Despite the stiff competition in e-commerce, Etsy (ETSY 4.76%) has continued to be a differentiating leader particularly in handmade and vintage goods. In this clip from "The Rank" on Motley Fool Live, recorded on May 2, Motley Fool contributors Danny Vena, Jason Hall, and Matt Frankel discuss how the e-commerce giant has excelled in its niche and why it might make an optimal long-term investment.
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Danny Vena: It's interesting that, you know, you talked about those other platforms because I think Depop is, well, kind of a cool name.
Jason Hall: Depop. That's the vintage and used clothes site.
Vena: In Brazil. And Reverb, I think, both of those are really cool names. But that aside, for e-commerce, one of the enduring trends that we have seen over the past, actually it's a couple of decades now, is this idea of vintage clothing coming back in style. I don't know how many times we've walked around and seen people wearing a Felix the Cat shirt, or you know, some of these vintage '70s clothes. Bell bottoms are coming back into vogue. So if you have some of these original items from decades ago, they are in hot demand. And Etsy is the place where people go, not only for handmade items, but also vintage goods. And I don't think that trend is going to go anywhere. Certainly, there is a lot of competition in e-commerce, and I don't think that's going to change at all, and we'll talk more about e-commerce later on in the program. But what I think is that, Etsy has carved out a very lucrative niche for itself. I think they are and will continue to be the leader in that niche of the vintage goods and handmade items and handcrafted items. And evidence of that, I believe, is that Amazon (AMZN 0.23%) tried to get into that. Amazon tried to say, "Oh yeah, Handmade by Amazon." And you know, that fell flat on its face, because everybody knew they were just trying to copy the original and that's where Etsy is. So I think Etsy is really a wonderful platform and I think that it will continue to do well once we get passed the really tough comps that we are seeing from the pandemic. What about you, Matt?
Matt Frankel: I've been a big fan ever since they beat Amazon at their own game. If you remember back, shortly, I think a year or two after Etsy went public, I think it was Bloomberg that called Amazon Handmade when they launched it an "Etsy killer." I can't tell you what Amazon Handmade's doing now or even if it exists anymore.
Hall: It still exists.
Frankel: Does it? It never really gained big traction though, especially with sellers. And I don't buy the risks related to the seller's strike that's going on with Etsy. Etsy raised their fees.
Hall: That was a nothing burger.
Frankel: Well, it's still a big reason the stock is down right now.
Hall: Oh yeah.
Frankel: And it's about 17,000 of their sellers last I looked, and the total number of sellers, I think, are over 2 million on the platform. So, it's not an insignificant development in the way that, you know, two or three Starbucks (SBUX -0.17%) unionizing isn't an insignificant development.
Hall: Number of sellers at the end of 2021 is its number of sellers at the end of 2021: 5.3 million.
Frankel: There you go.
Hall: That was double from the beginning of, or the end, of 2019.
Frankel: It's not as significant as the headlines make it out to be. Of course, when a platform like that raises fees, there's going to be some push back against it. But I don't see that as a big, significant move. And I think with the investments Etsy's making in marketing and improving experiences like allowing all their people to offer, you know, two-day shipping, to have more targeted marketing with their products, things like that. I think a fee increase was in order. I think they're delivering more value to their sellers. So I'm still bullish on this one long-term and it's on my list right now. We know what Amazon does. Amazon figures out what's selling on its platform and figures out how to make more money at it. And if that means that it's a third party that's selling it, and it can take that market, it will absolutely do it. Etsy's prior management tried to do and almost killed the business. They almost killed the business a number of years ago. But Josh Silverman has been a wonderful CEO that gets it and has made it a priority to be aligned with their sellers and in a better way.