Our Etsy SWOT Analysis examines the Strengths, Weaknesses, Opportunities and Threats of the online shopping platform to find out what makes it unique.
Are you an online shopping person? If yes, then today's article will be very interesting for you. Today we will discuss one of the top e-commerce companies, Etsy. If you shop online, then it is possible that you must have shopped from Etsy.
Etsy is a renowned e-commerce company that sells jewelry, clothes, furniture, crafts supplies, artifacts, home decor products, and much more. The retail company tries to meet the demand of every customer. This is why products with different price ranges are available on Etsy.
Etsy provides a platform to sellers to place their products in personal storefronts where they are visible to buyers. By creating this mechanism, the e-commerce store facilitates buying and selling.
Looking at the operations of Etsy and its success, today we have decided to carry out Etsy SWOT Analysis. But before proceeding to that, we need to know the journey of Etsy and what are its current operations.
Etsy was a concept initiated by three individuals: Rob Kalin, Chris Maguire, and Haim Schoppik. They thought about developing an online platform to help craftsmen sell their products.
In 2005, Etsy was established. Just after two years, the e-commerce company had registered 450,000 sellers. Due to such a high number of sellers, Etsy managed to generate $26 million in 2007.
Over the years, the company kept growing, and more features were added to the website of Etsy to facilitate the buying and selling of products. Meanwhile, some changes were made in the company's administration to make it more efficient.
In 2013, Etsy acquired its first company. In the same year, Etsy allowed its sellers to sell manufactured goods and handmade products. This increased the numbers of both buyers and sellers. As a result, in 2013, the e-commerce company generated $1.34B.
The retail company acquired more companies over the years to spread its operations. Besides that, Etsy also focused on developing mobile applications for the store so users can easily access the e-commerce store.
In 2015, Etsy announced a program that would connect the sellers with the manufacturers so that they could manufacture and provide products to sellers. Currently, Etsy has more than 120 million products in its marketplace.
Etsy is playing the role of a bridge to reduce the gap between sellers and buyers. Due to the platform provided by the e-commerce company, more than 96.3 million buyers and 7.5 million sellers connect.
In 2021, Etsy managed to generate revenue worth $2.32 billion. Etsy was able to generate such a high revenue in so little time due to its competent workforce that looks after the website, app, queries of users, and other operations.
Etsy has a skillful workforce of 2,402 employees, through which it manages to carry out its operations efficiently.
Now that we have learned about Etsy's operations and history, let's look at the significance of a SWOT Analysis. A SWOT Analysis is a technique applied to determine the strengths, weaknesses, opportunities, and threats a business faces.
A SWOT template can identify and highlight the internal and external factors that affect an organization's operations. Now that you have developed some understanding of what SWOT analysis is, we will proceed further and carry out the Etsy SWOT Analysis.
Etsy's Strengths
Strengths are the plus points that any organization possesses. These points help an organization to compete in the market since they provide a competitive edge to the company. In this section, we will be looking at some strengths of Etsy.
Global Presence
Businesses try hard to get international recognition since this increases their customer base and revenue. However, it takes years for a business to achieve international growth. Etsy, being an e-commerce company, already has a global reach.
Since Etsy operates from a website, anyone, anywhere in the world, can see the retail shop of Etsy. Although the company is relatively new to the business, it still has operations all across the globe.
Low Operational Costs
Businesses are always looking to maximize their profits, and one way to increase profit is to lower operational costs. However, many businesses fail to lower their operational costs since they include costs incurred due to operations. For example, salaries of the workforce, rent of the building where they operate, daily expenditures, etc.
Physical retail stores have high operational costs due to the size of their operations. However, Etsy has meager operational costs since it is an online platform.
It has a small workforce of 2,402 employees. Moreover, the e-commerce company doesn't have to buy any product. Instead, it simply gets a share from the suppliers for permitting them to display their product. Other than that, Etsy doesn't need to pay rent or buy land to run a business.
All these factors help in lowering the operational costs of Etsy. As a result, the online company can maximize its profits.
Online Payment Methods
There are several e-commerce companies present. However, due to rigid payment policies, consumers are reluctant to buy from some. Moreover, many online shops offer a lack of payment options which causes consumers to avoid shopping from those shops.
However, their flexible payment system distinguishes Etsy from other e-commerce companies. Etsy has a huge supplier and customer base because people find it convenient to pay. The e-commerce company offers several payment options, such as Paypal, Apple Pay, Google Pay, credit cards, debit cards, and other sources.
This makes it easier for buyers to buy products from Etsy and sellers to withdraw money from their accounts.
Etsy's Weaknesses
Weaknesses are the drawbacks due to which many businesses fail to succeed. Every organization possesses some weaknesses. However, it is necessary to decrease the number of weaknesses to succeed in the future. This section will discuss some weaknesses of Etsy.
Lack of Customer Trust
E-commerce has hit the world with a storm. People all over the world are shopping online. However, many people don't trust shopping online because, in online shopping, there is always risk involved in getting the product damaged in the delivery process or misplaced.
The risk involved in online shopping results in the lack of consumer trust. As a result, people are reluctant to shop on Etsy, due to which it is unable to attract more customers.
Payment System Available In Limited Countries
E-commerce has made it convenient for a lot of buyers to shop online. However, the payment method is still a significant worry for buyers. Moreover, many online stores fail to cater to customers from various parts of the world due to a lack of payment options available.
Besides other payment options, Etsy payments constitute a significant way to pay on the Etsy store. However, this service is available only in 45 countries. This makes it inconvenient for people in other countries to shop from Etsy.
Delivery of Products Take Time
Undoubtedly, online shopping has made it convenient for buyers to shop since now they have to place an order online and receive the product at their doorstep. But unfortunately, buyers have to wait for weeks and months to receive the products they have ordered.
Since Etsy is an online store, it ships products to different parts of the world. Unfortunately, shipping products to certain parts of the world takes months. This annoys customers who prefer buying products physically instead of through an e-commerce platform.
Etsy's Opportunities
Every organization gets an opportunity in life to succeed. However, businesses need to grab opportunities at the right time. In this section, we will analyze the opportunities present for Etsy to expand.
Make Etsy Payments Available In More Countries
In online shopping, customers look forward to having convenient payment methods; otherwise, they switch to other online shops with better payment systems due to no switching cost.
Etsy is a massive online store that offers a different variety of products. However, Etsy payments are not available in the majority of countries. Therefore, Etsy has an opportunity to make Etsy payments available to more countries. By doing so, Etsy can cater to more buyers and earn more profit.
Add More Categories of Products
The ideology upon which Etsy got established was to help craftsmen sell their products. Therefore, it was decided that the shopping store would only sell handmade and vintage products. However, as the e-commerce company attracted more customers, it started selling different products, including manufactured products.
Now that Etsy has become a massive name in the e-commerce industry and is selling other products, Etsy can add all sorts of products to its stores, like Alibaba, Amazon, and eBay. This will increase the company's customer base and enable Etsy to generate higher revenue.
Open Physical Stores
Due to technological advancements, people are switching to online shopping. However, more people still buy from physical stores since there are a lot of problems involved in online shopping, such as payment problems, time lag, risk of damaged products, etc.
This provides an opportunity for Etsy to open physical stores across the globe. This will increase the customer base of Etsy and help the company to generate revenue from both online and physical shopping.
Etsy's Threats
Every business operating in a market faces threats from the external environment. However, to achieve success, businesses must deal with the threats by countering them. In this section, we will have a look at some of the threats that are faced by Etsy.
Global Recession
Businesses are currently facing a threat of global recession due to the pandemic and the Russia-Ukraine conflict. A recession is always painful for businesses since it lowers the purchasing power of the people. As a result, the demand for businesses falls.
Like any other business, Etsy has to deal with the threat of a recession. This can be very damaging for the retail shop since the buying power of the people will fall, and the sales of Etsy will also fall.
High Competition
Businesses feel threatened by highly competitive markets because high competition leads to low-profit margins. For example, Etsy competes in an industry with 12 million to 24 million online stores.
In such a competitive environment, Etsy has to constantly innovate to stay ahead of its competitors. As a result, the e-commerce company feels threatened that all the existing companies and new entrants might snatch Etsy's market share.
Russia-Ukraine War
After the Russia-Ukraine conflict started, many businesses imposed sanctions on Russia. Similarly, Etsy has also suspended its operations in Russia. This will impact the business of Etsy negatively since now it won't be allowing Russian suppliers or buyers to do business on Etsy.
This ban will reduce Etsy's revenue since its user base will fall. In addition, Etsy feels threatened because it is suffering financially by not operating in Russia, and no one knows when the conflict will end.
Etsy SWOT Analysis: Final Word
Etsy is an e-commerce company that provides different handmade and manufactured products. Initially, the brand's vision was to provide a platform for craftsmen. However, with time Etsy offered more products to its consumers.
We then shed light on the history of Etsy and learned how the company came into being and how it expanded its operations over time. After that, we took a look at the current operations of Etsy.
Then, we discussed what a SWOT analysis is and what's the need for conducting a SWOT analysis. After getting aware of the SWOT analysis, we proceeded and carried out Etsy's SWOT analysis.
This article taught us about Etsy's strengths, weaknesses, opportunities, and threats. The results mentioned in this SWOT analysis can also be represented in the form of a SWOT Matrix or a SWOT table. We hope you would have enjoyed reading this article since it made you aware of an extensive online store named Etsy and taught you how to conduct a SWOT analysis. However, if you still have some questions, look at some examples of SWOT analysis.
