Etsy, even moreso than most marketplace businesses, has built success on sourcing a unique set of one-of-a-kind items from a diverse set of creators and collectors. What is inside the Etsy basket has changed dramatically over the last two years, with its ability to quickly take advantage of a demand for custom masks filling a void in the mass production marketplace. In today’s Insight Flash, we demonstrate how our CE Receipt and CE Web data can work together to show what’s happening below the Etsy top line, looking at how transaction size and price per item have been evolving, and how supply dynamics in sellers and listings have been playing into that.
Etsy’s strong growth among US buyers starting 2020Q2 was driven by a sharp rise in transaction growth. As large events fell out of favor, so did the need for big orders of accompanying favors and supplies. Instead, smaller crafting projects and design-driven masks made up a larger percentage of the growing Etsy orders. In April through September of 2020, Etsy y/y transaction growth was over 110% each month, while average ticket fell -10% or more. In 2021, transaction growth was negative lapping those months while average ticket growth was only in the single digits. However, October seemed to show some signs of more normalized dynamics with flat y/y transactions and 8.5% average ticket growth. And although the holiday season is often volatile, spend growth remained positive in November although slightly lower in December as transaction growth decelerated to -11% with average ticket only up 4%.
Spend Growth Dynamics
Peeling back the onion, trends in the average price per item among US buyers provide more clarity. Since the beginning of 2019, the lowest average price per item in the Etsy basket was in April 2020 at $17.28, a -10.9% decline from the year prior. Holiday 2020 saw the average price per item stay relatively steady however: $19.31 in November and $20.05 in December versus, respectively, $19.47 and $19.83 the year before. By 2021, the numbers had increased even above 2019 levels to $20.70 in November (6.3% increase) and $20.78 in December (4.8% increase). This move to higher-value items may be the beginnings of a longer-term growth driver for the company.
Price per Item
Almost all marketplace businesses rely on network effects on both sides of their business – both demand and supply. For Etsy, the number of suppliers has been consistently increasing over time. In the last three months of 2021, the number of sellers was over 1.3x what it had been in January 2019. The number of listings has also been increasing, with the combination of growing buyers and sellers implying an expanding array in the assortment on the site. However, the decline in listings in December is worth keeping an eye on in the months ahead. The number of listings on Etsy has declined in previous Decembers, likely as especially unique single items are snatched up as holiday gifts. The especially steep decline this past December may just be an indication that originality was becoming more valued this year. However, it may also be an indication that supply chain issues are affecting inputs even for creators operating in North America. Watching this metric in the months ahead will be important for assessing which is the case.