Etsy, the e-commerce focused on handmade and vintage items is effectively like an online craft fair in which sellers create personal storefronts. Following the appointment of a new CEO in 2017, the company reached profitability.

Mark Silverman, the new CEO, spoke to Fortune about the company’s development under his stewardship. In two years, the magazine reports, revenues have risen by 65%; as a result its market capitalisation is now larger than Macy’s. Here’s how they made the experience feel less like a flea market.

Focus on the basics

Etsy used to struggle with search. Often an item based search (bike jersey, for instance) used to return a host of results featuring either or both words. While the Anglophone world has grown used to Google’s predictive and ultra-developed search product, companies like Etsy used to struggle in this area, diminishing user trust and, ultimately, creating a barrier that could impede sales.

One of Silverman’s first moves was to improve search, in part by introducing features such as autocorrect. It has also begun to better understand what elements of the basic function drive revenue. Prior to upgrade, search favoured cheaper items because they sold more frequently; search is now pushing higher-priced goods. However, this has also led to the controversial move of giving items with free shipping more weight in search, which is good for buyers but tough on sellers.

Similar to Google and Facebook’s primacy in the online advertising space, much of Etsy’s success comes from a long tail of products that can’t be considered bestsellers but that still contribute impressively to the company’s revenue. Better search creates more sales.


A key idea that the new CEO introduced was “ambulances”. It was part of a hard transition when Silverman took over that also saw the company fire almost a quarter of its staff. Recognising that the company had become bogged down in an excess of projects, he pushed the idea of “ambulance” ideas that would see their path cleared, meaning implementation time shrank from months to weeks.

This led to a handful of key plays. First, one ambulance recognised customer nerves over putting their credit card details into the system, leading to the simple fix of a message: “The seller never sees your credit card information.”

Other ideas were more controversial despite being revenue winners in the longer term. Soon after Silverman began, sellers were required to use the company’s payments platform. This allowed the company to standardise its checkout system and improve customer service. It has also been able to take a larger cut of the deal, with per-transaction commission rates rising from 3.5% to 5%. While some sellers disapproved, the base has grown from 1.8 million to 2.2 million; gross sales are now growing around 20%.


Seller loyalty has been crucial for Etsy. In 2015, Amazon launched Handmade, a service widely read at the time as an Etsy killer. Etsy’s continuous focus on small sellers and community has been crucial to weathering that storm (Amazon Handmade’s selection remains small compared to Etsy’s).

Its next challenge, however, is to increase its number of active buyers. Though there are currently 41 million (people who have made at least one purchase in the past year), 60% of those shop only once a year and spend an average of just $100. Search is helping in this area, but increased tools for vendors will also help them to track their own businesses, growing professionalism across the platform; the company is now investing in a variety of dashboard and payment technologies.

Sourced from Fortune; additional content by WARC staff