Three reasons to be bullish on Etsy, a cross border e commerce platform in the United States

Mondo Technology Updated on 2024-01-28

Admittedly, the recent economic downturn has caused some trouble for the growth of the US cross-border e-commerce platform Etsy (ETSY). While Etsy's third-quarter revenue grew 7% year-over-year, its total merchandise volume grew by only 1%. Without a favorable exchange rate, Etsy's sales would have been essentially the same as in previous quarters.

While the deterioration in performance has almost come to an end this quarter, CEO Josh Silverman of Etsy admits that "we are still in a very challenging environment." ”

According to the U.S. Department of Commerce, the U.S. gross domestic product (GDP) in the third quarter has exceeded expectations and achieved strong growth (by 5.).2%, the strongest growth since Q4 2021), and also drove a 43%。Inflation is also leveling off at the moment, which not only eliminates the need for further rate hikes by the Fed, but may even open the door to rate cuts, and unemployment remains at a fairly low level.

All of these data bode well for the best and set the stage for a new bull run in 2024. In fact, Boldbeast Finance believes that such a bull market may have already begun. And this is also particularly good news for Etsy, and Boldbeast Finance will analyze three reasons to be bullish on Etsy in this article.

1. The economic downturn has inhibited Etsy sales

As mentioned earlier, inflation-weary consumers are cutting back on their spending on non-essential items to pay for their increasingly expensive essentials like food, utilities, and cosmetics.

However, it is a pendulum that swings in both directions. If a weak economy is bad for business, then economic growth and markets** have the opposite effect. Assuming that the new bull market comes in the context of strong economic growth, stable wages, and moderate inflation, then Etsy will operate in an ideal consumption environment.

Equally controversial is the fact that recent changes in consumers' budgets are linked to the so-called "wealth effect". That is, when the market is doing well, consumers feel richer and are willing to spend more on less essential items, such as handmade items available on the Etsy platform.

2. The handmade products market is still growing

While there is still a place in the consumer market for mass-produced goods, such as everything from vacuum cleaners to packaged foods, from light bulbs to sports socks, many consumers still appreciate the uniqueness and personalization of handmade items, just like the handmade items sold on the Etsy platform. Market research firm Techn**io expects the size of the U.S. handicraft market to grow at an average annual rate of nearly 9% by 2027, and the global handicraft market to grow by more than 13% annually by 2025.

The growth prospects for handmade products are also very exciting, as nearly half of Etsy's business is done outside of the United States. It is important to emphasize that Etsy also has very strong competitors in this regard. For example, Amazon (AMZN) manages a handmade goods platform, the handicraft chain Micheal'S is also working on a competition called Makerplace**.

However, as the first big brand dedicated to artisanal products, Etsy also has a huge advantage. As Morningstar analyst Sean Dunlop analyzes, "Etsy is one of the few companies that is poised to be a long-term winner in the e-commerce space. It builds a marketplace for non-traditional, unique, customizable craft products and can gain a competitive advantage from a network that becomes more valuable as more buyers and sellers join the platform.

3. Some of Etsy's growth plans are already starting to work

Considering the entry into Etsy** positions, as well as the new bull market, many of Etsy's reform efforts have begun to work.

Take, for example, its search function. At some point, a consumer may have a lot of similar products when they search on them, and there are no feedback channels and features on them to help shoppers improve their search or browsing experience. But since Etsy has already optimized this aspect in the last quarter, Etsy's search experience has now improved dramatically.

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