Startup-Watch: A Closer Look at Etsy.com

One of the companies I’ve been following for a long time is Etsy.com.  Etsy.com is a website for folks selling craft items — or as they put it "Your place to buy & sell all things handmade."Â  More broadly, they are referred to in the startup world as P2P commerce (person-to-person) — similar to eBay or any other site that enables person-to-person transactions with the website in the middle taking a small cut.

The press around the site has been amazing.  According to Techcrunch, "$100 million worth of goods were sold on Etsy in 2008. The company is generating over $1 million/month in revenue, Kalin told me."

Let’s take a look at their performance using Compete PRO Enterprise.  First, unique visitors and page views:

Etsy.com Uvs and Page Views

From a unique visitor (UV) and page views point of view — Etsy looks like it is still growing like gangbusters.  If you’re the CEO of Etsy you have got to be happy with that.

Also interestingly — Etsy seems to avoid the classic retail Christmas bump in their UV curve.  Here’s a view comparing Etsy to some other niche retailers:

Etsy.com Uvs with niche competitors

Now this could be a function of their growth that is hiding the retail Christmas bump.  But it could also be a function of the community they have developed around Etsy that keeps people coming back.  One way to measure this difference is to look at the average stay across these sites.

Etsy.com average stasy with niche competitors

Very interesting — Etsy clearly has great average stay metrics — putting it up with QVC and Victoria’s Secret, but they also seem to be dropping.  Let’s take a closer look at unique visitors vs. average stay just for Etsy.

Etsy’s average stay has been dropping since June of last year.  What could this mean?  It may be an indication that Etsy is now driving or receiving worse traffic to their website.  This isn’t unusual — given the growth curve of the website, they are bound to attract people who are not as hardcore as their original "core" group.
Etsy spends very little on advertising — let’s take a look via Compete PRO’s search analytics:

Etsy.com search traffic

As you can see, they’ve got over 3.3 million search referrals, and only 46,000 paid search referrals — an amazingly low 1.39%.

In terms of who is referring traffic to Etsy — a quick report shows us that Facebook (Etsy has two Facebook applications) is the #1 driver of traffic with Google at #2.  Also note the referrals coming from Bronto at the bottom — Bronto provides email marketing tools and probably indicates some outbound email marketing activity.

Etsy.com referral traffic

So what does all this mean?  To date, Etsy has had very powerful word-of-mouth referrals and has been particularly successful at using Facebook to generate referrals.  They may have, however, reached an inflection point in this traffic and now may be driving traffic, organically, that does not translate into buyers.   Now might be the time for Etsy to start using marketing dollars to drive the right people to their site.  Additionally, Etsy might want to focus an affiliate program — and perhaps one similar to eBay in which they evaluate the quality of the traffic coming to the site as part of the metrics for how affiliates get paid.
Etsy is clearly an innovative start-up — I can’t wait to see how they expand their offerings going forward.

About Damian Roskill:
Damian Roskill is the Managing Director of Marketing at Compete. Before Compete Damian was head of products for a video start-up and has worked in start-ups for most of his career. Damian's career aspiration is to be at one with the advertising universe. Damian can be found on Twitter as Droskill, or connect with him on LinkedIn at http://www.linkedin.com/in/droskill