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Business Case Presentation: Etsy

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Emilie Kruger

on 20 June 2013

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Transcript of Business Case Presentation: Etsy

Business Case Presentation
Etsy
By Emilie Kruger
What is Etsy?
In the simplest terms Etsy is an e-commerce website which gives independent artisans a global platform to sell goods they have made. They also sell vintage items and art and craft supplies.
How did Etsy Start?
Etsy was launced on June 18th, 2005
It was started by New York University graduates in Brooklyn, New York.
Etsy was created by Robert Kalin, Chris Maguire, Haim Schoppik, and Jared Tarbell.
In 2012 Etsy had $895.1 million in sales and 850,000 sellers worldwide.
Etsy's Eco-System
Competitors
Key Competitors:

The main market competitors of Etsy most people recognize are Ebay and Amazon. Ebay and Amazon are e-commerce websites in which buyers can purchase items from individual sellers not just from the main source. Etsy has even been described as being the "crafty cross between Ebay and Amazon".
Direct Competitors:
There are also a few direct competitors of Etsy which are:
Dawanda: same concept as Etsy but headquarterd in Germany and appealing to European market
Bonanza: Focuses on fashion and clothing
Tindie: Focuses on technology trends
Partners:
The main partner of Etsy is of course it's "shop oweners", the people who sell their items on Etsy. But in 2012 Etsy partnered with West Elm to showcase some items made by local sellers. In 2013 Etsy also partnered with Nordstrom in the "Etsy and Nordstrom Present" collaboration.
Who is Etsy Selling To?
Etsy is trying to attract customers who want a unique, one of a kind product. Their customers are mostly shoppers who are interested in supporting the artists who create these exclusive products.
“Etsy is more than a marketplace: we are a community of artists, creators, collectors, thinkers, and doers.”
Stakeholders
Shop Owners
Investors
Sean Meenan, Spencer and Judson Ain, Union Square Ventures, and founders of Flickr and Delicious
In May 2012, Etsy became B Corporation Certified
They look to society (stakeholders) before stockholders
They want to consider the society and environment in addition to making profits
Structure
The structure of Etsy is decentralized. The users can connect not to just the central node but with any other node on the network. For example buyers and sellers can connect with each other and also sellers can connect with other sellers and buyers can connect with other buyers. Etsy also operates on an individual production process in which sellers produce and sell their goods to individual users on their own. They use Etsy as a host and a marketing tool for their goods.
How Does Etsy Compete in the Eco-System?
Etsy’s decentralized structure allows it to compete in the eco system because all the nodes can be connected. This allows users to interconnect their products sold on Etsy and other platforms such as Ebay or smaller scale boutiques. Etsy is a knowledgeable company who is aware of their customers and knows their values in business which allows them to have a strong presence in comparison to other similar organizations.
How Does Etsy Make Revenue?
Etsy.com is worth an estimated $1,525,000,000 so how do they get that money? Etsy charges $.20 per item that the shop owner displays on their page. Upon the sale of an item customers pay the seller and the seller is responsible for paying Etsy a transaction fee of 3.5% of the items sale price.
Funding
As previously mentioned investors of Etsy include Sean Meenan, Spencer and Judson Ain, Union Square Ventures, and founders of Flickr and Delicious. They helped start Etsy start in 2005.
In January 2008, Etsy received $27 million in funding from Union Square Ventures, Hubert Burda Media, and Jim Breyer.
In May 2012, Etsy raised $40 million in Series F funding which they are partly using toward expanding Etsy international markets.

Individual Production
Etsy relies more on individual production rather than peer production. Although all the shops are connected in their ability to engage with other shops the shop owners produce and sell their products independently.
Long-Tail Goods
Etsy engages in distribution of long-tail goods. This means they sell a large number of unique items with relatively small quantities of each sold. Due to the amount of products being sold on the larger scale, Etsy makes good revenue.
User to User Distribution
Etsy definitely relies on user-to-user distribution. Sellers set up a “shop” that showcases their homemade or vintage products. Etsy hosts and markets these shops but when a customer wants to purchase and item it is the responsibility of the shop owner to receive payment and ship the product.
How Etsy Ensures Quality Products
Buyers can rate the “shops” on Etsy and comment on how quickly the product was shipped, if they were satisfied with the appearance of the product, etc. This allows other buyers to be more confident in purchasing items from Etsy and being assured they will not be disappointed.
Revenue Model
Affiliate Marketing
Etsy's Revenue Model uses the Affiliate Marketing Strategy which is when the business rewards one or more affiliates for each customer brought by the affiliates marketing efforts.
Core Players
Merchant (Etsy)
Affiliates (Shop Owners)
Customers
Intellectual Property
Shop Owners may not incorporate the word “Etsy” and other Etsy graphics, logos, designs, page headers, button icons, scripts, and service names for their shops or products because they are registered trademarks to the company.
Some things they advise their users not to do:
Do not say things about Etsy you know are not true
Do not incorporate the Etsy Marks or a confusingly similar mark into, for example, the name of your business, organization, non-profit organization, event, or trademark.
Do not, without prior permission, use the Etsy Marks in a product
Ownership
Etsy is a privately owned company owned by its four founders:
Jared Tarbell
Haim Schoppik
Chris Maguire
Robert Kalin

Sources
http://mksinghlaw.com/2010/10/etsy-guide-to-terms-and-conditions/

http://www.forbes.com/sites/barbarathau/2013/03/07/etsy-partners-with-nordstrom-west-elm-more-mall-stores-in-store/

http://www.privco.com/private-company/etsy-inc

http://www.etsy.com/help/article/481?ref=hc_policy
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