Panic At Etsy: CEO Fired and Stocks Falling

Posted by on May 3, 2017 in Copywriting | 11 comments

Panic At Etsy:  CEO Fired and Stocks Falling

If you follow my blog, then you know I’ve discussed the importance of emotional headlines in blogs.  This blog is one such example.  You may or may not have heard that the, now former, CEO of Etsy Chad Dickerson was recently fired.  This news was announced earlier this week and it sent the Etsy community spiraling into panic.  It’s not uncommon for us to get concerned when we hear of algorithm testing, so it’s only natural for us to react with a certain degree of fear when we hear about a shake-up this big.  What does it mean, though?  Let’s examine what we know and throw out the supposition.

We know that as of today, May 3rd, 2017, Dickerson has been replaced with a new CEO, Josh Silverman.

We know that Dickerson did not publicly fight against his removal from power and released the following statement:

“The Board decided that it was time for new leadership to take Etsy forward and I support that decision. … I have the greatest degree of confidence in the long-term growth opportunities for Etsy under Josh’s leadership. I wish the company and the community the greatest success and look forward to supporting the global community of Etsy sellers as a regular buyer after the transition.”

We know that immediately following this announcement at the Q1 2017 meeting, Etsy stock fell 14%.

This is obviously big news, but what does it mean for sellers and buyers that use the platform daily?  Business Wire published an article detailing some of the more nuanced issues that have been playing out behind the scenes.  If you’d like to read the full article in its entirety, which I always recommend that you do, you may do so here:

Black And White Capital Calls for Changes at Etsy

The main points of the article are simple:

Black-And-White-Capital LP own approximately 2% of all Etsy shares (approximately 2 million) and they have not been pleased with the performance of the selling platform since taking on this investment. They cite concern with the overall value of each share dropping 33% on average since going public and put together a list of critical issues they want to see resolved immediately:

1. Steep deceleration of gross merchandise sales (“GMS”) growth, which is even more alarming considering the macro e-commerce tailwinds Etsy is failing to capitalize on

2. Areas for operational improvements

3. Poor corporate governance, including the need to immediately separate the Chairman and CEO roles
Necessity of exploring strategic alternatives in order to maximize value for all shareholders

What I find to be the most interesting, and relevant to my Etsy shop frankly, is their concerns with the current search algorithm. I don’t have to tell you how frustrating it is to research SEO practices only to come up with less than ideal views, favorites, and then sales. You know it. I know it. The sellers have been clamoring for improvements for years. These are the big areas identified by Black-And-White-Capital LP:

Several factors have contributed to the deceleration in Etsy’s GMS growth, including the Company’s horrendous search functionality. Widespread problems that are depressing the current conversion rate of Etsy’s significant traffic include:

Etsy’s search algorithm is not optimized for conversion

It is black-and-white’s understanding that Etsy’s current search algorithm is scored to favor new sellers and other factors instead of trying to deliver the listings that are most likely to convert, leaving its marketplace drastically under-monetized. This is in stark contrast to other comparable online marketplace practices.

Autocorrect and/or spellcheck features for misspelled words lack breadth
Many misspelled words yield null results

A surprisingly low level of critical relevancy, even irrelevant, search results

While there is still much to be determined, I think a modicum of discomfort is appropriate for these developments. I still advocate for diversifying all business platforms which means don’t rely solely on your Etsy shop for income. Create a website. Create a Facebook page or group. Consider alternative third party platforms like Shopify or eBay if they are appropriate for your target audience.

Consider the alternatives.

We know a little bit, but hopefully over the next few weeks we’ll know more. In the meantime, you have my promise that I will keep you updated.

11 Comments

  1. 7-20-2017

    Etsy definitely needs to go back to their roots. It was an easy to use format for both buyer and seller. If Etsy needs to raise rates to make a profit – do so. My mailing rates have gone up 5 or 6 times in the 4 years I’ve been with Etsy – I still make money on my sales.
    Sellers are creators not computer geeks. It takes 30 minutes for me to post new items w/o the goofy changes Etsy made this spring. The cosmetic changes that were made are counter productive not an asset. The stat pages are slow and ridiculous – give us back old stats that were meaningful. Also maybe sell in 3 or 4 categories: Handmade/Vintage, Manufactured, and Supplies

  2. 5-24-2017

    Correction I have worked very hard on my shop and have spent a lot of time and care with that. I wish Etsy had taken my endeavor as seriously as I had.

  3. 5-24-2017

    I have become very disillusioned in the last month or so with Etsy. My sales were just starting to increase on a steady basis and I invested in a new kiln to help create pieces that were larger and more complex. In March the sales became sporadic. In May they stopped . What is peculiar to me is that I have almost no visits to the site anymore. I knew there were something odd today however when I found I had been billed for several promoted listing clicks and yet over the course of the day the statistics indicated that none of my listings had been viewed. Now I am wondering whether my work is being shown at all anymore or if I am just being charged to think that my work is being shown. I have worked very hard on my shop and have spent a lot of time and care with that. I wish I had taken my endeavor as seriously as I had.

  4. 5-10-2017

    I am excited to see these serious issues being addressed, and hope to see major changes to the search engine very soon. I was never a top seller, but I was improving until last March when everything bottomed out.

    Thanks for keeping us Etsy sellers informed!

  5. 5-9-2017

    The new CEO has a huge task to undertake that frankly I am not sure he can right this sinking ship. I am a top 300 seller on the website and had enough. We sell on average $15-16,000 and up a month and we are planning on leaving . I see as of this more alexa.co has etsy down over 28% from one year ago. I see this as a continuing trend. Etsy continues to drive off sellers, even top seller such as myself. In our case we are restarting our ebay store and will be channeling our huge list of buyers to ebay instead.
    I am sure they plan to split apart the site making supplies on the new “Studio” platform. Supply sellers are the greatest drivers of revenue and nearly all the top sellers. I am sure etsy is dividing the site so they can charge store subscription fees ,etc. While I don’t care about absorbing these fees I do care that so far I find it even more difficult to navigate that the old etsy. Also less personal relationship with a store owner . . I believe they are in the testing stages of the new studio concept but without a doubt they will split apart the formats in order to raise more revenue . Personally I believe this will lead to far few sales as the buyers wont search in individual stores as much to add items to a cart. With dying user ship we have decided to place our efforts back into ebay where we had a very thriving shop before we “moved” to etsy in 2008.

  6. 5-4-2017

    Wow! I missed this announcement. I have been so busy with life, that it is hard to keep up with the changes…..Thanks for the information…I truly appreciate it!

  7. 5-3-2017

    Reading this I am not surprised. I think the top ought to read “Start with Why” by Simon Sinek and get back to WHY they started this platform in the first place.

  8. 5-3-2017

    Great article and I appreciate your thoughts…reassuring yet frustrating to know that Etsy & investors were aware of issues and let sellers struggle. Sure admins offered tips but after many hours spent editing photos, listings & views; using Promoted Ads; renewing & listing new items; marketing on social media to still have mediocre views makes one wonder why.

  9. 5-3-2017

    One of the things I would like to see happen in this potentiallu positive shift in leadership is that Josh Silverman actually ASKS Etsy shop owners what works and what doesn’t work on their behalf. So many have left Etsy for other sites simply because the practices were allegedly working on behalf of Etsy but not benefiting shop owners. Now we find out that they weren’t even benefiting Etsy!

    Chad Dickerson made a very poor decision when he allowed manufactured items into Etsy and began to favor those shops over ones with beautifully handcrafted items (on which Etsy built its unique reputation). The other day, out of curiosity, I did a search for Mother’s Day gifts and was shocked to discover that the first 7 pages (I went no further) were 95% mass produced items. Each page might have had 1-2 handmade items. This is not only shocking, it is close to malpractice in that Etsy isn’t seving those of us who have built it into what it is, both by running our shops and by purchasing from others.

    Etsy needs to return to its roots and build upward again on what it once did best: providing a marketplace for lovely artisan arts and crafts.No more of this crap anyone can string on a chain or buy at WalMart.

    Another bad decision is that Etsy changes it algorithm at the worst times of the year for its artisan sellers. In 2016, they made a major change in late September, just as we were heading into prime selling season for the holidays. This required a major update of all tags and titles so that we, the sellers, were forced to do this just as we should have been marketing for the season. It was awful.

    And it takes forever when they DO make changes for sellers to find out how to respond to them, which is an absolute waste of time for shop owners whose items languish while we try to figure out what the changes are and how to catch up with them.

    My STRONG suggestion to Josh Silverman: Plan on one major change a year, provide shops with information about the changes and what they need to do to stay relevant, and support the he** out of their faithful shop owners while we do this. It seems inconceivable to me that this simple business practice has been ignored. It’s almost as if Etsy has wanted shop owners to fail.

    I can’t begin to count the hours spent in trying to figure out what Etsy’s doing next. And why? Why is it so hard to understand that, if they help shop owners instead of thwarting us, everyone wins?

    It seems to me this would be an excellent time for a survey of shop owners. It’s either listen to us and collaborate with us, or watch us exit en masse.

    I’m fortunate to have diversified as you suggest. I sell as much on Facebook as I do on Etsy, and DESPITE Etsy’s practices, I have managed through my own daily efforts to sell reasonably well on Etsy. I have a good base of faithful, returning customers I don’t want to lose by leaving Etsy. I want to stay and help them think through strategies that will lure many of the shops who have left back to the fold.

    I hope they want that too.

    Meredith Jordan
    Wild Woman Beads

    • 5-3-2017

      Meredith, I just wanted to say Yes! I hope Etsy wakes up and goes back to their roots. I believe if a company needs to have manufacturers to meet their demand then that company has outgrown etsy and should be on a different platform.

    • 5-3-2017

      EXCELLENT. I could not have said it better. I hope the new CEO will read this

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