An Etsy Investment Might be Worth Your While

Disclaimer: This post does not constitute financial advice. Author has no position in ETSY stock. Do your own due diligence before making an investment.

Esty (ETSY), the company made for crafting and other small businesses, has excelled in the recent years.

Etsy allows young entrepreneurs to sell their products via their online portal. During the COVID-19 pandemic, many 9-5 workers have been spending more time at home than usual. Service workers have lost their jobs. All this time off has given rise to a new wave of vendors. People are following their childhood passions of creating their own businesses. Whether it’s making jewelry or candles from scratch, home businesses are booming. Not only is there a surplus of supply, but also a rise in demand.

People have more time to shop online, as they have nothing else to do. Amazon’s (AMZN) business has risen immensely, as have other online vendors. Since stores are closed, the only way for people to scratch their shopping itch is through the Internet.

Etsy has thrived among fierce competition. Despite its huge success during the pandemic, this isn’t the only reason it’s a household name. Etsy had steady growth prior to the pandemic. This business went from having a revenue of $273.5 million to $818.4 million from 2015 to 2019. Etsy was a growing business and has no plans to stop post pandemic. However, the pandemic did push their sales through the roof. Check out the line graph below showing their 2020 success.

Part of their success was in direct relation to the pandemic. Sales for homemade masks made up 14% of Etsy sales for its 2020 second quarter. This didn’t create the bump in sales, but definitely contributed to it. The pandemic contributed to online sales in all areas, which kickstarted growth in the company that will be difficult to regularly sustain. The great part about specialty home businesses, however, is that they may produce more repeat customers.

If you’re bored at home with nothing to do except online shop, you’re probably going to try new things. You’ll buy peppermint oils and beeswax wraps you never thought you’d need. They were more expensive than normal brands, but since you’re not going out every weekend you have a bit of extra spending money. You try out this new, homemade product and realize everything you’ve been missing all your life. Now, you can’t go back. Just like once you sit in First Class on an airplane, coach will never feel the same. Just like Etsy customers, they are hooked. Selling quality products is sustainable after the pandemic because customers have given them a chance. A free sample is a great business tactic for this very reason, and millions of people were just driven so crazy in a pandemic they decided to buy anything. Since they’re stuck loving the products now, the company will most likely remain a big contender in the market. All this to say, the pandemic ending probably shouldn’t be a huge fear for investors.

In 2019, Etsy outlined its four pillars they would use for their five-year-plan. They were personalized search and discovery, human connections, a strong and trusted brand, and a large variety of handmade and vintage products. They are committed to improving the simplicity of the site, as well as helping businesses better sell their products. By featuring celebrity vendors such as Jojo Fletcher and Tan France, they developed a higher personal connection with site goers.

This business was doing well before the pandemic and was simply bumped up because of its position in this sad circumstance. Despite it being an expensive purchase right now, it’ll will most likely continue to rise long-term post pandemic. Investing in Etsy (ETSY) has great potential.

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