Etsy powers strong earnings, employee raises by working to improve shopping experience

BY CARA EISENPRESS

Customers are having an easier time searching Etsy for stickers, art prints and vintage jewelry—and employees at the Dumbo-based firm are finding their paychecks fatter as thanks.

Etsy reported $640.9 million in revenue for the first three months of the year, according to its third-quarter earnings results, released Wednesday after the market closed. That is 10.6% higher than the same period last year, even though total sales dropped by 4.6%. The results follow a holiday shopping season that saw slightly lower sales than the previous year—but higher revenue on those sales.

In 2020 and 2021, the pandemic’s stay-at-home culture proved a boon to Etsy as millions of sellers shipped craft supplies, home decor and homemade masks as fast as the company’s 95 million active users could order them.

Demand eventually slowed, and CEO Josh Silverman tasked Etsy employees with holding on to the gains. He said Etsy would fix up the user experience both for sellers and for buyers, a priority he affirmed in a statement released with the first-quarter results.

It appears that employees met their boss’s expectations.

The median annual total compensation for Etsy employees was $248,232 for 2022, according to a regulatory filing by the company, an increase of 30% in two years. Etsy workers are now the highest paid in the city’s tech industry, with median pay nearly $100,000 higher than their equivalent on Wall Street. At Goldman Sachs, median pay sank from $166,000 in 2021 to $150,000 last year.

Workers at other homegrown tech firms with revenue of more than $1 billion, which are required to report median pay, also did pretty well, although not as well as the Etsy crew. At Datadog, for example, the median pay is $203,000. The out-of-town behemoths with sizable New York offices still pay a little more: Median pay at Google owner Alphabet was $279,000 in 2022, and at Facebook parent Meta Platforms, it was $296,000. Microsoft shelled out a median of $190,302 for its employees. Pay raises at tech companies were hardly the norm. At Alphabet, that high median salary was actually down 5% from 2021. Median pay for Uber workers was down 6%. Like other e-commerce players, Etsy had to deal with slow or falling growth after the two-year online ordering boom ended.

Silverman said on last year’s third-quarter earnings call that the company needed to “narrow search results and get you to the good stuff fast. … We need world-class search technology married with worldclass personalization.”

In April 2022 Etsy increased its transaction fee from 5% to 6.5%. Increased marketing and efforts to make customer interactions smoother appear to have assuaged sellers. There were 7.9 million of them on the platform in the first quarter of this year, up from 7.7 million in the same quarter last year. The number of active buyers also increased by 1% to 89.9 million— the first time the metric has gone up in two years.

By the personal standards of Fred Wilson, Etsy’s board chair, the changes are working out great.

“Most people don’t go to Etsy and enter ‘pizza oven’ into the search field,” Wilson observed in a recent blog post. “As a result, searching on Etsy can be a bit of a ‘hunt and peck’ experience, even as the search on Etsy has improved enormously in the last few years.”

Wilson went on to describe how a new search feature called Etsy Lens has changed that for him. He now photographs interesting objects—in one case, a typewriter he saw in a coffee shop—and searches for similar Etsy listings.

“I see things that I like when I am out and about, use the Etsy app to photograph them, search Etsy for similar things, favorite and curate them in my profile, and then buy the ones I love,” he said. ■