Etsy: How online-only Etsy entered the material world

For most brands, having both a high-street and online presence is essential, but if you are an ecommerce company, how can you gain that physical clout without a major real-estate bill? Etsy drew up its own blueprint, launching in the UK next year.

Recently high street retailer M&S admitted that although it is investing 25% of its marketing budget into digital, only 16% of sales are made online. Speaking at the Festival of Marketing earlier this month, Laura Wade-Gery, executive director of multichannel at M&S said: “Online is a 24/7 shop window for the whole brand experience of M&S. Some of those [consumers] will convert online but a huge number still shop in our stores.”

M&S isn’t alone in its intentions to find ways to bridge the gap between a digital offering and physical stores so that customers have maximum access to its goods. With retailers facing an intense battle for consumer spend, many are looking to do the same.

US-based online marketplace Etsy is no exception, but it is taking the novel approach of using other people’s stores to extend its reach. The brand started up in 2005 as an online platform for individual designers, artists and creators of unique products to sell their items directly to consumers, but in August this year it launched a wholesale operation in the US. Next year, it will launch its wholesale business in the UK, with plans for further expansion in key European markets, Australia and Canada. Its aim is to “reimagine commerce”, according to international multichannel manager Jonathan Zatland.

Etsy-House-2014-1
Etsy is launching its wholesale model, which involves partnering with retailers, in the UK

Combining online and offline is something that brands such as Etsy are focusing on to upscale their businesses. Moving into wholesale will allow retailers to buy Etsy products, help it promote small and medium-sized businesses and expand the brand globally.

Etsy’s marketplace has 1 million online stores set up by sellers, with 40 million consumer members worldwide. In 2013 sales of goods on the platform reached $1.35bn (£861m). The business model involves a 20 cents charge for a listing and a transaction fee of 3.5%. It currently operates in US dollars only but that will change when it expands to the UK.

In the US the wholesale business has created partnerships with fashion retailer Nordstrom, for example, which is working with Etsy to source products and currently sells Etsy goods in 60 of its stores. The platform is attracting similar interest from retailers outside of the US, according to Zatland, as it shares its plans for the wholesale business.

Etsy-House-2014

As a precursor to its launch in international markets, Etsy is providing consumers who may not have bought from or even heard of the brand with the chance to familiarise themselves with it through a pop-up shop in the UK.

“It’s a window to what is special about the marketplace,” says Zatland. He is heading up the wholesale expansion and the ‘Etsy House’ pop-up, open 5-7 December in London’s Covent Garden. It features products from 121 sellers from 11 countries, most of whom are on the waiting list to be featured in Etsy’s wholesale venture.

The Etsy House pop-up is providing the first physical touchpoint that gives people the ability to “live and breathe” the online marketplace offline because “90% of retail still happens offline and the physical element is important,” says Zatland.

Jonathan-Zatland-QA-2

As an online marketplace, why is Etsy moving into international wholesale?

Retailers were trying to source from Etsy.com, so we knew the demand was there; we just needed to create a destination where they could tap into our source of sellers, who were in turn looking to upscale their businesses. Following the [wholesale] launch in the US, it was always intended that we would take the concept out to our core international markets. The growth we are seeing outside of the US is very healthy. We are a global platform so we need to have our products support the global marketplace that we are.

In wholesale is there a risk of Etsy losing its appeal of unique products if retailers are buying at scale?

We are very focused on authorship and the designers so we don’t lose that sense. The sellers set minimum orders but we as a business have to help sellers be able to meet demands. It was a natural move for the business to be able to help them do that by creating a platform that enables them to set their business on a bigger scale.

What kind of investment does it take from Etsy to allow that wholesale business to grow?

It’s a healthy investment. We are constantly providing the tools, education and the teams that surround that, so there is a $100 sign-up fee for the wholesale platform to help us resource it. Then there is the 3.5% transaction fee we keep, so it’s a low barrier to entry for sellers.

What opportunities are you seeing for the offline business?

Wholesale offers really interesting prospects in terms of partnerships. It allows retailers to stock their shelves with meaning and create an authentic link between the person and the product, and that is why I think Etsy stands out.

What would you say is the biggest challenge in taking a US brand and expanding?

Being able to tell a consistent brand story across global markets and at the same time identify different needs for different markets. Our mission is reimagining commerce. We want to create a diverse and lasting retail ecosystem – that is our drive with our product launches and how we support our sellers. It’s all based around that.

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