The fundamental value Etsy marketplace brought to sellers when it launched in 2005 was discoverability. At the time, being an artisan meant having very limited reach to the sea of customers. Today though Etsy found itself in a tough position - it has clearly already maximized opportunities in the handmade and vintage market. Etsy set expectations for sales growth it is now struggling to meet.
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The unique idea powering marketplaces is the hiding of complexity in picking a retailer. Instead of a customer spending time to find the best deal, and the best shipping option, a marketplace like Amazon suggest the best one. But we think this can be taken even further - a marketplace which hides the complexity of picking a product.
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Walmart marketplace launched all the way back in 2009. But the marketplace wasn't resulting in the only thing which mattered - sales growth. So Walmart went out and acquired Jet.com for $3.3b to bring in new talent and have the founder Marc Lore run Walmart's e-commerce. In many ways Jet.com acquisition happened because everything done before that wasn't working, marketplace included.
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Amazon has so far done really well by launching generic products - products which do not depend on a brand. Batteries, cables, other electronics are a good examples of this. But Amazon hasn't yet figured out how to build brands. Sales of Lark & Ro apparel products are growing, but likely a lot of this is driven by search optimization and Amazon prioritizing own products.
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Last week Amazon reported great 2017 Q1 results, stating that "Net sales increased 23% to $35.7 billion in the first quarter, compared with $29.1 billion in first quarter 2016". But the net sales figure hides the true size of Amazon - Amazon has far bigger reach in retail than commonly understood.
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Yesterday Amazon released their 2017 Q1 results. For the first time Amazon reported quarterly revenues for marketplace seller services, showcasing the importance of the services it provides for marketplace sellers. Last time it broke out a new category was Amazon Web Services (AWS).
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On April 25th Etsy officially launched the previously announced Etsy Studio, a marketplace dedicated to craft supplies. Craft supplies is a big category, they already have sellers for it, and thus Etsy Studio will go from a new idea to a multi-million marketplace in a matter of weeks. We think it is a very smart move.
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Effective March 1st, 2017 there were two major changes which affected books sellers. To understand how this affected the market we looked at sales by books sellers on both Amazon and eBay and how it changed over time.
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At least 55 cents of every new dollar spent in US e-commerce is on Amazon, and analysts estimate that by 2021 Amazon will account for more than 50% of all US e-commerce spending. We think e-commerce business which fail to realize where the market is heading are going to waste a lot of resources trying to compete in a market they cannot win. Un-Amazon-Able are the only brands and e-commerce businesses that will be able to survive Amazon's growing e-commerce presence.
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eBay's future, at least in public, has been about structured data, new user experience development and efforts around AI and machine learning. eBay has been talking about the structured data initiative since at least the start of 2015, so it's been two years, and there isn't yet much to show for it. We think the biggest issue with the structured data initiative is it is taking too long.
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