Crafts vendor Etsy has strengths, weaknesses at a time of economic headwinds
When consumers face a number of economic headwinds, discretionary spending is the first thing to go, analysts say. That could hurt growth at e-commerce platform Etsy, which had a bit of a heyday selling crafts and personalized items during the pandemic. But these days, it’s a bit of a different story with Americans shelling out more on services and experiences.
The platform’s quarterly financial results come in Wednesday, so as we descend further into the holiday shopping season, let’s look at what’s on the line for this specialized online marketplace.
The resilience of the consumer — after the post-pandemic travel splurging and spending on services — has its limits, said Brittany Steiger, an analyst at Mintel. “Seventy-one percent of consumers are still concerned about rising prices and inflation,” she said.
So they’ve pulled back on discretionary spending, said Citi analyst Ygal Arounian. “Essentially everything that’s on Etsy is squarely in this discretionary spend bucket,” he said.
Plus, with student loan payments resuming this fall, many people have to fit that into their budgets too.
Then there’s holiday spending. Though technically discretionary, it’s slightly different, said Claire Tassin with Morning Consult. “There’s an enormous amount of pressure to participate in, we’ll call it, the holiday magic,” she said.
Tassin said e-commerce platforms will be relying heavily on discounts to attract shoppers who are looking for the perfect gift. Etsy may have an edge in that department.
“What we see among young people specifically is much more emphasis on sentimental entertaining and sort of humorous gifts, which I do think is a great advantage for a brand like Etsy,” she said.
That’s because Etsy is a known marketplace for artisan products, said Forrester analyst Sucharita Kodali.
“Things that are unique, they’re special. People may be looking for something very, very specific, like a jute tablecloth,” she said.
That market is still niche, though, so it’s not going to have the same growth opportunities as, say, Walmart or Amazon.