Etsy: Masters of the Long Tail

Etsy has announced in the past week that it is ready to go public and cash in on the huge success it has had in recent years, to the tune of a whopping $300m – the biggest New York tech IPO since 1999 (http://fortune.com/2015/01/14/etsy-ready-for-its-public-debut/). Etsy is a peer-to-peer e-commerce site for the transaction of handmade and vintage goods, and has gone from strength to strength since it’s inception in 2005. It is the perfect example of a strategy built on the Long Tail.

Credit: Etsy Blog
Credit: Etsy Blog

Chris Anderson’s pioneering WIRED article in 2004 (http://archive.wired.com/wired/archive/12.10/tail.html) spoke at length about the ability of the internet to fulfil unlimited demand by offering variety on a scale never seen before. This choice can be made available at an extremely low marginal cost of adding each additional item to a website. These effects have already seen huge impact in the music and publishing industries, with Amazon recording over half of it’s book sales outside it’s top 500. Anderson believes this is the strategy of the internet age, and Etsy has turned the handmade items market on it’s head by utilising the Long Tail on an international scale.

Previously, the vintage and handmade market has been hugely hindered by geographical constraints. Customers could only access handmade clothes and items in their vicinity through markets or local suppliers. If you were a vintage fan outside of Shoreditch, much of your demand was left frustrated. Etsy aggregates these suppliers to tap into these willing customers, bringing the best talent around the world to produce beautiful products to consumers.

Etsy Seller TopHome's store
Etsy Seller TopHome’s store

For example, take the ‘TopHome’ store (https://www.etsy.com/uk/shop/TopHome). TopHome, run by creator Clint, specialises in handmade wool accessories for technology products like iPads and MacBooks. These beautiful items have taken off since being involved with Etsy – selling 6,197 items, with 1,524 5* reviews and 4,514 admirers. They are the perfect example of a creator who has been able to tap into a huge amount of demand due to the power of Etsy and their Long Tail strategy, that otherwise would have been left unfulfilled.

Crucially, Etsy has managed it’s reputation for high-quality items well, and trust remains from it’s faithful customers. The challenge following this IPO will be to maintain this brand equity as the company continues to expand, and comes into contact with different cultures. If carefully managed, it should add to the variety and choice of handmade and vintage items that Etsy customers crave.

The strategy of utilising the Long Tail is not for all e-commerce companies – it is well suited to industries where novelty is key, such as fashion and music. But expanding variety and choice has strong potential to help e-commerce sites fulfil demand and achieve explosive growth.

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