Four times a year, we get a behind-the-scenes glimpse into Etsy! They share all kinds of numbers and information with us. It’s mostly geared towards investors but every now and then you can pull little nuggets of information from them that are very useful to sellers. And that’s exactly what we’re doing in this episode of the Jam! Let’s dive in to the Etsy 2020 Q4 Report!
Today we are digging into Etsy’s 2020 Q4 Report that just dropped! We’re going to see some things we expected, some we didn’t, and what it all means to you as a seller. We’ve got a lot to cover here, so let’s dive in.
Leaps and bounds in 2020
Right off the bat, they hit us with a pretty impressive-looking chart that’s showing GMS (Gross Merchandise Sales) spiking in 2020. This should come as no surprise, but their percent growth year over year shows that they did well in 2020 versus previous years.
Etsy 2020 Q4 Report is not that surprising
We can see in the chart above that Q1 started low in 2020. That’s not a big surprise because historically, Etsy drops down in Q1 versus how they did the previous Q4 and Q3 (we think this is due to the holidays being over with and is just a normal lifecycle). Again, no surprise here!
Also not surprising, Q2 was absolutely HUGE. They already shared these numbers with us in previous reports, but it’s nice to look at the full year to put things into perspective. This huge growth should come as no surprise and is partly due to the number of mask sales on the platform. You can see the growth displayed on the chart with mask sales and without. Nonetheless, the growth is really impressive compared to years prior.
Etsy 2020 Q4 Report shares Etsy has outpaced the growth of eCommerce x2.5 (that’s 250%)!
Compared to all other eCommerce platforms in general, the chart above shows Etsy far outpacing the rest! You would have expected eCommerce to grow because people were staying home and doing more of their shopping online, but Etsy’s growth compared to the average eCommerce platform is fantastic! We think that’s why they’re showing it here because if it wasn’t impressive, they wouldn’t show it (after all, this report is for investors 🙂)!
Keep ’em coming back
When it comes to selling on Etsy, we all know the hardest part is getting someone to make the initial purchase. So Etsy is REALLY working on keeping buyers coming back. Yes, they’re bringing a ton back in but they’ve also reactivated a ton as well (“reactivated” is what they call it when people have bought before and are now coming back to the platform). Don’t forget the existing buyers that have always been around! These are the ones that made an account, bought something on Etsy, and just keep coming back for more.
Etsy has been investing in bringing buyers back for a long time now (which needs to be apart of any business strategy)! And it makes sense — you can’t just have one customer, one time, and be done… you NEED people to come back.
Etsy 2020 Q4 Report shows that active buyers have grown 77% and active sellers have grown 64%
This means the amount of buyers on the platform is outpacing the number of new sellers on the platform!
So, anyone who’s been thinking “Aw man, Etsy has gotten so competitive” or “I can’t hack it on Etsy anymore,” you’ve still got WAY more shoppers coming in. Etsy is still bringing people to the table and you’re not in that position where there’s more supply than demand. There’s definitely been a larger growth in shoppers than there has in buyers. For sellers, this is great news!
Fun Fact: the trailing 12-months of Gross Merchandise Sales per seller averaged $2,281. So, if you’re making more than that per year, then you’re above average for an Etsy seller! That’s straight sales, not profit.
Buying without searching?
Here’s something interesting: the percent of purchases on the first page of search results has increased over time. From Q1 of 2018 to the end of 2020, this has increased from 77% to 86%. This means that the number of people who are making a purchase from the first page of search results is increasing!
Now, we know that you’re thinking…
“This is insane! Are people not shopping around? Are you telling me that people are just doing a search and — BOOM, whatever shows up in the first fifty things on that first page, they’re just going to pick one of those and that’s what they’re going with?”
However, when we really break this down, there are a couple things to consider:
- The chart shows purchases from the first page of search results, but this doesn’t tell us what number search this was. Someone might have done twelve searches and then on the twelfth search when they’ve really honed in on what they’re looking for, THAT’S when they’re ready to make their purchase off the first page.
- Another thing to keep in mind is this might not be accounting for the filter system on Etsy. If I do a search, and I filter by something (maybe I want to see only things that are tan or only things in a certain price range), Etsy re-shuffles the search results to match whatever my filter set is. So everything pulled from this filter is going to look like first page results.
Is this measuring Etsy’s success or is this measuring the laziness of shoppers?
Are people getting lazier and not wanting to move further down in search results or is Etsy really getting better at delivering content? It’s one of those things that’s tough to measure.
Buying from ONE search?
The next chart doesn’t exactly shed light on that question above. It says that Etsy “continues to make meaningful progress in helping buyers find what they’re looking for.”
This chart apparently measures the percentage of purchase visits when a buyer updates a search query. So at first, we were wondering what they’re talking about here… Are they saying there are people that just jump on the site, search for one thing and they buy it? That would be interesting! But we don’t really think that’s what’s happening… We think buyers may often be doing different searches rather than updating their previous searches. This would be considered a different search rather than an update to a search, even though it essentially serves the same purpose.
Here’s an example: If I jump on Etsy and search for “Valentine’s Day gift for wife” I’ll see a bunch of results, but I’m not really looking to buy anything at that moment. It’s just a search to get ideas and Etsy is going to show me all kinds of different gifts ideas. From there, maybe I do a search for “heart-shaped scented candle.” I saw this in the search results of my first search and now I know that’s what I want! So, now I’m searching for that item only.
A little further down in the report, they mention expected shipping and delivery date for shoppers on Etsy. This is something that is front and center for Etsy shoppers and Etsy knows that people are coming to the platform and they want to get stuff within a certain timeframe.
A friendly reminder for you as an Etsy seller: You need to get your delivery and production times down. If you can keep more inventory in stock and ready to ship out the door, the better you’re going to be for shoppers who have a quick-delivery mindset
Before you panic
You’re only competing on shipping and delivery with the other people in your space. So if you’re saying “Hey, I can’t do this next-day. I can’t stock this. I can’t do this or that.” Well, great! If none of your competition can do that either then you’re fine! 👍
Are you using product videos?
Videos are still pretty new to the platform but Etsy has been pushing those pretty hard. In their previous report, they told us that they had 1.3 million videos already uploaded to the platform! As of Q4, they have 1.7 million videos uploaded — which is awesome that they’re making headway here. But, the real big takeaway from this (sort of like shipping) is you need to keep this in mind as a seller. This could be an opportunity to get ahead of the curve and be one of the few to add a product video to your listing!
This is a really good time to start experimenting with your videos because nobody else is going to be great at this either — it’s new to them too. Your first video is not going to be as good as your 50th video — I don’t care who you are, it’s just not going to be the case. So, right now just the fact that you have a video is pretty cool. It’s a novelty. Later on, you might be expected to take better videos. Kind of how now, you’re expected to take better product photos.
Discovery, even without the words to describe the item
This. is. important.
Historically on Etsy, you’ve always had to have the keyword that shoppers are using for them to find your listing. However, Etsy is now saying that shoppers don’t have to know the right words to use and they want shoppers to be able to find what they’re looking for anyways. We just did a video with Kara Buntin almost on this exact same thing. One of the points we talked about is how Etsy has been expanding the number of similar products that they’re showing in certain keyword searches.
Example: If you searched for “Mountain Lion” Etsy, might show you cougar stuff that doesn’t have that mountain lion keyword term on it, because Etsy thinks it’s related and thinks you might be looking for it. You might not have to know the exact words for what you’re looking for, but Etsy is going to help you out and show relevant listings anyways.
We believe that Etsy is going to be using this for more and more keywords. They’re probably starting with keywords that don’t have a whole lot of results to begin with – to try and bolster those results. They’re going to hone their algorithm to make sure it’s doing as good of a job as it can to pull in things that people are going to go through and purchase. And they’re going to want to bring that to more and more keywords on the platform.
Does that mean you don’t have to have great keywords on your listings anymore?
No, absolutely not! It does mean that you need to regularly check in to your keyword stats and if you’re getting views and visits from keywords that you don’t have in your listing, put them on there!
A quick note on keywords: as Etsy makes these improvements on discovery, it’s important to remember that keywords are what tell Etsy what your listing is about. So, no matter how the shopper is searching for it, and no matter how Etsy helps bolster search results, it’s your listing keywords that tell Etsy exactly what your listing is about. Without having good keywords on there, you’ll never get thrown into that pile.
Etsy 2020 Q4 Report shares the power of selling on Etsy
Buyer lifecycle: Acquisition. Activation. Retention.
As an Etsy seller, you now have access to this funnel that really only huge corporations have access to. It starts with TV ads. Now, who has national and international TV besides huge corporations? Nobody. But, Etsy puts you in people’s living room through TV ads, follows that up with promoted listing ads on different platforms (Google, Instagram, Pinterest, Bing search), and they’re all over social media (both with the paid and their own page/promotion), they send emails, and of course, in-app buyers are seeing more of the stuff they like through recommendations and notifications.
For any of you that have tried to set this up on your own site, it’s A LOT of work! But Etsy’s doing it for you and at no cost — and we think that’s really cool! You’re not paying for their TV spots they take out or for their advertising on Google (unless you make a sale from it, then they take a commission). You’re not paying for their efforts on social media, the emails that they send out, or the push-notifications that are coming out of the Etsy shopping app. Those are all things that Etsy is doing to bring more boots to your shop and more eyes on your products.
Along those lines, Etsy is pointing out the success of its ads: 9% of Gross Merchandise Sales in the second half of 2020 earned an offsite ads fee. This means that 9% came from offsite ads, which means they’re working!
Top of the funnel
Once those buyers come in, they’re going to get the app, they’re on the list — they’re in the Etsy ecosystem. They’re going to be reminded to come back and shop on Etsy. Now they’re Etsy buyers.
Etsy 2020 Q4 Report Forecast for 2021
That’s a run-through of all things about 2020. At the end of their report, they also have some things where they’re looking forward into Q1 of 2021, and what their expectations are. Let’s take a look at the forecast!
Etsy is looking to put up some pretty impressive numbers in 2021
- Between $2.9B-$3.1B in Gross Merchandise Sales (GMS)
- Expected GMS growth in the range of 115%-125%
Now, of course they want to be as accurate as possible, but they really want to beat these numbers (Wallstreet freaks out if you miss them by even a little bit and they go ecstatic when you beat them by even a little bit)!
What’s impressive is they are staking their claim that their sales in 2020 were not a fluke. Early on in the presentation, they said that they’ve reached an inflection point, not just with eCommerce but with Etsy in general. They are looking to keep this thing rolling forward and strong! This is not just a flash in the pan, but they believe that it will continue to be an upward trend.
Wrapping Up the Etsy 2020 Q4 Report
So there you go. There’s a whirlwind tour of the highlights that we found in Etsy’s Q4 presentation from 2020. We hope you find some of this information useful and you can use it in your shop to take yourself to the next level in 2021. Did your shop experience a spike in popularity at any point in 2020? Let us know in the comments below!