The following is a transcript of a video update from Josh Silverman published in December, 2017. The transcript has been edited slightly for this format. You can watch the video on our Etsy Success YouTube channel.
Hi, I’m Josh, the CEO of Etsy. It’s been a few months since my last video and Forums chat, and I’m happy to give you another update today. In this video, I’m going to talk to you about the progress we’re making accelerating sales growth for our sellers; and highlight specifically some improvements we’ve made to search. I’ll also talk to you about some of the things we’re doing to help you have a successful holiday season, and steps you can take to extend your selling season this year. I know experiments have been front of mind, so I’ll spend some time talking about those as well. Next week, I’ll be on the Forums answering your top questions. You can find more information on how to join the discussion here. I hope to see you there.
First, I want to give you a quick update on how we did during the third quarter. We are laser-focused on getting you more sales, by doing fewer things better. And we’re making great progress. Back in August, I told you that, as a result of the improvements we’ve been making to the buying experience, we were on track to increase sales in the third quarter compared to the second quarter. We did that, delivering 13% sales growth, and reversing the sales deceleration of the past few years. We’ve made strong progress in a short amount of time, and we’re continuing to work hard, driving growth in the months and years to come. I encourage you to listen to our recent shareholder call for more information about our financial performance. We’ll include a link to it at the end of this video.
Enhancing search and discovery
Improving the search and discovery experience has been an absolute top priority; we’ve been investing a lot, and seeing strong progress. The improvements we’ve made are moving the needle.
One of our core strengths is the diversity of the 45 million items that sellers like you offer in the Etsy market, many of which can’t be found anywhere else. From that incredible diversity, showcasing the items a shopper is most likely to like, and to buy, presents a unique technical challenge. We need to make sure that the items which appear in search results are the most relevant breadth and depth of items for each individual shopper.
In September, we introduced a major improvement called Context Specific Ranking, or CSR. Through CSR, we’re personalizing the search experience by using information about the shopper, time of day, and other context-specific factors to rank results in real time. To give you an example, here are some before and after images to illustrate how this technology can deliver a better search experience for our buyers. This example shows a search for “laundry basket,” and the image on the right shows more relevant results delivered by our CSR improvements. The more personalized approach means that you’ll no longer see the same results every time you type in a search term. And the good news is that we’re already seeing CSR drive more sales.
We’re also working hard to get better at understanding what your item actually is, based on all of the information in your listings, with less focus on your titles. Eventually, as search continues to improve, our goal is to enable you to include all the relevant data about your products as you list them, reducing the need to continuously refine your SEO terms.
These are just two of the ways we’re making it easier for shoppers to search for and discover items on Etsy. In total, we expect the successful search and discovery products we’ve launched since May will deliver nearly $100 million in incremental annualized sales. This is further evidence that improving search on Etsy can move the needle in a meaningful way.
Improving Etsy through data and testing
Let’s talk about how we’re improving Etsy by using data and testing to determine which designs drive the best buyer experience, therefore resulting in the most sales. While not every test we run is a success, a good number are. In fact, we've launched dozens of changes since May that have had a positive impact and led to sales increases nearly every week. For instance, we ran a test to see if we could increase sales by highlighting shop reviews more prominently on listing pages. You work hard to get great reviews, and positive reviews send a signal to buyers that they can trust you. I know that this change was controversial, but the results were clear. The new design drove a meaningful increase in the number of buyers making a purchase compared to the control group who saw the old design. This is just one example of how we are using data to make good decisions about how to best improve the buyer experience, and get you more sales.
You’ve told us you want to know more about the experiments we’re running. So we’ve launched a new central location where you can get all of that information and we update the page regularly. And we’ll continue to find ways to communicate with you about experiments more effectively.
Sales and promotions
Over the past few months we’ve been focused on helping you have a successful holiday season. One way we’re doing that is through sales and promotions. The last time we talked about sales and promotions, I told you how prevalent they were going to be across the web this holiday season. I also told you we’d be arming you with the tools and support you need to compete in this environment. In August, we introduced a new tool that makes it easier and more effective for you to offer sales, coupons, and free shipping promotions.
Giving you the tool was just the start. We’re also supporting your efforts by creating sitewide sale experiences and offering other incentives to buyers. In September, we launched our first-ever Labor Day sale. We made it clear to buyers that this wasn’t just any sale, but a way to get a great deal on a special item while supporting sellers like you. Many buyers told us that message really resonated with them, and I’m happy to say the sale was a success. During the sale, sellers across the site saw more orders. And, on average, sellers who participated in the sale sold more than during the same weekend last year. As you can see on this graph, even sellers who didn’t participate in the promotion got more sales that weekend, so there was a benefit sitewide.
We built on the success and lessons we learned from Labor Day to launch a holiday sale on November 20. Once again, we encouraged buyers to save while supporting creative entrepreneurs like you. We highlighted sellers throughout the sale experience, including Anderson and Jessie Bailey of Bean and Bailey ceramics in Chattanooga, Tennessee, and Dani of BennyBee Leather in Edinburgh, Scotland.
Holiday shoppers expect to see sales, and you’ve really given them what they want this season with over 14 million reduced price items to choose from as of last week. I’m excited to see so many of you taking advantage of the new sales tool and sitewide promotions. That said, I know running promotions may not make sense for every Etsy seller and I encourage each of you to do what’s right for your shop based on your business strategy and goals. If you haven’t tried out the tool and you think it might be a good idea for your shop, it’s not too late to run a promotion in the next couple of weeks leading up to Christmas.
In addition to sitewide sales, we sponsored an email promotion designed to keep buyers coming back to Etsy by rewarding them with gift cards after a qualifying purchase. We’re very encouraged by the early results. On our earnings call, we shared that over 50% of participating buyers had returned to the site and made another purchase.
We also launched a holiday gift guide to make it easier for holiday shoppers to discover the perfect gifts. The guide goes beyond the typical ideas and offers collections tailored for all the different people shoppers are buying for, including aspiring chefs and outdoor enthusiasts. One of my personal favorites is the collection that highlights great vintage items.
Extending the holiday season
Looking ahead, we’re working hard to extend the holiday shopping season on Etsy. Across the web, the shopping season is getting longer as more shoppers become confident in buying online, and trust that their orders will arrive by Christmas.
But on Etsy, the holiday season has started to wind down in mid-December, just when other e-commerce players are gearing up for some of the busiest shopping days of the year. In the past, last-minute shoppers haven’t seen Etsy as an option because they were concerned their gifts may not arrive in time, and no one wants to show up at the holiday party empty-handed. I have to admit I’m guilty of doing some last-minute shopping every year myself.
This year, we’re giving you new ways to extend your holiday sales and attract those procrastinators. If you can, take advantage of our new capability to offer gift wrapping. That way, your item can be shipped directly to the recipient, saving precious time. If you have items that are ready to ship, update your processing times so we can highlight those items to buyers. Right now, for instance, we’re testing out ways to highlight items that are ready to ship in one business day or within three business days. Together, let’s make this the year that even last-minute shoppers come to Etsy to buy holiday gifts.
Tools for your shop
In my last video, I told you we were working on top requested features for sellers. Since then, we gave you five additional shop sections to showcase your items and a bulk edit tool that cuts down on the time it takes to update your listings. By popular demand, we also brought back real-time views in Stats and made other improvements to Stats to give you the reliability and consistency you need to run your business.
As we approach the new year, we’ll continue to focus on bringing you more sales and doing fewer things better. During our last Forums Q&A, many of you shared your thoughts on tools you’d like us to build. We’ve been keeping your requests in mind as we make plans for 2018. I look forward to sharing our plans with you in the coming months.
I know this is an especially busy time for you. Thanks for taking the time to watch this video, and I look forward to seeing you in the Forums next week.
_Note: These remarks contain forward-looking statements, including regarding Etsy’s financial performance, our business strategy and key initiatives, our product roadmap, and future growth. These statements involve substantial risks and uncertainties that may cause actual results to differ materially from those we expect. These include our history of operating losses; the fluctuation of our quarterly operating results; our ability to implement our business strategy; our ability to continue to implement initiatives to increase efficiency, streamline our cost structure, and improve focus on key opportunities; and the effectiveness of our marketing efforts.
These risks and uncertainties are more fully described in our filings with the SEC, including the section entitled “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, and subsequent reports that we file with the SEC. Forward-looking statements represent our beliefs and assumptions only as of the date of these remarks and we disclaim any obligation to update them.
For more information, please refer to our earnings materials for the third quarter of 2017 that are available at investors.etsy.com.
Words by Etsy Staff
