Etsy Is Poised to Shine This Holiday Season

Supply-Chain Woes Could Benefit Etsy

With supply-chain delays threatening the holiday season, retailers, apparel companies, and toy makers could take a hit in the coming months as a result. But Etsy (ETSY), an online marketplace for crafts, gifts, and other items, could benefit. With record numbers of items expected to be out-of-stock this holiday season, consumers are looking for alternative ways to shop.

This trend was already evident in Etsy’s third-quarter results. The company had $3.1 billion in gross merchandise sales, which is up nearly 18% from last year, blowing past Wall Street’s forecast. Net income in the quarter also topped Wall Street views despite the expenses associated with Etsy’s acquisitions of Depop and Elo7, which closed during the quarter. Etsy is projecting revenue to increase 10% year-over-year in the current fourth quarter, which is slightly lower than Wall Street’s forecast.

Is Etsy Being Too Conservative?

While Etsy’s predictions for the holiday quarter are conservative by some Wall Street standards, the online marketplace operator does face tough comparisons with 2020. Last year, revenue nearly doubled compared to 2019 as more buyers and sellers discovered Etsy, many for the first time, during lockdowns.

Etsy is also watching closely to see if strong sales in October mean that consumers began shopping for the holidays earlier than previously. Etsy is incorporating that into its revenue forecast for the fourth quarter, but it is likely that a sizable number of consumers will still wait until closer to the holidays to begin shopping despite warnings of shipping delays.

Alternative Gifts Gain Popularity

Also working in Etsy’s favor is an increasing number of consumers who are interested in buying alternative holiday gifts this year. Instead of scouring the internet and overpaying for new items, 43% of consumers who responded to a recent survey said they would be willing to purchase unique gifts from websites like Etsy and secondhand marketplaces. Consumer confidence is also holding up despite rising inflation and an end to stimulus benefits, which is a positive sign for the holiday shopping season overall.

The nation’s retailers may be bracing for less joy this holiday season thanks to supply-chain snarls and inventory shortages. But for Etsy and the other marketplace operators, it could be a very happy holiday season.

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