Etsy's Path to E-Commerce Excellence:

A Strategic Blueprint for 'Keeping Commerce Human'

Mohammad Almousa
 CONTENTS
1. EXECUTIVE SUMMARY:...........................................................................................................3

2. ETSY'S STRATEGIC PLAN: PRESERVING THE HUMAN TOUCH:................................3

3. UNPACKING ETSY'S STRATEGIC AIMS AND OBJECTIVES:.........................................4

4. DECOMPOSITION OF ETSY'S ORGANIZATIONAL STRATEGY....................................5

5. ENVIRONMENTAL SCAN:........................................................................................................5

6. AUDIT OF PROCESSES WORKING TOWARDS ETSY’S STRATEGIC AIMS:...............6

7. STRATEGIC POSITIONING ANALYSIS:................................................................................7

8. STRATEGIC OPTIONS TOOLS FOR SHORT AND MEDIUM TERM...............................8

9. EVOLVED STRATEGIC OPTION(S)........................................................................................8

10. CONCLUSION:..............................................................................................................................9
1 EXECUTIVE SUMMARY:
Etsy, the beloved e-commerce platform celebrated for its commitment to handmade, vintage, and craft
goods, continues to thrive as a medium-sized organization in the digital realm. This research delves
deep into Etsy's strategic plan, which revolves around the noble mission of "Keeping Commerce
Human." The analysis reveals Etsy's key focus areas, including community building, user experience
enhancement, global expansion, sustainability, and seller support and tools. The trajectory of Etsy's
strategic decisions resonates with its dedication to preserving the human touch in commerce, striking a
balance between technological advancements and core values (Silverman, 2017).

The research examines Etsy's strategic aims and objectives, utilizing the Balanced Scorecard
approach, which considers financial, customer, internal business processes, and learning and growth
perspectives. It highlights potential misalignments between growth and preserving the close-knit
community feeling as Etsy scales.

Etsy's organizational strategy is further broken down into marketing, technology, product, and global
expansion components, emphasizing potential misalignments when regional teams have varying
objectives. The article also provides an environmental scan, encompassing short- and medium-term
factors, including economic, sociocultural, technological, and environmental considerations. The
conclusion emphasizes the importance of alignment in strategy across various functions and regions
while remaining vigilant about external environmental factors for Etsy's sustained success.

The research continues with an audit of processes working toward Etsy's strategic aims using a SWOT
analysis, identifying strengths, weaknesses, opportunities, and threats, and provides a stakeholder
analysis employing Mendelow's Matrix. It assesses Etsy's strategic positioning through Porter's Five
Forces, Value Chain Analysis, and BCG Matrix, highlighting the need for continuous evolution in
response to the dynamic e-commerce landscape and stakeholder expectations.

The article then explores strategic options for the short- and medium-term using tools such as Ansoff's
Matrix and TOWS Analysis, ultimately recommending strategies: market penetration for the short
term and market development for the medium term. These options align with Etsy's ethos of "Keeping
Commerce Human" while tapping into new revenue streams and fortifying its presence in established
markets.

This comprehensive examination of Etsy's strategic landscape underscores the significance of

adaptability in e-commerce. By aligning with stakeholder expectations and capitalizing on emerging
markets while retaining its unique brand essence, Etsy is poised for continued success in the ever-
evolving digital marketplace.

2 ETSY'S STRATEGIC PLAN: PRESERVING THE HUMAN

TOUCH:
Etsy, an online marketplace specializing in handcrafted, vintage products, and artisanal supplies, has
experienced significant growth. However, in comparison to tech giants, it remains a medium-sized
entity as of 2022 (Johnson et al., 2017). Etsy is widely recognized for its distinctive e-commerce
platform, which is dedicated to promoting handmade, vintage, and craft items and is driven by the
noble mission of "Preserving the Human Touch in Commerce" (Grant, 2016). An examination of
Etsy's strategic blueprint unveils several key focal points:

1. Community Building: Etsy understands the value of its community of sellers and buyers.
Efforts are constantly being made to strengthen this community through forums, workshops,
and support tools.

2. Enhanced User Experience: The company has made strides in enhancing its mobile
platform, recognizing that a significant percentage of its users shop via smartphones.

3. Global Expansion: While Etsy is US-based, it eyes global markets for growth. Efforts are
being made to localize content, support multiple currencies, and understand regional craft
nuances.

4. Sustainability: Recognizing the modern consumer's emphasis on sustainability, Etsy is

committed to offsetting 100% of carbon emissions from shipping and has also set ambitious
ecological goals for the upcoming years.

5. Seller Support & Tools: Etsy provides a suite of tools for its sellers, from analytics to
marketing, intending to democratize e-commerce for small sellers.

The trajectory of Etsy’s strategic decisions resonates with its commitment to preserving human touch
in commerce. By balancing technological advancements with its core values, Etsy endeavors to remain
a favored platform for both sellers and buyers who value craftsmanship and uniqueness.

Etsy's strategy aligns with its broader mission and business principles, emphasizing sustainability,
community building, and economic impact through entrepreneurship. As a global company, Etsy
continues to position itself as a unique marketplace, fostering intentional shopping, offering a diverse
array of handmade and vintage products, and connecting sellers and buyers across borders. The
company's commitment to "Keeping Commerce Human" remains integral to its identity and strategic
direction (Stocklight, 2022).

3 UNPACKING ETSY'S STRATEGIC AIMS AND OBJECTIVES:

Etsy’s overarching aim is “Keeping Commerce Human.” At its core, this signifies a commitment to a
marketplace that values creativity, individuality, and sustainability. Using the, a strategic planning and
management system (Kaplan & Norton, 1992):

 Financial Perspective: Etsy’s objective is to grow revenues, particularly from its international
markets. This involves expanding its user base and increasing the average purchase value.

 Customer Perspective: Etsy aims to provide a unique shopping experience, one that promotes
trust, value, and discovery.

 Internal Business Processes: Streamlining operations to enhance the mobile experience,

bolstering seller tools, and investing in machine learning to refine search results and
recommendations.

 Learning & Growth: Focusing on sustainable practices and expanding its horizons to global
markets while retaining its core values.
Etsy consistently demonstrates that achieving business success and making a positive societal impact
can be mutually beneficial. Over the years, the company has refined its goals, making them more
specific, measurable, and time-bound, while also enhancing the transparency of its reporting. Since
2019, Etsy has been one of the few public companies publishing a comprehensive annual report,
treating its Impact metrics with the same rigor as its financial metrics. Etsy transitioned its Impact
reporting to adhere to the widely recognized environmental, social, and governance (ESG) structure
(Moskowitz, 2022) . This shift allows the company to reassess its focus areas while aligning its
reporting with global standards, making it easier for stakeholders to monitor and interpret its progress.
Looking forward, Etsy's strategic focus involves strengthening its commitments to both people and the
planet as it responsibly expands its business. This includes:

1. Building Resilience for the Long Term: Progressing towards its Net Zero commitment, adopting
sustainable operations, and addressing the impact of its marketplaces to position them as preferred
destinations for environmentally conscious consumers.

2. Ensuring Equitable Access to Economic Opportunity: Engaging in Diversity, Equity, and Inclusion
(DEI) and Social Innovation efforts to contribute to the creation of a more just, equitable, and resilient
economy, placing people at the forefront of commerce.

3. Fostering a Culture of Ethics and Accountability: Emphasizing Governance by adhering to

responsible marketplace practices, maintaining thoughtful corporate governance, and sustaining its
integrated ESG reporting throughout 2022.

4 DECOMPOSITION OF ETSY'S ORGANIZATIONAL

STRATEGY
As Etsy navigates the evolving e-commerce landscape, it remains dedicated to its mission of keeping
commerce human. By leveraging its distinct strengths and strategic focus areas, Etsy aims to sustain
its position as a global leader in the marketplace for unique and creative goods. By breaking down
Etsy's strategy into component parts (Grant, 2016):

 Marketing: Targeting niche audiences who value handmade and unique products. Tactic:
Leveraging storytelling in advertising campaigns to share the stories behind products.

 Technology: Improving mobile platform user experience. Tactic: Regular app updates based
on user feedback and analytics.

 Product: Diversifying the product range to include craft supplies and vintage items. Tactic:
Collaborations with renowned crafters or influencers.

 Global Expansion: Localizing content for international markets. Tactic: Currency support,
localized marketing, and partnership with local artisans.

Misalignments can occur, especially when regional teams have varying objectives. For example, a
team focusing on the Asian market might prioritize different products or marketing strategies than the
US team, causing potential branding inconsistencies.
5 ENVIRONMENTAL SCAN:
Understanding and proactively addressing these factors can help Etsy navigate challenges and
capitalize on opportunities in the dynamic eCommerce landscape. By staying adaptable and aligning
strategies with the ever-changing external environment, Etsy can continue to thrive as a global
marketplace for unique and handmade products. Many factors affected Etsy on the short run are
(Momin, 2023):

 Economic Factors: Changes in consumer spending due to global economic fluctuations.

 Sociocultural Factors: Growing emphasis on sustainable and eco-friendly products.

 Technological Factors: The rapid adoption of m-commerce; Etsy needs to enhance its mobile
experience continually.

While on medium term we can list the following factors:

 Economic Factors: Potential recessions can impact consumer spending on non-essential items.

 Sociocultural Factors: A rising trend of Do-It-Yourself (DIY) and crafting, especially post-
pandemic, offers a potential market.

 Technological Factors: Augmented Reality (AR) shopping experiences, offering users a 'try-
before-you-buy' experience virtually.

 Environmental Factors: Growing emphasis on sustainability might require Etsy to evaluate its
shipping and packaging practices.

Etsy, with its unique value proposition, has a distinctive market position. However, alignment in
strategy across various functions and regions, coupled with a vigilant eye on external environmental
factors, is crucial for sustained success.

Etsy's success in creating and capturing value lies in its strategic choices. By narrowing its product
offerings exclusively to handcrafted and vintage goods, Etsy established a unique brand identity,
differentiating itself from larger e-commerce platforms like Amazon and Alibaba. This specialization
allows Etsy to claim the position of the premier destination for artist-made goods. The platform creates
value for both sellers and buyers, offering artists a global marketplace, community connections, and
personalized branding while providing buyers with a diverse range of handmade products and
personalized recommendations. Additionally, Etsy offers supplementary services, such as
communication tools and advertising, contributing to its revenue model based on listing fees,
commissions, and upselling (Weiler, 2020).

6 AUDIT OF PROCESSES WORKING TOWARDS ETSY’S

STRATEGIC AIMS:
An audit of Etsy's processes can be done using the SWOT analysis, a diagnostic tool that evaluates
strengths, weaknesses, opportunities, and threats. This analysis provides a comprehensive view of the
current state, helping detect areas needing attention in the path towards strategic aims (Johnson et al.,
2017):
  Strengths: Unique marketplace, strong community of sellers, brand recognition.

 Weaknesses: Dependency on search algorithms, potential quality inconsistencies due to

diverse sellers.

 Opportunities: Expansion into new geographies, introduction of new product categories,

partnerships with influencers.

 Threats: Rise of similar platforms, changes in online purchase behavior, global economic
fluctuations.

The SWOT analysis can significantly benefit Etsy.com in building a robust and informed strategy. By
addressing these key elements, Etsy can capitalize on its strengths, mitigate weaknesses, seize
opportunities, and prepare for potential threats, ultimately fostering long-term success in the dynamic
e-commerce landscape.

By identifying ten stakeholders: Sellers, Buyers, Employees, Shareholders, Partners (like delivery
services), Competitors, Regulatory bodies, E-commerce industry groups, Influencers/collaborators,
and Local communities. Etsy can use Mendelow's Matrix for analyze and categorize stakeholders
based on their level of power and interest in an organization or project, the stakeholder mapping
(Ginige, Amaratunga and Haigh, 2018):

 High Power, High Interest: Shareholders, Sellers, Employees – Their interests should be
closely aligned with Etsy's strategy.

 High Power, Low Interest: Regulatory bodies – Compliance is critical, even if they’re not
directly involved in daily operations.

 Low Power, High Interest: Buyers, Influencers – While they might not influence major
decisions, their satisfaction is vital.

 Low Power, Low Interest: Competitors, Local communities, Industry groups – While they
have lesser direct influence, it's essential to be aware of their actions and perceptions.

7 STRATEGIC POSITIONING ANALYSIS:

To assess the competitive forces that influence their industry and make informed strategic decisions.
Porter's Five Forces framework includes the following five elements (Porter, 2008):

 Rivalry Among Existing Competitors: Moderate to high, with platforms like

Handmade at Amazon.

 Threat of New Entrants: Moderate, given the unique niche but the online
marketplace's accessibility.

 Bargaining Power of Buyers: High, given the variety of online shopping platforms.

 Bargaining Power of Suppliers (Sellers): Moderate, as many sellers rely on Etsy’s

platform.

 Threat of Substitute Products: Low to moderate, with few platforms offering exactly
what Etsy does.
Understanding these forces helps Etsy formulate strategic decisions. For instance, recognizing the
bargaining power of buyers and sellers, Etsy may focus on improving user experiences, introducing
seller-friendly policies, and implementing effective marketing strategies. Additionally, being vigilant
about the threat of substitutes, Etsy can invest in innovation, expand its product categories, and
strengthen partnerships to maintain its competitive edge in the market. Continuous monitoring and
adaptation to changes in these forces are crucial for Etsy to sustain its success in the dynamic e-
commerce industry.

By analyzing the Value Chain involves breaking down key activities such as service and marketing,
along with support functions like HR and technology, to comprehend how value is added at each step
provides Etsy with insights into cost drivers, points of differentiation, and areas for improvement
(Porter, 2008). It helps the company align its internal processes with external demands and
competitive pressures. By continually refining each step in the value chain, Etsy can enhance overall
efficiency, customer satisfaction, and maintain its unique value proposition in the online marketplace.

The BCG Matrix categorizes products into Stars, Cash Cows, Question Marks, and Dogs. In Etsy's
case, handmade crafts could be classified as Stars due to their high growth and market share, while
specific vintage items might be considered Cash Cows due to their high market share despite low
growth (Wheelen & Hunger, 2017).

Through these tools, it’s evident that while Etsy holds a solid strategic position, it's vital to
continuously evolve in response to the dynamic e-commerce landscape and stakeholder expectations.
As the e-commerce landscape evolves, characterized by rapid technological advancements and shifting
consumer preferences, Etsy's agility in adapting to these changes becomes paramount. Regular
reassessment of its SWOT factors, ongoing engagement with stakeholders based on power and interest
dynamics, and strategic responses to competitive forces contribute to Etsy's resilience and
competitiveness in the ever-changing digital marketplace (Johnson et al., 2017).

8 STRATEGIC OPTIONS TOOLS FOR SHORT AND MEDIUM

TERM
Tools should be adept at identifying strategic growth areas, whether through market penetration,
product development, market expansion, or diversification. Etsy's growth strategy may involve
entering new geographical markets, introducing innovative product categories, or forming strategic
partnerships. Ansoff’s Matrix is an effective tool to evaluate strategic options based on the products
and markets (Ansoff, 1957):

 Market Penetration: Leveraging Etsy's core competency in handmade crafts, the platform can
offer promotional deals or enhanced marketing strategies to increase sales in existing markets.

 Market Development: Expand to new geographies, considering the regions where craft and
handmade items are valued but underrepresented online.

 Product Development: Introduce new categories or a premium segment for exclusive artisanal
creations.

 Diversification: Explore opportunities outside of the current domain, like crafting tutorials or
workshops.
Another tool is the TOWS Analysis, a strategic tool derived from SWOT. It can:

 Use strengths to exploit opportunities (S-O).

 Use strengths to avoid threats (S-T).

 Improve weaknesses by taking advantage of opportunities (W-O).

 Minimize weaknesses and avoid threats (W-T).

Examining the selected tools critically reveals that Ansoff's Matrix offers a well-defined structure for
growth strategies, though evaluating the associated risks in each quadrant is crucial. In contrast,
TOWS Analysis extends the SWOT analysis to provide actionable strategies, but its effectiveness
depends significantly on the precision and thoroughness of the initial SWOT assessment. The selection
of these tools is based on their capacity to identify growth opportunities in harmony with Etsy's core
competencies, quality assurance, and competitive considerations (Stocklight, 2022).

9 EVOLVED STRATEGIC OPTION(S)

Considering Etsy's distinctive market position and drawing insights from strategic tools, the short-term
application of Market Penetration involves bolstering its standing in existing markets. Introducing
loyalty programs, seasonal promotions, or enticing seller incentives has the potential to augment both
revenue and user engagement. This approach capitalizes on Etsy's established brand presence, making
it a relatively secure strategy that concentrates on expanding within the existing customer base.

In the medium term, Market Development comes into play. Given the universal appeal of handmade
items, Etsy can explore untapped geographies, providing a localized experience in terms of currency,
language, and marketing. This strategy aligns with Etsy's previous successes in global expansion,
taking advantage of prevailing trends favoring unique, sustainable, and artisanal products (LaBuz,
2021).

These chosen strategies not only adhere to Etsy's core ethos of 'Keeping Commerce Human' but also
strategically tap into new revenue streams while reinforcing its presence in well-established markets.
The interplay of Market Penetration and Market Development reflects a dynamic approach that
intertwines short-term gains with medium-term expansion, ensuring Etsy's continued growth and
relevance in the marketplace.

10 CONCLUSION:
Etsy's remarkable journey towards achieving e-commerce excellence shines brightly due to its
steadfast dedication to preserving the human aspect of commerce. This commitment has set Etsy apart
in a digital marketplace often dominated by large, faceless corporations. One of the keys to Etsy's
success lies in its ability to adapt and innovate continually. Etsy has proven itself to be a nimble and
resilient organization, capable of navigating these shifts while remaining authentic to its unique brand
essence.
Etsy understands that alignment with stakeholder expectations is paramount. Moreover, Etsy's ability
to seize emerging opportunities sets it on a trajectory for sustained success. The strategic blueprint
presented here serves as a robust framework for guiding Etsy's future endeavors. It encapsulates the
wisdom gained from Etsy's journey and offers a roadmap for navigating the ever-changing e-
commerce landscape. It emphasizes the enduring importance of adaptability and strategic agility. In a
world where the only constant is change, Etsy's commitment to preserving the human touch while
embracing innovation and adaptability makes it a beacon of success in the digital marketplace. It's an
inspiring model for e-commerce platforms aiming to balance technology with core values and
maintain a thriving, human-centered approach.
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