Etsy: The Rising Star of Online Marketplaces

By Patricia Miller


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Etsy: A growing online marketplace for handmade products. Resilient against competition, remarkable sales growth, and unique value proposition make it an attractive choice for investors.

image capturing the vibrant and creative essence of an artisan market scene, reflective of the Etsy experience.
Personalization and Handmade Items Drive Etsy's Success

What You Need To Know

Etsy (NASDAQ: ETSY) is an online marketplace for handmade products, founded in 2005. Elliott Investment Management, a prominent investor, believes that Etsy has significant upside potential for the next few years. They compare it to Pinterest (NYSE: PINS), another company where Elliott appointed a board member. Despite facing competition from Amazon Handmade in 2017, Etsy has shown remarkable growth, increasing its gross merchandise sales (GMS) from $3.3 billion in 2017 to $12 billion in 2023, $2.6 billion in revenue, and $750 million in EBITDA, proving skeptics wrong. The number of sellers and active buyers on the platform has also significantly increased.

Etsy thrived during the pandemic, attracting tens of millions of new buyers, many of whom remain active. Despite macroeconomic pressures and competition, Etsy focuses on what sets it apart: unique, customizable products and an engaging shopping experience. The company is enhancing search capabilities and leveraging AI to better showcase its diverse inventory.

The company has focused on improving the user experience, including search and discovery features, and introducing initiatives like Gift Mode. The company differentiates itself from big e-commerce retailers by emphasizing its unique value proposition of handmade and personalized items.

Etsy aims to maintain profitability while expanding its market share and brand recognition globally. The company's strategy includes investing in logistics to make cross-border buying feel local and focusing on both new and reactivated buyers.

CEO, Joshua G. Silverman, is confident in Etsy's potential to outpace e-commerce growth, driven by its unique value proposition and dedicated team. With strategic investments in technology and marketing, Etsy is well-positioned for sustained growth in the competitive e-commerce landscape.

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Why This Is Important for Retail Investors

  1. Proven Growth Trajectory: Etsy's impressive increase in gross merchandise sales and revenue from 2017 to 2023 demonstrates a strong growth trajectory. This historical performance reassures retail investors about the company's ability to scale and generate profits, providing confidence in the potential for future returns.

  2. Resilience Against Competition: Despite intense competition from giants like Amazon, Etsy has successfully carved out its niche and expanded. This resilience is a positive indicator for retail investors, highlighting the company's competitive edge and ability to withstand market pressures.

  3. Unique Market Position: Etsy's focus on handmade, customizable, and personalized products differentiates it from other e-commerce platforms. This unique value proposition attracts a dedicated customer base, which is crucial for sustained growth and provides retail investors with a stable investment opportunity.

  4. Strategic Use of Technology: Etsy's investments in enhancing search capabilities and leveraging AI to improve user experience showcase its commitment to innovation. These technological advancements are likely to drive further growth, making it an attractive prospect for retail investors looking for companies that prioritize innovation and user satisfaction.

  5. Global Expansion Potential: Etsy's strategy to improve logistics and make cross-border buying feel local indicates significant global expansion opportunities. This potential for international growth offers retail investors the prospect of diversified revenue streams and a broader market presence, contributing to long-term investment value.

How Can You Use This Information?

Here are some of the investing ideas that can be explored using this information:

Growth Investing

Etsy's impressive growth trajectory and potential for significant upside make it an attractive option for growth-focused investors.

Growth investing focuses on stocks of companies expected to grow at an above-average rate compared to other stocks in the market; learn more in our article titled 'What is Growth Investing?'.

Defensive investing

Etsy's ability to withstand competition and its focus on personalized, handmade items could make it an appealing choice for defensive investors seeking stability in uncertain markets.

Defensive Investing focuses on securing a portfolio by choosing companies that are less sensitive to economic downturns.

Thematic Investing

Investors interested in thematic strategies focused on e-commerce, online marketplaces, or the demand for unique, handmade products can consider Etsy as a thematic investment opportunity.

Thematic Investing selects assets based on projected trends or themes believed to offer growth opportunities.

Innovation-Focused Investing

Etsy's commitment to platform innovations, technology investments, and marketing strategies positions it well for investors looking to capitalize on companies leading the way in e-commerce innovation.

Innovation-focused investing seeks out companies that are leaders in technological advancement, offering potential for significant growth as they develop new products and services.

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Popular ETFs

Some investors prefer to invest in stocks via an exchange-traded fund for ease and reduced risk. Some popular ETFs include the following:

  • E-Commerce ETFs:

    • Amplify Online Retail ETF (IBUY): This ETF is dedicated to companies deriving a significant portion of their revenue from online and virtual sales, which includes platforms like Etsy.

    • Global X E-commerce ETF (EBIZ): Focuses on companies around the world involved in the e-commerce industry, including those providing online retail and marketplace services.

  • Consumer Discretionary ETFs:

    • Vanguard Consumer Discretionary ETF (VCR): Invests in companies within the consumer discretionary sector, including e-commerce platforms that offer consumer goods.

    • SPDR Consumer Discretionary Select Sector ETF (XLY): This ETF includes companies from the consumer discretionary sector, which can cover online marketplaces like Etsy.

  • Small-Cap and Growth ETFs:

    • iShares Russell 2000 Growth ETF (IWO): While Etsy may no longer be considered a small-cap company, ETFs that focus on small-cap growth stocks can include companies with similar growth trajectories and innovative business models.

    • Vanguard Small-Cap Growth ETF (VBK): Focuses on small-cap companies that exhibit growth characteristics, which could be relevant for investors interested in companies with a profile similar to Etsy's during its growth phases.

  • Innovation and Technology ETFs:

    • Ark Innovation ETF (ARKK): Known for investing in disruptive innovation, ARKK may include companies like Etsy that leverage technology to create new market opportunities.

    • First Trust Dow Jones Internet Index Fund (FDN): This ETF invests in the largest and most significant internet companies, which may include e-commerce platforms that have significantly disrupted traditional retail models.

  • ESG (Environmental, Social, and Governance) ETFs:

    • iShares ESG Aware MSCI USA ETF (ESGU): Targets companies operating with positive environmental, social, and governance practices. Etsy, with its focus on handmade, sustainable products, might align with the ESG criteria.

Explore more on these topics:



This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Patricia Miller does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Patricia Miller has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of, has not been paid for the production of this piece by the company or companies mentioned above.

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