Please ensure Javascript is enabled for purposes of website accessibility

Etsy's Coronavirus Customers Are Sticking Around

By Brian Withers and Brian Stoffel - Updated Jun 23, 2021 at 9:23AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Millions of new customers have discovered this unique handcrafted marketplace.

Etsy (ETSY 4.56%) has become a go-to shopping site for consumers during the pandemic. Its unique and handcrafted goods, especially face coverings, have brought millions to its website. As brick-and-mortar retailers welcome shoppers back in stores, investors may be wondering whether these new Etsy customers will stick around. On a Fool Live episode recorded on May 12, Fool.com contributors Brian Stoffel and Brian Withers go over the most recent quarterly results and discuss the data that shows its customers are staying, and buying more.

Brian Withers: Etsy has had tremendous tailwinds from the pandemic as people have gone online to look for gifts or just everyday household supplies. Throughout this, Etsy has been quietly building a loyal customer base, setting it up for long-term growth.

Masks sales are down to only 2.5% of gross merchandise sales last quarter, so it's really, really a small fraction of what they're seeing on the platform. But active buyers who've made one purchase in the last 12 months was up 91% to 90 million, repeat buyers up 114%. They added almost 10 million new buyers in the quarter and habitual buyers that have purchased on six or more days over the past 12 months tripled to almost 8 million. Sales on the platform is up 132%, revenue was up even more at 142%, meaning that the company is getting more from every sale on the platform. Gross profit even better, up 180%, says that they're scaling the business. Their net income is up more than tenfold increase year over year. Active sellers on the platform up to 67% to 4.5 million. International is becoming a real staple for the business, it's up to 42% versus 36% last Q1.

I love that buyers and sellers are more deeply embedded into this platform, buyers trailing-12-months purchases is up to $124 per buyer, that's up 20%, and sellers are up to about 2,500 bucks, that's up to 34%. So pretty impressive. The take rate that the company is seeing is 17.5% with all its add-ons with optional advertising, payments and other services. The outlook is 15%-25% growth in the next quarter, and that's what got scared off with investors in the markets yawning with the stock down 17% over the last week, but I love this report.

Brian Stoffel: I did, too. I'm an Etsy shareholder, I loved it. But my question is, what evidence in any, where you talked about habitual buyers just exploding, but do we have any evidence that the people that came to Etsy to buy masks are staying to buy other things?

Withers: That's really a great question, Brian. There's two things that I found from the report that the evidence says yes. They've added 43.5 million new buyers in the last four quarters, and over that same period, the company has seen an increase in repeat buyers of 19.4 million, so about 45%. This isn't a one-for-one necessarily, but 45% of the new people that they've added potentially turned into repeat buyers.

The other pieces of the sales from masks have dropped from 14% in Q2, [20]20 down to 2.5%. At the same time, over the last couple of quarters, non-mask sales have grown 118% and 138% in the last two quarters. It really looks like to me that buyers were coming and discovering Etsy over this past year and have stuck around and many of their top categories have doubled in their sales over the past year.

Brian Stoffel owns shares of Etsy. Brian Withers owns shares of Etsy. The Motley Fool owns shares of and recommends Etsy. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Etsy, Inc. Stock Quote
Etsy, Inc.
ETSY
$119.91 (4.56%) $5.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.