The following is a transcript of a podcast episode released in April 2021. The transcript has been edited slightly for this format. You can listen to the episode on Apple Podcasts, SoundCloud, Spotify, or wherever you get your podcasts.
Tess: Welcome to the show, Michelle! Could you tell us a bit about your role and what you and your team do here at Etsy?
Michelle: Sure. I’m on our research team, and as part of that, I track market trends, consumer trends, and seller trends. I like to think that my job is to harness all of this available information that might impact our buyers or our sellers, and I study these trends and behaviours in research – so, surveys, focus groups, and the like – to ultimately make sense of all of that for Etsy. I also keep an eye out for opportunities and threats for our business.
Another part of my job is to connect all Etsy employees to the mindset of our buyers and sellers. Regularly speaking with our customers – meaning our buyers and sellers – is a great joy of mine in my job and it gets us so much rich insight. I think of my job as bridging the gap between what I hear directly from our customers and all the work that our teams are doing here internally.
Tess: Before we dive into your insights, I was wondering if you could talk a little bit more about how exactly research works. How is this data being collected and where does it come from?
Michelle: We have an extensive database of all of our buyers and sellers. We use that contact list and send surveys to see who among these customers is willing and wants to participate in research. So that could be something like an online survey, and I’m sure some of those listening may have been requested to participate in research.
We’ll also invite buyers and sellers to join focus groups, which are more in-depth and cover a wide variety of topics that we’re looking into. Before the pandemic, these happened in-person, and now we’ve moved a lot of that online. And all of this data that we’re collecting is stored confidentially and securely. We have a lot of restrictions on how we handle this data and information and who can access it.
Internally, our buyers’ and sellers’ perspectives are so important to us. For example, when we think about bringing a new product to the market, we always like to get feedback first. This feedback really helps inform the products that we develop. There have been many times where we think something is a great idea, and then we test it and realise that sellers want something about it done differently. So we evolve to best meet needs there.
Tess: So, a lot has changed in the past year in terms of how people shop online. I’m interested to hear what that’s meant for Etsy. What are some key insights that your team has noticed since the pandemic hit?
Michelle: There’s been so much change in this past year, and I think the biggest shakeup that we’ve seen since the pandemic started is this explosive growth in the number of people shopping on Etsy. We have more than 61 million new and reactivated shoppers who joined Etsy in 2020. There were 13 million new shoppers who joined during the last Christmas season alone. That was a 77% increase of new shoppers compared to the 2019 Christmas season.
This, of course, translates into spending. As we see more buyers, generally we see more money spent on-site. During this last Christmas season, the amount that buyers spent on Etsy increased 118% year-over-year. Looking at this year just a couple of months ago in early 2021, what we’ve noticed is a lot of spending seemed to mirror what we saw last year, so a lot has still been online. Weather in many places was cold so people are purchasing what we call “nesting items”. Those are things like items for your home, bath and beauty products, and so on. It’s honestly just been such a wild, interesting year watching how dynamic this marketplace has been, and there seems to be much more to come as we think about the year ahead.
Tess: Wow, that’s a lot of new buyers. Where are all of these new shoppers located?
Michelle: The US has traditionally been our core market, meaning the large majority of our buyers have generally been based in the US. But what we saw during the pandemic in 2020 was a lot of growth coming from international markets, and our international sales increased 145% compared to the same time last year. And the UK in particular has been really strong for us, and we have a whole team on the ground there, trying to figure out how to meet the needs of UK buyers, and what we need to consider culturally with how we show up as a brand in that market. So there are a lot of considerations for us as we think about this growth that we’ve seen in international markets.
Now what we’re doing is closely watching current events in the US and core international markets, and how consumer spend, for example, may or may not be shifting with things like vaccine distribution, warmer weather, shops reopening, and so on. Again, there are many factors that we’re closely monitoring to project how behaviour on Etsy might look in the months to come.
Tess: Got it. And how did these changes affect Etsy as a company?
Michelle: One of the things we’re doing is investing a lot more in advertising. We ran Christmas TV ads and digital ad campaigns in the US, which we’ve done before, but we also expanded that into the UK and Germany. We rolled out our first-ever Spanish language ads to, again, appeal to all of these new buyers that we've had pop up all over the world. And we’re also investing a lot in making the product experience better.
Tess: Tell me more about improving the product experience. How exactly are we doing that?
Michelle: Yeah there’s a lot that we’re working on so I’ll focus on some of the bigger ones. One, we’re constantly working on our search functionalities. That means understanding keywords that buyers use when searching on-site, and how our terminology on the backend can better match how buyers are searching. We’re always also expanding our efforts to personalise the search results that buyers get and recommendations that we give buyers.
We launched listing videos so sellers could showcase items better to buyers in a video format, versus just a static image. We added an expected delivery date feature – using a mix of sellers’ processing time plus transit time based on where a buyer is – to calculate roughly when the buyer will receive the item. We also launched a “buy now, pay later” instalment option for US buyers. That’s a huge growing trend in retail overall, so that buyers can spread out their spending. Our buyers seemed to respond really well to that feature so far.
So that’s a really quick round-robin, but it gives you a sense of the breadth of work that our teams are doing here to try to continuously improve the experience of shopping and selling on Etsy.
Tess: So much exciting work going on behind the scenes! OK, looking forward to the rest of 2021, what’s the overall sentiment among buyers right now?
Michelle: We think about and track consumer sentiment in a few ways here. First, we keep a pulse on consumer confidence trackers and key indicators that we see in the market that suggest growing confidence. So foot traffic through airports or number of flights booked are examples of people becoming more confident and returning back to travel, and we’re thinking about what that means from a consumer lens. Overall we’ve been seeing a lot of upward trend in consumer confidence on a month-on-month basis. This generally translates to buying confidence in the near-term, which we think is a good sign overall.
We also track buyer sentiment through surveys that we do internally here. And what we found recently, based on our research, is that there have been some sentiment shifts between the first months of 2021, and the spring months now heading into summer. In early 2021, we saw much more cautious mindsets. While buyers are still tempering expectations for a return to normal, looking from at least March – when we did this survey – to now, the mood is more of what I’d call cautious excitement. And that’s brought on by things like warmer weather, the change in seasons, and increasing vaccination rates. But people are still recognising that a lot is still unknown, and that’s where the cautious bit comes in.
More recently in the US, there’s been stimulus money injected into the economy, people may be starting to get tax returns, and we still have this above-average savings rate in America. So there’s this idea that there’s pent-up demand that could be unleashed, with more people getting comfortable getting out of their houses, travelling, and having gatherings. We can tell through buyer research that many seem to recognise we’re on the precipice of what’s to come for the next “new normal”.
Tess: Moving into some specifics, what’s the latest when it comes to what shoppers are looking for right now?
Michelle: One of the things that we look at in research is how buyers anticipate spending money in the months ahead. And what we found recently in some research that we did looking at US buyers is that shoppers are looking to treat themselves. For example, we see growing interest in accessories for going out into the world. It’s not just upper body accessorising for your laptop anymore. People are getting more comfortable going outside, and we see that reflected a bit in how buyers are responding in these surveys.
Shoppers are also ready and really open to the concept of a seasonal refresh. About a quarter of US buyers who we surveyed recently said they’ll do some shopping on Etsy for a spring refresh, and that type of shopping is really focused on home decor, outdoor and garden, and storage and organisational items.
Personalised items also continue to be popular. A handful of buyers said they planned to buy something personalised or customised on Etsy in the next few months. We think some of that might be connected to gifting, which is another top purchase occasion buyers said they’ll come to Etsy for in the next few months. We see in buyer research that evergreen gifting – things like birthday gifts, baby gifts, wedding gifts, and so on – are pretty popular on Etsy. So, it’s not just Christmas gifts. I think this is a great opportunity for our sellers year-long. Gifting is something that’s relevant throughout the course of a year.
Tess: When shoppers are looking for these items, I’m curious about their approach. Do they get specific in their searches, or do they tend to browse?
Michelle: That’s also something that we’ve looked at in research, and we do a lot of studies around shopping missions and underlying intent when buyers come to Etsy. We did a study recently among US buyers who landed on the Etsy homepage and we asked them, “What was the reason you came to Etsy today?”
What we found at a high level was that a number of them came to Etsy looking for a specific item, but we also saw a good portion came just to browse or explore with no specific item in mind. And another subset are coming to seek inspiration for a purchase or a project. So we know there are many different reasons that buyers come to Etsy and different mindsets that they have when they land on-site.
Tess: I know a lot of sellers are curious about how the weddings category is going to look this year. Are there any predictions you can share about what couples’ plans are for 2021?
Michelle: Yes, this is something that we’ve been tracking very closely, looking at key indicators as I mentioned earlier. In the wedding category space, we’re looking at things like event bookings: Are they starting to pick up on a national level? Are buyers purchasing items that we see early on in the wedding purchasing journey, like engagement rings, or paper supplies for wedding invites?
We also lean on a lot of third-party research here. I'd say this is a hotly studied topic in the industry. One study we’ve been looking at is from The Knot, which is a wedding all-in-one website. They recently came out with a COVID-19 study, looking at couples who had weddings scheduled for 2020. They found that 93% of those couples were still planning to have a wedding. Only 7% were going to be cancelling their wedding. I think that’s a really telling number. Weddings are still going to happen, even if they are on a different timeline.
Looking at the couples who did have a wedding in 2020, 43% just went on with the wedding in 2020 as intended, so no change. Meanwhile, 32% had a celebration in 2020 but pushed the reception to a later date. And then a smaller amount, around 15%, postponed their entire wedding to 2021 or later. So even though a good portion of couples still got married in 2020, many plan to hold a sequel event this year, either another formal wedding reception or some other kind of celebration. And the timing of that is pretty equally split between the first half of this year and the second half of this year, while a much smaller portion are waiting until 2022, or later.
Overall, this told us that weddings are still very much happening this year, but likely on a condensed timeline. I personally have a handful of Friday weddings to attend this autumn, and I can imagine they might look different with more health and safety measures and smaller guest lists.
Tess: What does this mean for Etsy shoppers? Have you found anything on how our buyers will be approaching weddings this year?
Michelle: Looking specifically at our buyer base, we did a study recently taking a closer look at timelines this year to see when weddings are actually happening. We took what we learned externally in these third-party research studies and applied it to our buyers. Overall, we’re trying to get a sense of what our buyers’ plans are for attending weddings, and we’re trying to understand the potential concerns around COVID-19.
We looked at this more through the lens of wedding attendees (as opposed to the couples getting married themselves), and that was a proxy for when weddings may or may not be happening this year. What we found is that among US buyers, according to a survey we did in March, many buyers are planning on attending weddings this year and only a small portion won’t because of concerns around COVID-19. The wedding season timeline is anticipated this year for May through October and will be relatively equally distributed across those months. So, a pretty typical wedding season, I'd say.
Overall, weddings are largely expected to pick back up this year. It’s something we’re keeping a close eye on very holistically, both in terms of the wedding event itself and also all the other reasons that buyers come to Etsy for wedding-related purchases, like hen nights, wedding gifts, decorations, wedding showers, and so on.
Tess: Thank you for answering all of my questions, Michelle. Now it’s time to get into the questions from the sellers. This is our lightning round, where we collect questions in the Forums and on the Etsy Success social channels. Are you ready?
Michelle: Yes, and thank you in advance for everyone’s questions!
Tess: Our first question comes from Breezy Tee: “How far in advance do shoppers seem to be shopping for specific occasions? Autumn and winter are typically our busiest seasons, so how far in advance should we be prepared this year?”
Michelle: It really depends on which occasion, and it depends on if it’s what we call a “timeboxed” celebration. Christmas is one example of a timeboxed celebration, because people need a gift by a certain date. This is as opposed to a more general purchase, like when people want to buy seasonal decor for their home.
For the winter festivities, using this upcoming year as an example, we expect earlier shopping again. In buyer research we heard buyers really liked the earlier shopping that they were forced to do last year to get their packages in time for Christmas, and we heard many expect to do the same this upcoming festive season. I’d expect shopping to start earlier than in a typical year, and closer to what we saw in 2020, based on fears of delivery delays which are still fresh in everyone’s minds.
Tess: Our next question comes from BarnettCrafted: “I imagine Etsy has seen sales go way up overall since the start of the pandemic. What specific categories have seen the biggest increases?”
Michelle: We touched on this a bit earlier, but I think home and living overall has been the biggest winner, as people began nesting and spending much more time staring at the walls of their houses all day. Bath and beauty was also really big, as people turned to self-care and relaxing activities to do at home. Another big category winner this past year was craft supplies, as people shifted to do-it-yourself activities, and again, were looking for ways to pass the time at home.
On the counter end of that, we saw some categories suppressed naturally, like paper and party. No one was going to parties in the pandemic. However, since then, this category has recovered a bit with greeting cards surging as a way for people to stay connected while apart. Party decor also has evolved to take on new forms as people celebrate more virtually or outdoors. As shops open up again and as the economy opens up, we’re closely tracking how the share of category purchasing shifts, in addition to tracking if people move some of their shopping offline.
Tess: The next question is from WreathsGaloreandMor: “Now that things are slowing down with COVID-19 and some states are starting to lift restrictions, do you think buyers will continue purchasing the way they did in 2020, or will they go back to how they were purchasing before?”
Michelle: That’s another area that we’re tracking really, really closely. We’re looking at spending overall and on a category level, both on and off Etsy. Third-party sources show that after a year into the pandemic, online spending in general – not necessarily on Etsy – was still elevated as of January and February of this year. So online shopping does seem to be sticking at some rate.
We’ve heard some buyers say that when shops open up this summer, they’ll return to some in-person shopping. But then when it comes to Christmas, when they’re shopping for multiple people at multiple shops, there are crowds, and everyone’s trying to shop at the same time, they could see themselves turning back to online shopping a bit more. We are, of course, many months away from the Christmas period, but we’re predicting that it might not be a very linear situation. We might see some online shopping loopback, depending on the season.
Tess: Our last question comes from TreasureKave: “I’d like to know what kind of customers shop on Etsy, and which groups are shopping most frequently?
Michelle: As of the last few months of 2020, we had 81 million buyers so you can imagine that there are so many different types of customers on Etsy. To make sense of these groups, we segment our buyers out into distinct groups based on how often they shop with us and how much they spend with us. Looking at our top buyers – so those who purchase with us most frequently – that buyer base grew 157% in 2020. We, of course, love to see this. We have more buyers and are deepening relationships with them. So we focus a lot of our research efforts on understanding who these most frequent Etsy shoppers are, and what their attitudes, beliefs, and shopping behaviours are.
At a very high level, we know they come to Etsy to explore specific niche interests and personal hobbies. They also purchase things on Etsy to express their own personal style, and many come to Etsy when they’re celebrating life moves. For example, they moved houses and now need to decorate. Overall, we’re constantly studying this group because they’re our most loyal customers and they bring the most business to us, and we always want to keep their perspectives top of mind.
Words by Etsy Staff
