Etsy CEO

2018 Annual Report

The path to owning special

We live in an era of incredible convenience, matched with equally incredible price and selection. Any commodity item can be purchased with one click, packed by a robot, and land at your door virtually the next day. But when the world develops a default, it also craves the antidote.

We believe Etsy is the antidote to commoditized commerce—I often call us the home for special. As massive e-tailers compete to dominate the world of the everyday, many of us shop with them for the commodities of life. They are increasingly commoditizing everything, reducing online shopping to price and speed of delivery. But it is very hard for them to be the place we want to go when we want something to be, or to feel, special.

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Keep Commerce Human

This is our mission. It’s at the heart of everything we do.

In 2018, we introduced a new set of guiding principles. These principles serve as our North Star and reflect how we strive to act. They enable individuals, teams, and our entire company to have a greater impact as we work together to achieve our mission.

We commit to our craft
We commit to our craft. Our work has the power to change lives. That’s why we strive to learn continuously and excel at what we do.
We dig deeper
We dig deeper. The best solutions to meaningful challenges are rarely easy or obvious. We stay curious, balance our intuition with insights, and decide with confidence.
We minimize waste
We minimize waste. Time, resources, and energy are precious, so we focus only on what will have the greatest impact.
We lead with optimism
We lead with optimism. We believe in our mission, and we believe in each other. We see the world as it is, set ambitious goals, and inspire one another with generosity of spirit. Together, we reimagine what is possible.
We embrace differences
We embrace differences. Diverse teams are stronger, and inclusive cultures are more resilient. When we seek out different perspectives, we make better decisions and build better products.

Nurturing our Marketplace

Etsy is the global two-sided marketplace for unique and creative goods. We connect millions of buyers and sellers from nearly every country.

In a world of increasing automation and commoditization, we believe creativity cannot be automated and human connection cannot be commoditized.

There are several characteristics that differentiate Etsy. Collectively, we call them our “Right to Win.” By focusing on these areas, we aim to provide the best possible experience for our customers.

Click here to view details in the Etsy 2018 10K

Our Right to Win

Best-in-class search and discovery
The power of human connections
A brand you can trust
Our collection of unique items

Connecting and serving real people

Buyers come to our marketplace to be inspired and delighted by the more than 60 million items lovingly crafted or curated by real people. In fact, 78% of buyers say they come to Etsy for items they can’t find anywhere else. *On our platform, Etsy buyers enjoy a personalized shopping experience and can build relationships with Etsy sellers through direct interactions and conversations. We believe there are many moments in life that call for something a little less ordinary, and a lot more special. We believe that there are many “special” occasions throughout the year where Etsy can and should be top of mind for buyers.

Etsy sellers are at the very heart of our business. Powered by imagination, 2.1 million sellers** use the Etsy platform to pursue their crafts and grow their businesses. Ranging from hobbyists t o professional artisans, they are the creative force that captivates buyers and keeps us moving forward.

We are committed to helping Etsy sellers transform their creative passions into personal fulfillment, economic opportunity, and empowerment. In addition to bringing our sellers millions of buyers, we offer them a range of tools and services to help them generate more sales and seamlessly run their businesses—from shipping and tracking items to managing inventory, running ad campaigns and promotions, creating beautiful custom websites, and even bookkeeping and accounting.

* According to a 2018 survey of Etsy buyers. ** Active sellers as ofDecember31, 2018.

At Etsy,

we believe there are many occasions throughout the year for us to connect buyers with sellers. Here are just a few examples.

Wedding Wedding
Valentine’s Day Valentine’s Day
Easter Easter
New home New home
Mother’s Day Mother’s Day
Having a baby Having a baby
4th of July 4th of July
Labor Day Labor Day
Back to School Back to School
Halloween Halloween
Special dress Special dress
Thanksgiving Thanksgiving
Holiday Holiday

Strong financial and operational performance

In 2018, we continued to nurture and invest in our marketplace. As a result, we connected more buyers and sellers than ever before, and delivered a strong performance across important financial and operating metrics.

Gross Merchandise Sales (GMS)

GMS growth accelerated to
36.8% in 2018 compared to 2017.

% Domestic GMS
% International GMS

Our vibrant community includes people buying and selling in nearly every country in the world.

active sellers Active sellers
grew 9.4% to 2.1 million*
*As of December 31, 2018.
active buyers Active buyers
grew 18.2% to 39.4 million*

Revenue growth accelerated to 36.8% in 2018 compared to 2017.

A long runway for sustainable growth

With more and more people around the world choosing to purchase goods online, we believe we are in the early stages of our opportunity and that we have a large addressable market.

2018 Retail and online total
addressable market
$1.7T Total retail and online spend in all relevant
categories in our six core geographies
  • Top geographies:
  • United States
  • United Kingdom
  • Canada
  • Australia
  • Germany
  • France
$249B Online spend in these
categories and geographies
Etsy’s 2018 GMS represents under 2% of this $249 billion market

Sources: Euromonitor (2018), Assoc. for Creative Ind. (Jan. 2018), Art Basel (2018), Hiscox (2018), IBIS.

We believe we are well positioned to capitalize on our large market opportunity. Etsy stands out in a sea of sameness by offering a differentiated experience, one that is rooted in human connection and creativity. By leaning into our competitive advantages, we see a significant runway for sustainable long-term growth:

right to win image

Unique “Right to win”

pencil image

untapped opportunities in product development and marketing investment

technology image

best in-class technology

leadership image

disciplined leadership and high-performance culture

Having a positive impact

We are committed to using the power of business as a force for good in the world. Our impact strategy outlines the specific ways we seek to generate positive economic, social, and ecological value for our community and our stakeholders in a way that advances and supports our long-term business strategy. We believe in cultivating a virtuous cycle where our impact drives our business and our business drives our impact, working together to advance our broader mission to Keep Commerce Human.

Our strategy for Impact

Economic Impact

Make creative entrepreneurship a path to economic security and personal empowerment.

Double U.S. Etsy sellers’ economic output by 2023.

Invest in social programs that foster economic security and personal empowerment for our stakeholders.

Advance public policies that increase economic security and reduce administrative burdens for creative entrepreneurs.

Social impact

Enable equitable access to the opportunities that we create.

Approximately double the percentage of Black and Latinx employees in Etsy’s workforce by 2023.

Build a diverse, equitable, and sustainable supply chain to support our operations and bring value to both Etsy and our vendors.

Make Etsy a more inclusive and welcoming marketplace for people from underrepresented backgrounds.

Ecological impact

Build long-term resilience by eliminating our carbon impacts and fostering responsible resource use.

Utilize and source energy responsibly so that we can power our operations with 100% renewable electricity by 2020 and reduce the intensity of our energy use by 25% by 2025.

Mitigate the ecological impact of our marketplace by offering carbon-neutral shipping on 100% of transactions by 2020.

Run zero waste operations by 2020.

Empowering creative
entrepreneurs around the world

At Etsy, we like to say that economic empowerment is our day job. In our marketplace, creativity can turn into a thriving business. We bring our sellers millions of buyers and provide them with tools and services that make it easy to run a business. But our support doesn’t end there. From advocating for public policies that increase economic security to providing financial relief when disaster strikes, we have our sellers’ backs.

A powerful platform for entrepreneurs

In 2018, we helped give creative entrepreneurs a voice, as Etsy sellers sent 140,000 messages to policy makers on issues ranging from net neutrality to tax fairness. We also gave $280,000 in charitable gifts to support our local communities and creative entrepreneurs in need.

A ripple effect

Etsy’s economic impact extends beyond the sales that our marketplace enables. Sellers pay for supplies, postage, rent, their taxes, and compensate their employees, all of which drives economic activity. According to our economic impact study, conducted by ECO Northwest, in 2018, U.S. Etsy sellers:

Etsy sellers at a glance

active Etsy sellers*
are business of one**
of Etsy sellers are women.** By comparison, 35% of firms globally have women in ownership positions***
of sellers live in rural areas**
run shops from their homes**
of sellers first sold their goods on Etsy**
*As of December 31,2018.
**According to our 2018 seller survey.
***According to The World Bank Enterprise Survey on Gender, 2018.
  • Contributed $5.37billion t o the U.S. economy, more than double their direct business sales
  • Created 1.52 million jobs in the independent worker economy, enough jobs to employ the entire city of San Antonio
  • Generated more than $1.76 billion in income
  • Produced $3billion i n additional economic value by harnessing their creativity and bringing unique products to market

For more details on our economic impact work and recent progress, please see page16 of our 10-K.

Nurturing a culture of diversity and inclusivity

Nurturing a culture of diversity and inclusivity has always been a part of Etsy’s DNA. Embracing diverse perspectives makes us stronger, more resilient, and enables us to be the best we can be.

We continue to look across all of our processes and the entire employee life cycle to ensure that we welcome and support people of all backgrounds, genders, races, ethnicities, sexual orientations, ages, life stations, and abilities.

Below are a few
examples of our
diversity and
inclusion efforts:

We’re proud that Etsy is a leader within our industry in terms of gender diversity. As of December 31, 2018, women comprised:

of our overall employee base
of our Board of Directors and the majority of our Executive Team
of all leaders (Director level and above)
of engineers
Increasing our targeted recruiting efforts to reach candidates from underrepresented backgrounds
Creating hiring rubrics to ensure that all candidates are evaluated fairly and with objective criteria
Implementing a more formal companywide performance management process to support consistent and fair evaluations
Providing managers with highly interactive anti-discrimination and anti-harassment training
Supporting and promoting employee resource groups (“ERGs”) in order to build a sense o f community, develop new leaders, and amplify diverse voices within Etsy

For more details on our social impact work and recent progress, please see page17 of our 10-K.

Protecting our planet

In the face of a changing climate, we believe in being proactive in how we manage our resources. In 2018 and early 2019, we reached several key milestones that moved us closer to our goal of building long-term resilience by eliminating our carbon impacts and fostering responsible resource use.

Carbon-neutral shipping: 98% of Etsy’s total emissions stem from items shipped from our sellers to our buyers. Although we do not actively manage this shipping process, we believe we should hold ourselves accountable for the environmental impact. That’s why in February 2019, we became the first global ecommerce company to offset emissions from shipping.* Each time someone makes a purchase on Etsy, we automatically purchase verified emissions reductions through a third-party partner.

These purchases, which cost Etsy less than one penny per package, support environmental projects, including protecting forests that improve air quality and absorb carbon, sponsoring wind farms that generate clean energy and replace fossil fuels, and developing greener methods for producing auto parts. Offsetting our shipping emissions is an important milestone as we work toward a long-term reduction solution. And although we’re the first global ecommerce company to take this step, we hope we are not the last.

Etsy Social
Etsy Plant

Procuring power from sustainable sources:
In August 2018, we announced that we were joining Apple, Akamai, and Swiss Re to procure power from new solar and wind energy farms. This virtual power purchase agreement will allow us to drive a larger, more positive environmental impact than we would have achieved individually. We plan to use the renewable energy from this agreement to help power our operations and computing infrastructure, furthering our goals of creating a cleaner internet and reducing our impact on the planet.

Migrating to the cloud: In 2018, we kicked d off our work on transitioning from our own data center infrastructure to Google Cloud Platform (GCP). Moving to flexible cloud-based infrastructure allows us to reduce energy consumption. This is a key step toward rea aching our sustainability goal of reducing our energy consumption and powering Etsy with 100% renewable electricity by 2020.

Zero waste operations: We’re proud to have achieved our goal of running zero waste operations globally in 2018, two years ahead of schedule. In 2018 8, we diverted 95% of waste from landfills or incineration n across our offices globally, well above the 90% threshold to be considered “Zero Waste.”

For more details on our ecological impact work and recent progress, please see page 18 of our 10-K.

*According to research by 3Degrees.

Integrated value model

Through our efforts to nurture our marketplace and drive a positive impact, Etsy creates value and empowers people every day.

Our ecosystem

Our ecosystem
Includes a set of external factors that support our success, such as: a strong ecommerce foundation; access to clean, renewable energy; laws that allow creativity and entrepreneurship to thrive; and a healthy natural environment.

Our ecosystem
Is an environment that supports and nurtures creative entrepreneurship.

Our Community

Our community
Is filled with not only our buyers, sellers, and employees, but all of those who make it possible for us to live our mission.

Our community
Empowers people who come together to Keep Commerce Human.

Our business

Our business
Is a trusted marketplace where sellers can grow and pursue their creative businesses and buyers can find unique and special items. This is all supported by our passionate team at Etsy.

Our business
Delivers more joyful moments to buyers, empowers more creative entrepreneurs to build successful businesses, and fosters the talents and careers of Etsy employees.

Discover a universe of products that help them express themselves and support independent creative businesses.

Turn their creativity into thriving businesses by connecting with a global community of buyers.

Etsy, Inc.
Continuously invests in our people, and the platform, to grow a vibrant, creative marketplace.

When everything is working together the way we envision, the result is financially empowered sellers, delighted buyers, a strong and vibrant team of employees, and a healthy planet—all contributing in their own unique way to fulfilling the Etsy mission.