Etsy Q3 2020 earnings show higher-than expected growth across its key metrics. New Consumer shopping habits have allowed Etsy to sustain growth by driving retention and frequency of their existing buyers as well as becoming an important shopping destination for new buyers.
Consolidated GMS grew 119% to $2.6B ($2.4B for Etsy.com standalone) and Etsy Q3 revenue increased a massive 128% to $451 million with active buyers increasing 55% to 69.6M and sellers up 42% to 3.7M.
Etsy has released Q4 guidance as year-over-year GMS growth of 65%-85%, Year-over-year revenue growth of 70%-90% and Adjusted EBITDA margin of 24%-27%.
“2020 demonstrates the scalability and value of our marketplace business model. We have a very disciplined approach to our investments with a goal to deliver profitable long-term growth. Our investments in marketing have contributed to encouraging progress in buyer retention and frequency which will serve as a foundation for the future. Etsy is uniquely positioned to leverage our strong balance sheet, dynamic business model, and solid fundamentals to capitalize on our large addressable market.”
– Rachel Glaser, Chief Financial Officer, Etsy, Inc.
Etsy is outpacing e-commerce growth rates probably due to the increase in online shopping and desire for unique handcrafted items. Whilst there is a struggle for social interaction, handmade personalized goods can bring comfort to consumers. It also seems that since more people have been forced to start shopping online more consumers are re-engaging with the platform. additionally, GMS per active buyer growth has accelerated for the past 6 consecutive quarters.
Etsy are preparing to serve this Christmas through marketing investments. No matter when buyers want to shop, Etsy relies on their sellers to meet demands and fulfill their orders. This is an unpredictable time, and according to Etsy the majority of Etsy sellers aren’t constrained by supply chain issues that have limited traditional retailers in recent months.
One Response
It’s very interesting to see the shift in consumer buying habits since March, the main issue with reporting on ecommerce growth is that data is often coming from the big players in the market. Yet data like this is showing that the small online stores are up by a lot bigger percentage than generally reported.
Is there something else going on here? Are the very small online businesses taking a far bigger share of the market than we realise, yet not being picked up when reports are taken from the top 100 online stores?