Why aren’t more Etsy sellers signing up for its Seller Services?
Report Available: December 21, 2016
Blueshift’s initial research shows ETSY with an opportunity to grow its revenue through its seller services, designed to provide sellers with simple, powerful tools to help them manage their ETSY business. But sellers have not yet embraced these opportunities enough, and glitches earlier in the year created headaches for sellers and buyers, necessitating a change to a new payments company.
- ETSY’s Q3 showed gross merchandise sales ahead of expectations with stable active buyer/seller growth. Seller services revenue grew 50%, down from Q2’s 58% increase. The company expects this trend to continue as it laps the PayPal integration into Direct Checkout, which has been the primary source of revenue growth for seller services this year. Still, ETSY raised its full-year guidance.
- ETSY provides three main services to support its sellers: Direct Checkout, where it processes payment and allows buyers to pay in a the manner of their choice; Promoted Listings, which gets sellers’ items in front of shoppers more frequently with better placement; and Shipping, which provides shipping labels, tracking services, and generally makes order fulfillment efficient and affordable. These services are relatively underpenetrated and represent an opportunity for growth if ETSY can convince sellers to partake more. For instance, the Shipping service has only 24% penetration despite it being one of the most economical ways for these sellers to ship goods.
- ETSY recently launched Google shopping ads, designed to allow sellers to attract shoppers off of ETSY by advertising their listings in Google search results, which, combined with Promoted Listings, gives sellers more options for advertising. However, revenue from Google shopping ads is separate from Promoted Listings, though it is integrated into a single dashboard. It also purchased Blackbird Technologies, an artificial intelligence company to enhance the Etsy shopper experience with a more personalized search and other features similar to those used by Amazon and Google.
- As ETSY attempts to increase adoption of its seller services, it cannot afford glitches like the one in July where credit cards and gift cards did not process payments, users reporting duplicate charges, and sellers having dropped transactions, leading to 15,000 customer complaints. As a result, ETSY announced last month the addition of payments company Adyen to ensure a seamless payment experience for shoppers.
Why are sellers on ETSY not using Seller Services? What alternatives are they choosing instead? What are the primary benefits of using ETSY vs. other third parties? How has the mix shift changed at all between ETSY and non-ETSY platforms? Will sellers consider using ETSY’s Pattern service to help build their website or are there other third party offerings they are using/considering? What is the number one improvement ETSY can make to its platform? What is the repeat buyer rate and will it increase in frequency? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: ETSY sellers, ETSY shoppers, and Industry specialists.
Companies: Etsy Inc. (ETSY)
Research Begins: Dec. 5, 2016