Embroidered face masks by Etsy seller NatasaTote.
Etsy logged an eye-popping $2.7 billion in gross merchandise sales (GMS) in the second quarter of 2020. Even if you omit the $227 million from music marketplace Reverb, Etsy topped the total dollar amount of sales it made in all of 2015 in just one quarter.
When face masks started selling like gangbusters in April and May, Etsy predicted that its GMS for the second quarter of 2020 could potentially double the sales of Q2 2019. It ended up being up 146% over the same period last year.
About $346 million worth of masks were sold on Etsy in April, May, and June, CEO Josh Silverman said on the earnings call, and more than 110,000 sellers sold at least one mask.
But it wasn’t just masks driving Etsy sales — non-mask sales were also up 93% in the second quarter. All of Etsy’s top categories (see infographic below) saw significant growth. Sales in the largest category, housewares, and home furnishings, grew by 128% compared to last year’s Q2, topping $700 million.
“It speaks again to the extremely large addressable market that we believe we are facing,” Silverman said. In 2019, Etsy estimated its total addressable market in its top six countries as $100 billion.
“When we pull back and look at what we’ve learned over the past three months, it reinforces my belief that the size of Etsy’s addressable market starts with a T, not with a B.”
That’s right — he’s talking about a trillion dollars. “Etsy is not a niche marketplace,” the company’s presentation read. The distinction between online and offline shopping has meaningfully changed, and more people want to make everyday purchases special.
Fine art print by Etsy seller Jorey Hurley.
What Etsy sellers need to know
The new Offsite Ads program went into effect in the second quarter, and CFO Rachel Glaser said there was “minimal churn” among the sellers required to participate in the program, and only 2% of sellers with less than $10,000 in sales per year opted out. Silverman called the return on ad spend “terrific” without giving more details.
Etsy Ads (formerly known as promoted listings) had its first $1 million day in July, and grew by 60% from the first quarter of this year.
The push for free shipping Etsy made last summer “positioned us much better for this moment that we’re in today,” Silverman said. This quarter the company unrolled a bundle feature that shows buyers more items from the same seller that would push them over $35 to qualify for free shipping.
And speaking of shipping, the pandemic has caused mail issues and delays both domestically and internationally. Silverman didn’t address that directly but did say Etsy is “working on setting appropriate expectations around when the item can arrive and helping to resolve issues proactively for buyers before they might even become serious issues.”
Etsy is tweaking its search and discovery services, adding the ability for buyers to save searches, a feature that so far has proved popular. Silverman reports that so far 8% of buyers have at least one saved search, and 11% of people who have a saved search have come back to check on it. Silverman says the new feature that allows sellers to add videos to listings is also showing promise, with 700,000 videos uploaded in the few weeks it’s been live. Etsy also unrolled an augmented reality feature that lets buyers see how a piece of art would look in their home.
More about the numbers
“We thought GMS might decelerate in May and June from the highs seen in April,” Glaser said on the earnings call. But “in fact strong trends continued throughout the quarter.”
Etsy’s gross merchandise sales reaching $2.7 billion in the second quarter which also meant record-breaking revenue. Etsy revenue — including fees for listings, ads, payment processing, and other services — was up 137% to $429 million from Q2 of 2019. EBITDA (earnings before interest, taxes, depreciation, and amortization) was $151 million, up by 379% compared to the same period last year.
The marketplace saw 18.7 million new and reactivated buyers in the second quarter, reaching more than 60 million active buyers. And those people are buying more: GMS per active buyer rose by 5.9% in this quarter compared to the same period last year.
“Getting new buyers to the fourth purchase is generally an inflection point for repeat purchases,” Glaser said. In Q2 this year, 9.6% of new and reactivated buyers made four or more purchases across multiple categories —nearly double the rate last year.
Marketing spend reached $115 million by the end of Q2, up 149% from 2019. “Paid GMS” (meaning sales that can be directly tied to performance marketing) accounted for 21% of all gross merchandise sales in the quarter, up from 15% last year.
It’s difficult to know how re-openings and future waves in the global pandemic will affect in-person and online shopping, but Etsy is pretty sure their growth will continue. The company anticipates GMS will reach $2.2 billion to $2.5 billion in the third quarter, potentially double from last year.