Case Study: Amazon vs. Etsy in the United States

Amazon vs. Etsy
 
Amazon’s got 99 problems, and a Senator is one
 
It’s no secret that Amazon dominates the ecommerce market, both around the world as well as in the United States. And it is clear to see why – no matter which country you delve into regarding ecommerce, Amazon usually ranks in one of the top 3 positions for marketplaces (usually in 1stplace for several western countries, including the United States).
 
However, Amazon’s success hasn’t necessarily trickled down. The exorbitantly wealthy Founder and CEO, Jeff Bezos, has come under fire recently in the U.S. regarding the treatment and working conditions of employees, which doesn’t help their image, something Americans (and consumers worldwide) are beginning to care about more and more. In fact, a study published in 2015 by Nielsen demonstrated that 56% of global respondents are willing to spend more on a product if it comes from a company known for its commitment to social value. And it’s not just Americans – in the same Nielsen study, 43% of global respondents are in the market for products from a company known for its commitment to social values. This is going to make the road to market domination longer and more difficult for Amazon if it continues to pay workers sub-standard living wages.
 
To throw more fuel on the fire, Senator Bernie Sanders (D-VT) publicly (and heavily) criticized Amazon for paying its employees such low wages that they require public assistance to make ends meet, which doesn’t sit well with a majority of its consumer base. The 2016 presidential contender went so far as to propose the ‘Stop BEZOS Act’, the acronym being, ‘Bad Employers by Zeroing Out Subsidies’. Regardless of whether the bill would be tenable, the point seemed to be more to bring awareness to the issue. Suffice it to say, it worked.
 
Although the bill has not gone through, the social media uproar and backlash forced Jeff Bezos’ hand. Amazon announced that on November 1, the new minimum wage will be $15/hour and will apply to both full- and part-time employees. Moreover, Amazon’s public policy team will apparently begin lobbying for an increase in the federal minimum wage. Although staunchly criticized by Senator Sanders previously, the Tweets are proof that if companies like Amazon can become more socially responsible, there may be hope yet.

 

 

 

Millennials will tell you what they want… what they really really  want
 
There is a generation amongst the consumer base that has a strong digital memory and is not always the most forgiving: millennials. The general feeling when reading the Twitter comments are that Jeff Bezos felt extreme pressure (a bill was literallynamed after him), and only then made the change. The issues surrounding ‘Corporate Social Responsibility’ (CSR) are going to prove troublesome for businesses with the upcoming generations purchasing online. A study published in 2015 by Cone Communications revealed that millennials are prepared to pay more for a product (70%), from a responsible company. Moreover, 87% were more willing to purchase a product with a social/environmental benefit. It’s likely they will not soon forget the Amazon controversy, or the ‘Stop BEZOS Act’.
 
So, what is the alternative for these socially- and environmentally-minded generations? Is Etsy the answer?
 
What is Etsy? Here is what they say:

 

Etsy is the global marketplace for unique and creative goods. It’s home to a universe of special, extraordinary items, from unique handcrafted pieces to vintage treasures. In a time of increasing automation, it’s our mission to keep human connection at the heart of commerce. That’s why we built a place where creativity lives and thrives because it’s powered by people.

 

A mission statement like this sounds socially responsible, and better yet, the data prove it as well (found in the Etsy Impact Update Report , published August 2018):

 

 

 

It seems the population has also accepted Etsy as a great option compared to Amazon. Etsy had a 40% jump in sales (Q3, 2018) and the stock is up 150% for 2018 – better than Amazon’s 40%. The holidays are another opportunity for Etsy to shine, and they know that Americans especially love giving personalized and handmade gifts. They’ve even got their own ‘Etsy Gift Finder’ with added holiday cheer, and if a user allows it, you can see which items they have favorited so you don’t have to guess if your relative just wants socks again this year.

 

 

 

 

By both talking-the-talk and walking-the-walk, Etsy appears to be contributing to helping small- and medium-sized business owners expand their customer base, particularly across the border. As of 2017, 33.4 million buyers purchased goods via Etsy shops, and Etsy Payments is available for shops in almost all European countries (including the U.K. and Switzerland), as well as Canada, Australia, New Zealand and Hong Kong.*
 
As for whether the ethos of sustainability and social benefit are present in Etsy and Etsy’s shops, there are blogs dedicated to which Etsy shops you can (and apparently, should) buy from if you want to support a good cause, Etsy was ‘one of the first companies to IPO with a B Corp certification, a third-party validation of its commitment to social responsibility’, and shockingly, Etsy spent $40 million in building its new office, ‘with green walls fed by rainwater, solar panels on the roof, and numerous spaces dedicated to yoga, meditation, printmaking, and cooking, among other modes of employee self-actualization’.
 
What about shipping costs…?
 
With all these steps towards being a more socially responsible company, there are still some issues to solve for it to overtake Amazon as the ‘socially responsible’ marketplace for online shoppers, namely shipping costs. Josh Silverman, CEO of Etsy was asked about shipping costs, and answered:
 
“We know that shipping remains one of the top friction points in our marketplace. For example, in the third quarter, less than 20% of listings on Etsy offered free shipping and our research suggests that buyers perceive about half of the items in our marketplace as having high shipping prices. It not only impacts conversion rates on those items, it also damages the brand perception of Etsy overall. We are determined to fix this. Our first step has been to educate sellers about the impact of high shipping prices and ask them to think of shipping as just another component of their cost of goods sold. Next, we’re evolving our search algorithms in order to more prominently promote items that have competitively priced shipping. We’ve introduced notifications to sellers whose shipping prices are perceived as too high, tools to hep them adjust shipping prices, if they so choose and we launched the Holiday Sweepstakes for sellers who offer free shipping.”
 
Clearly, Etsy is aware of the issue surrounding shipping charges. And they are spot on. There’s a reason why memes about free shipping are circulating the internet and social media platforms:

 



Although funny, the memes also speak truth -- consumers seem much more willing to pay for something thinking they are receiving something for free, like shipping. If Etsy sellers are willing to ‘bake’ it into the sale price of a product, it may play better for them, especially with a generation in love with free shipping. And to top it off, if we take memes even a tiny bit seriously, there is a strong likelihood that if a webshop offers free shipping at a certain price point (i.e. $50), consumers will buy more just to get to that free shipping jackpot. Everything seems better when it’s free (as exhibited below)!

 

 

 

All that aside, kudos to Etsy sellers who seem to be at the forefront of transparency, showing the shipping cost of a product to consumers rather than baking it in, but it may be time to shift the mentality if the goal is to become the online marketplace leader. If Etsy can remedy their shipping charges to reflect more of what their consumer base wants, they’ll have a fighting chance in the battle with Amazon. With more consumers planning to shop online than ever before during the holidays this year, the 2018 holiday sales will serve as the ‘big-reveal’ for which online giant will push ahead to become the millennial marketplace leader. 
 
* We interviewed a British owner of an Etsy shop (living in the Netherlands) to see what her experience was in selling via Etsy to the United States. Katie Joy Privett is an designer and owner of the shop, Uniquely You Jewellery. She started her own online jewelry business in 2012 and sells her designs globally via her Etsy Shop, UniquelyUJewellery
 
--
 
You’re based in the Netherlands, but you also sell to the U.S. via your Etsy shop. How does Etsy make this easier/more affordable than would otherwise be possible if you were to do so solely from your own webshop?
 
Etsy has a much larger presence in the U.S. compared to what I could personally do by myself. The footfall from Etsy is better because they market well in the U.S.. If I left Etsy and started my own website, based in the EU, I would still get footfall, but it won’t be as much compared to what Etsy could provide me from their own marketing strategies.
 
However, as a shop owner, you still need to have a good marketing strategy, especially for other countries. Selling to the U.S. is also made easier because Etsy has a good selling fee structure. It only costs a few cents per listing, that is a small business cost I am willing to make to achieve a wider audience.
Which social media platform(s) do you use to promote your Etsy shop for the U.S. market? Pinterest seems to be quite huge for sellers on Etsy, how does this resonate with your experience?
 
I use most social media platforms, such as Facebook and Instagram. Occasionally, I used Pinterest and Snapchat. According to my shop stats, the most views I receive from the social media avenue are actually from Pinterest and Instagram. I suppose this could be because both of these platforms are image-heavy.
 
Also, Pinterest is very much a DIYer’s haven, so the tag/keyword ‘Handmade’ would be used a lot in search results; handmade is Etsy’s ethos, so I am not surprised that a lot of sellers get hits from Pinterest. However, my conversion rate isn’t high from social media. I have noticed that when people log on to Etsy and search for an item through their search engine and then they buy.
 
 
Can you give some specific insights into U.S. consumers and their buying habits, particularly for Etsy-style shops like yours? What are some unique qualitites about Americans you don’t see in some of the other countries you sell in?
 
I find that Americans tend to buy multiple purchases at once, compared to customers based in the EU who would just buy one item at a time. This could be due to shipping costs and how long it takes for items to arrive from overseas. I have also noticed that Americans tend to buy for other people; I have more gift wrapping and personal note requests. EU purchases seem to be for themselves, not for others.
 
Of course, this isn’t everybody, but a trend would suggest that my American customers are buying multiple items to give away as gifts. Also, my American customers are a lot more chatty. I receive more conversations asking about items, shipping times, gift wrap options and more. Maybe this is because Americans are used to a certain level of customer service, even online.
--
 
If you want to read more about the U.S. ecommerce market, you can read the free report here.
 

Continue reading?

Share this article

Continue reading

asds