonised, and fair and appropriate for everyone.”
In his view, any change of tax rules should be coordinated internationally and unilateral efforts to get technology companies to pay more are unhelpful. “At the end of the day, this is about supporting Etsy sellers and micro-businesses, we don’t want to put them in the middle of that.”
The company is hoping pressure from sellers on its site may help sway the balance away from sweeping new tax rules in Britain. Earlier this year, Etsy began a petition for sellers to sign, urging the Government against introducing an online sales tax, something various MPs are considering and which would impose new levies on businesses selling online to level the playing field with high-street stores which pay hefty business rates.
At a glance | online sales tax
Silverman doesn’t shy away from the topic. “I don’t think we should say because it’s cost prohibitive to start an offline store, we should also be keeping entrepreneurs from selling online,” he insists. “I think it’s terrible for the economy, and it’s terrible for small businesses.”
People selling products online can “create jobs and employment and economic activity for people all across the UK that can far outstrip what’s happening with offline retail”.
“That’s something that the government should be excited to support.”
That’s not to say that high street retail is gone forever, Silverman adds. “Consumers want a lot of choice and options, so there will always be a desire for a retail experience from some people. But I don’t think sellers need to have an offline presence to be thriving. If you think about those barriers for small and micro business people, how intimidating is it to sign a five or ten year lease, and then buy the inventory? Many people don’t have the capital for that.”
Online retail is actually a “much more democratic way to build a business.”
As much is clear from the type of people selling on Etsy. According to Silverman, 91pc of Etsy sellers are businesses of one. Around 85pc are women. Much of what they are selling is hand-crafted, personalised, or vintage.
It is a pool of sellers which has ballooned in size this year. In the UK, numbers have jumped 181pc year over year, meaning there are now nine million listings from British sellers.
“Lots of people who, you know, had thriving offline businesses who suddenly have needed to sell online and discovered a whole new way to run their business during lockdowns,” Silverman says.
With Christmas fast approaching, but many high streets remaining shuttered, his comments have never been more true. “With all the tragedy of the pandemic, small sellers have had the chance to come in and make the most of the opportunity,” Silverman says.
For Etsy, the hope is this those sellers will continue to rise to the occasion.
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