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Etsy runs an online marketplace where independent sellers list handmade, vintage, and craft goods, and it earns money mainly by taking a cut of each sale.
Etsy is an online marketplace where independent sellers list things they make themselves, vintage items, and craft supplies, and buyers come to browse and purchase from them. It is not a store that owns inventory. It is the middleman that hosts the listings, handles the technology, and connects millions of small sellers with shoppers who want something other than mass-produced stuff from a big-box retailer.
The way Etsy makes money is mostly by taking a cut of each sale. Sellers pay a small fee to list an item, then a transaction fee when it sells, plus a payment-processing fee to handle the money. Etsy also sells ads that push a seller's products up in search results, and that advertising business has become a big and fast-growing part of the company. Customers choose Etsy because it offers things you cannot easily find elsewhere — a specific handmade gift, a vintage find, a personalized item — and sellers choose it because it gives them a ready-made storefront and a built-in audience without building their own website. The company is based in Brooklyn, New York, and it went public on the NASDAQ in 2015. A turning point came during the pandemic, when locked-down shoppers flooded the site and revenue jumped sharply. That surge faded as people went back to normal life, and growth slowed, which forced Etsy to focus on efficiency. It has also grown by acquisition, buying the musical-instrument marketplace Reverb and the fashion resale site Depop, though Depop was later sold off. The core Etsy marketplace still pays for most of the business.
Etsy's strength is its distinct identity — the "handmade" brand is hard to copy, and it has a loyal base of repeat buyers. Its vulnerability is that it depends on people spending on discretionary, often non-essential items, so a weak economy hurts it. It also faces competition from Amazon's handmade section, from Shopify, which lets sellers build their own stores, and from resale and craft marketplaces. Etsy has used its cash to buy back shares in recent years, and it has faced pressure over how much it charges sellers and how much of its marketplace is now advertising rather than pure selling fees.
Saved answer · last researched 21 Oct 2026