In this clip from "The Rank" on Motley Fool Live, recorded on Feb. 7, Motley Fool contributors Matt Frankel, Jason Hall, and Taylor Carmichael discuss the marketplace giant that continues to impress and master the art of differentiation.
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Matt Frankel: If you've been keeping track, you know our No. 1 is Etsy (ETSY 0.34%), ticker symbol E-T-S-Y, has been a fantastic performer since about 2015. The stock is still up more than tenfold. If you guys remember when Amazon (AMZN 3.43%) came out with Amazon Handmade and Bloomberg actually ran an article saying that there was an Etsy killer coming to market and the stock tanked. They've been a fantastic performer. They've just proven all of the analysts wrong. They've done a great job growing into their addressable market. They now have over $12 billion of gross merchandise sales on an annualized basis and it continues to grow. Their recent growth numbers are somewhat deceptive. Over the past year, their revenue has grown 24%, excluding sales of face masks, which is a big thing they pivoted to during the COVID pandemic. But that's on top of a big pop they got two years ago when the COVID pandemic first hit. So many people just had so much more time to shop online. Over the past two years, their revenue has more than doubled, up 138%. They have done a great job of building out their addressable market. A stat that I've quoted very often when talking about Etsy is they put their total addressable market at $100 billion for specialized goods, of which I mentioned they have about $12 billion of annualized revenue or annualized merchandise sales. They put that as $250 billion for all of their categories of online spending. And, if you include the special merchandise that sold like craft markets and non-online sources, they put their addressable market at $1.7 trillion. That's for Etsy. That's not including some of these other brands that they're building out. When you see that, you do say "Wow" just like Taylor just did. But then you realize that they added Reverb, which is the music marketplace they acquired. They added the Depop, the fashion resale brand, which is really big among the younger generations. They added Elo7, which is widely considered to be the Etsy of Brazil and is growing very fast. E-commerce in Latin America is expected to grow at a 21% annualized rate through 2025. A lot of potential there for it to be a big hit and they acquired Elo7 for something like $100 million, something really low, in the context of this stuff. I think they're making all the right moves. They've shown their ability to grow. They've shown that what they have is something special. Not many companies can compete against Amazon like they did and clearly win. The best you could do against Amazon normally is to co-exist like Walmart's (WMT -0.08%) doing. Etsy went up and knocked it out of the park. I don't know if you guys have ever shopped on Amazon Handmade. I don't know anyone who has or who sells on it. But they totally went up against Amazon and won, and their management is making great decisions.
Jason Hall: I know some makers that have taken a pretty clear stand which platform they prefer and will continue to use, and it's not Amazon.
Taylor Carmichael: I was just going to ask, Matt, do you happen to know what percentage of items are on Etsy that you can't get anywhere else? I know it's handcrafted stuff and original stuff, but do they have any sort of exclusivity with their suppliers, or is it just their brand?
Frankel: I know 80% of their customers agree that the things on Etsy, you can't find anywhere else.
Carmichael: Wow.
Frankel: That's the customer perception. I don't know the actual statistics.
Carmichael: [laughs] Right.
Frankel: That's what you need. You need customers to think big.
Carmichael: That's way more important than it actually being the truth, I think.
Frankel: You're not going to see their products cross-listed on Amazon. That's why masks, I mentioned, we're such a big thing in the past couple of years. Because if you wanted a mask that didn't look like you just bought it off the rack at CVS (CVS -0.22%), you needed to go somewhere that has unique things. You could get a mask with your name on it. Especially toward the early days of the pandemic, when it was a commodity, masks. If you wanted to be a little unique, you had to go to a place like Etsy.
