1/ Thread: Etsy’s international opportunity
One of my core thesis for $Etsy is their ability to scale the brand in international markets. Building two-sided marketplace is not easy, but to do it in multiple countries is even more difficult.
But Etsy might just pull it off.
One of my core thesis for $Etsy is their ability to scale the brand in international markets. Building two-sided marketplace is not easy, but to do it in multiple countries is even more difficult.
But Etsy might just pull it off.
2/ In 2Q’20, international was 32% of total GMS. In 2Q’21, it reached 41%.
Important to remember how Etsy defines international. If either buyer or seller is outside the US, it is considered international.
Important to remember how Etsy defines international. If either buyer or seller is outside the US, it is considered international.
3/ When both buyer and seller is in the same country outside the US, that’s considered “domestic international”.
In 1Q’21, Etsy mentioned “International domestic” GMS grew 2x faster than overall revenue.
In 1Q’21, Etsy mentioned “International domestic” GMS grew 2x faster than overall revenue.
4/ Outside of the US, Etsy identifies 6 other countries as core markets: Canada, UK, Australia, Germany, France, and India.
“What are your favorite places to shop online?” Etsy is now among the top 10 in the US and UK. Etsy wants to replicate this in multiple countries.
“What are your favorite places to shop online?” Etsy is now among the top 10 in the US and UK. Etsy wants to replicate this in multiple countries.
5/ When Etsy felt its brand may not have the power to have a bite in Brazil, they acquired Elo7.
6/ The focus on international is evident by management’s willingness to not care about short-term margins.
7/ Interestingly, apart from $AMZN, none of the other US retailers/marketplaces have any focus on international markets.
It is quite revealing when you look at internet traffic in top 6 marketplaces over the last 3 years.
It is quite revealing when you look at internet traffic in top 6 marketplaces over the last 3 years.
8/ Let’s first look at the US.
Please note I've defined “market” as top 6 retailers/marketplaces in the US. An important missing piece here is $SHOP stores.
$AMZN and $EBAY lost 200-300 bps market share to others in last 3 years in the US. Thanks to @Similarweb for the data.
Please note I've defined “market” as top 6 retailers/marketplaces in the US. An important missing piece here is $SHOP stores.
$AMZN and $EBAY lost 200-300 bps market share to others in last 3 years in the US. Thanks to @Similarweb for the data.
9/ International is much more interesting.
$EBAY is losing relevance in international market much faster, and it appears other than $ETSY and $AMZN, others are not interested in international markets.
Again, thanks to @similarweb for giving me access to the data.
$EBAY is losing relevance in international market much faster, and it appears other than $ETSY and $AMZN, others are not interested in international markets.
Again, thanks to @similarweb for giving me access to the data.
10/ Of course, international markets have their own platforms/marketplaces/retailers which are not being captured in the traffic market share data, so don’t confuse this with their actual market share in international markets.
11/ One of the reasons Etsy’s potentials in international market is underappreciated is how analysts model a company such as Etsy.
Analysts, including myself, project GMS based on # of sellers/buyers and GMS per seller/buyer. Forecasting based on geography is very difficult.
Analysts, including myself, project GMS based on # of sellers/buyers and GMS per seller/buyer. Forecasting based on geography is very difficult.
12/ It is tempting to fade # of buyers/sellers growth quickly while projecting in the future, but if Etsy can continue to penetrate international markets, our models may fail to capture that underlying long growth runway for Etsy in the international markets.
End/ Here’s my deep dive on $ETSY (published in October 2020): mbi-deepdives.com/etsy-a-handmad…
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