Etsy: Breaking Down a Business Mode

Etsy: Breaking Down a Business Mode

Etsy is an e-commerce site that emphases on vintage, handmade and exclusive factory-made products. These items comprise of a variety of products such as furniture, kitchen gadgets, clothing, art, housewares and jewellery. The site website is similar to an open craft fair, where sellers primarily local artisans and small merchants set up an Etsy store and they then sell their products to customers who are composed of individuals who want to purchase unique, typically handmade products from local or small manufacturers. The website was launched in 2005, and by 2013, it had attracted more than 30 million buyers, and approximately one million sellers were registered on the platform. The idea of creating such a platform originated in a woodworking shop. Rob Kalin had graduated from a college with a degree in the classics. However, they avoided the traditional job market to concentrate on his woodworking talents (Barringer & Ireland, 2015). He created a unique product which was a computer enclosed in wood, but he could find a suitable market to sell his product. Therefore, Rob Kalin, Haim Schoppik and Jared Tarbell established Etsy. The website enables artisans and hobbyists from different background to connect with individuals having the desire to purchase handmade products.

Question one

Etsy creates, delivers and captures value for its shareholders through its business model. The business’ mission is to re-imagine commerce in ways that develop a more satisfying and lasting world. The company focuses on developing new ways of shopping which is beneficial to both buyers and sellers. Etsy is an advocate of both artisans and merchants who has been affected by mass production. The organization focuses on helping these businesses grow by providing them with a platform to sell their products. Etsy’s differentiation strategy progressively vital areasfrom the firm’s mission to focus on the sales of handmade goods to the number of registered sellers on the website. Etsy’s points of differentiation have been made possible by its main capabilities and primary assets. From its inception, the organization has been able to provide its sellers with great opportunities and strategies to increase their sales volume through web-based tools, offline events and educational materials (Barringer & Ireland, 2015). The firm has established its business in a way that encourages its sellers to build awareness of Etsy. Every seller has an Etsy store, and when they promote their stores, they also promote Etsy. The organization has two markets which are comprised of its sellers and buyers. The sellers produce handmade products, and the buyers are attracted to the site by their desire to purchase unique products.

Question two

Etsy’s business model is disruptive because the organization uses a strategy for establishing new business markets by improving or making changes to the present business model. The Site has been growing to attract more people by proving social networking functions resembling Facebook’s social networking features. The social networking features of the firm’s website allows users to make friends with other users, and they can keep track of their friend’s purchases and favourite shops. The site also upgraded its site to provide gift services. It suggests products that users may like. In the past, Etsy required sellers to list only products made by themselves and the sales of product produced a mass production service was prohibited. The organization implemented this policy because most of the sellers were small scale entrepreneurs, and they were being protected from stiff competition. However, many small merchants and local artisans were able to grow through continuous sales on the website, and the handmade rule was limiting them. The firm recognized the challenge faced by many sellers, and it decided to permit the selling of factory-made products on its sight. This move was necessary because it provided more opportunities for successful sellers to expand and remain on the site. However, the firm implemented a new restriction on factory-made products stating that they have to be designed by the seller, or they may hire another individual to create the products. However, the seller must disclose information where the product was made (Barringer & Ireland, 2015). Having a disruptive business model enables an organization to address new issues that they face effectively. A standard business model may limit a business because it may not be able to solve the unique problems originating from growth or technological advancements.

Question three

Etsy’s business model is different from eBay’s business model because it chose a narrow domain of craft, art, and handmade products. Etsy is more successful than eBay because the value it provides attracts many customers. Etsy’s business model allows for word of mouth advertising. In the past, Etsy was the only platform that allowed sellers to list handmade products on the site. Etsy stated that mots of the site’s users are women. Therefore, word of mouth advertising in women’s cycles played an essential role in the growth of the website. Etsy has an extended API’s which enables developers to tap into the Etsy’s community and create Etsy-powered application from the web and mobile devices. Many small businesses have utilized this method to sell their merchandise. Esty’s business model encourages the provision of offline support to artists and sellers. The organizations operate workshops for crafters, and they always stick around to provide support to their sellers. In some cases, the organization even give small loans to the crafters.

Question four

The biggest challenge experienced by an organization is its ability to maintain its integrity as it grows. From inception, the organization focused majorly on handmade goods, and it provided opportunities to local merchants and crafters with a chance to meet potential customers through their website. However, many merchants and crafters are successful, and they have grown their business (Barringer & Ireland, 2015). Being that the past organization’s policies did not allow the sales of factory-made products on the website, therefore, if the merchants wanted to remain on the site, they had to stay small and focus on handmade products or grow and leave Etsy. This is a great challenge to the organization because if some merchants leave the website, they may not be able to make a profit and they still want to make profits, they will have to increase the fees and increasing the prices may affect may businesses on the website. The only solution is to ensure that successful merchants are not forced to leave the site, they will have to change their policies and accept factory-made products and formulate procedures to ensure that the products are not produced through any mass production process. This will ensure that the firm grows and attracts many other successful crafters. Changing the sales policies provides everybody with an opportunity to grow because the firm will be able to grow too. Small merchants on the website should understand the situation and work hard to improve to increase their sales volume and growth their businesses.

Reference

Barringer, B. R., & Ireland, R. D. (2015). Entrepreneurship: Successfully launching new ventures. Pearson Education, India.