Why 85% of Buyers Trust This Platform—and What It Means for Long-Term Investors
Discover how international buyers are contributing nearly 26% of total sales—and where the next big opportunity lies.
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INTRODUCTION
I want to share with you a surprising story of a fast-growing online marketplace that has quietly reshaped how people buy and sell unique goods. Imagine a platform where you can find over 100 million one-of-a-kind items—everything from handmade home décor to personalized jewelry—often crafted by individual entrepreneurs who pour their creativity into every piece. Last year alone, this marketplace processed billions of dollars in transactions, yet it remains under many investors’ radars. I’m going to show you why its community-driven approach, powerful search tools, and international reach could give it an edge in today’s crowded e-commerce space. One key data point I find especially impressive is that nearly 30% of the total sales come from custom or made-to-order products, which not only command higher prices but also drive deeper loyalty among buyers. There’s also an intriguing trust factor at play—more than 85% of surveyed buyers associate this platform with genuine craftsmanship and small-business support, which has major implications for growth. By the end of our conversation, you’ll see exactly how this platform’s competitive advantages fit together like a puzzle, and I promise you’ll walk away feeling more confident and better informed.
Now, let’s dive in step by step. I’ll start by exploring the incredible variety of products on offer, then reveal how the brand’s reputation sets it apart. We’ll also look at the strength of its global community of sellers, the advanced technology driving personalization, and how international expansion is unfolding. Along the way, I’ll share the platform’s name, but only after we’ve built a solid foundation for why it matters. Let’s begin.
1. THE MAGIC OF A WIDE PRODUCT RANGE
One thing that immediately stands out is the platform’s focus on distinctive and handcrafted merchandise. I’ve never seen so many custom-made, one-of-a-kind products in a single online marketplace, and that’s not an accident. Roughly 100 million listings were active at the end of 2024, covering categories like home décor, jewelry, apparel, craft supplies, paper goods, toys, and games. What’s striking is that 87% of the platform’s annual Gross Merchandise Sales (GMS) come from just six main categories, with homeware alone driving around $3.2 billion in sales, or about 29.4% of total marketplace volume. Jewelry pulls in another $1.8 billion, and apparel sits at $1.5 billion.
At first, I couldn’t figure out how this online hub managed to stand out when so many others struggle with commoditization. Then I noticed something else: about 30% of the total GMS, which equates to more than $3.2 billion, comes specifically from custom or made-to-order goods. These tend to have a 15–20% higher average order value, which means buyers are willing to pay a premium for personalization. That premium trickles down into higher transaction fees and extra revenue from offsite advertising when these items get promoted on third-party sites.
Sellers on this platform pay a 6.5% transaction fee on each sale, plus a $0.20 listing fee, and some also opt into 12–15%offsite advertising fees if a sale is driven by external ads. Many sellers pay for optional in-platform ads too. Thanks to all of that, the company’s revenue engine is powered by consistent fee streams from a massive variety of truly distinct products. The sheer diversity of items encourages more browsing, repeat visits, and larger baskets—because you never quite know what treasure you’ll find next.
Let me finally reveal who we’re talking about: it’s Etsy, a name that has become almost synonymous with handmade, creative, and personalized shopping. Yet, despite its growing popularity, Etsy still feels like it’s only scratched the surface of its potential. In 2024, its marketplace GMS was about $10.9 billion, but when factoring in other business segments, total GMS reached $12.6 billion. Much of that success is linked to the unique product selection that separates Etsy from giants like Amazon and eBay.
2. THE VALUE OF TRUST
Trust is a big deal in e-commerce. While most online sellers compete primarily on price and speed, Etsy does something different: it builds a reputation for authenticity and conscious shopping. From internal surveys conducted in 2024, I learned that 85% of buyers associate Etsy with genuine handmade craftsmanship, 78% feel good about supporting small businesses, and 73% say the platform’s emphasis on ethical sourcing and sustainability keeps them coming back.
Because of these perceptions, Etsy attracts buyers who aren’t just looking for bargains; they want meaningful products tied to real people. That consumer mindset leads to a higher likelihood of repeat purchases and a willingness to pay slightly more in fees or shipping for items that feel special. What struck me is that 79% of Etsy’s total GMS comes from organic channels—people visiting the site directly or searching for it by name. That reduces overall marketing costs and boosts margins. Sellers, meanwhile, accept the 6.5% transaction fee because they’re tapping into a customer base that’s ready to buy and values creativity over cheaper, mass-produced alternatives.
Etsy also introduced the Purchase Protection Program, which covers eligible sellers for up to $250 if orders arrive damaged or late. Knowing that the marketplace actively backs them in disputes gives sellers more confidence to invest time and money into their shops. At the same time, the newly updated “Creativity Standards” ensure that every product is either made, designed, handpicked, or responsibly sourced by the seller. That keeps the marketplace aligned with its ethos and preserves the trust that’s been cultivated over the years.
This brand identity contrasts sharply with that of bigger platforms. In a 2024 consumer survey that ranked trust, Etsy earned an 85% score, while Amazon got 68%, eBay reached 62%, and ThredUp scored 75%. For investors, that trust advantage is a goldmine. It allows Etsy to sustain premium fees, reduce reliance on paid advertising, and encourage sellers to grow their businesses on the platform rather than looking elsewhere.
3. A COMMUNITY OF SELLERS
No online marketplace thrives without engaged sellers, and Etsy is no exception. As of December 31, 2024, there were 8.1 million active sellers on the platform, an 8% jump from the previous year. About 65% of these entrepreneurs are in the United States, with another 10% in the United Kingdom and smaller but growing numbers in Germany, Canada, Australia, and France. Each active seller does around $1,350 in annual GMS on average, although the top 10% account for about 50% of total sales, demonstrating a power-law dynamic where some star sellers bring in significant volume.
This community aspect drives a virtuous cycle: more sellers listing unique items means more shopper curiosity and, in turn, more sales opportunities. That leads to more transaction and listing fees collected by Etsy, plus potential offsite ad fees if sellers choose external promotions. With around 100 million active listings at any given time, Etsy is raking in at least $20 million annually just from listing fees alone. Add the 6.5% slice of $10.9 billion in marketplace GMS—roughly $708.5 million—and you begin to see how vital seller contributions are.
One thing I hear from sellers is that they appreciate the educational resources Etsy offers, like tips on search optimization, photography, and pricing. The Purchase Protection policy also reassures them they won’t be left hanging if something goes wrong with an order. And because the overall brand stands for “Conscious Shopping,” buyers often specifically seek out smaller shops that reflect the personal touch they can’t get on big-box sites. All of this keeps sellers loyal: about 68% renewed their listings at least once in 2024.
4. AI-POWERED PERSONALIZATION
As Etsy grew, simply connecting buyers and sellers with basic keyword search was no longer enough. The company needed to make discovery smoother and faster. That’s where advanced AI and machine learning came in. You may have noticed how your own searches on Etsy quickly get tailored to your tastes. That’s the result of neural information retrieval paired with relational search engines, which interpret not only your explicit words but also your browsing patterns, time spent on certain products, and even your interactions with specific shops.
In 2024, Etsy re-trained its algorithms to prioritize high-quality listings and to diversify the search results. I read that 42%of the marketplace’s GMS now originates from the Buy on Etsy (BOE) app, which has a higher conversion rate than the website. This makes sense because Etsy can push personalized notifications to people’s phones, reminding them of items they favorited or showcasing new, similar offerings from sellers they like. That personalization has helped drive a 16% improvement in overall conversion rate compared to the previous year, up from 3.1% to 3.6%.
Because buyers see more relevant products, 25% of total sales conversions now come directly from AI-powered recommendations. That’s a big deal for revenue. More conversions mean more fees from each transaction, and the integrated ad system sees higher click-through rates, generating extra income for Etsy. The average order value even went up by about 9%, reaching $39.80. On top of that, repeat-buyer retention rose from 40% to 45%, which signals that these AI tools are pulling people in for more frequent purchases.
5. GLOBAL EXPANSION
Etsy’s growth isn’t just confined to the U.S. I’m impressed that 26% of its total GMS in 2024—around $3.28 billion—came from international buyers, with the UK, Germany, Canada, France, and Australia leading the way. While the United States still provides 60% of total buyers and 74% of the GMS, the company is quickly expanding its reach. Interestingly, non-U.S. marketplace GMS growth outpaced the U.S. by about 5 percentage points in 2024.
That’s an important detail. A bigger global footprint reduces dependency on one market and opens up opportunities for cross-border transactions, which can carry slightly higher fees or currency conversion advantages. I noticed that Etsy has focused on tailoring its platform to different regions, including more localized payment methods and multi-language support. It’s also pushing into Western Europe with improved shipping integrations and marketing campaigns that highlight the handmade nature of the products.
Of course, global expansion brings challenges. Currency volatility, VAT regulations, and compliance with policies like GDPR can create friction. Local e-commerce platforms also pose competition in certain countries. Yet the upside is significant. Etsy can keep fine-tuning its technology so that a German buyer finds exactly the kind of handcrafted décor they need, or a French shopper discovers personalized wedding invitations from a seller halfway around the world. Because 26% of the GMS is already international—and likely to grow—this has become a key driver of the company’s future.
CONCLUSION
Now that we’ve walked through the platform’s unique strengths, I want to tie everything together and show you just how interdependent these advantages are. You’ve seen how over 100 million creative listings and a whopping 30% of them being custom help the company capture higher fees and retain enthusiastic buyers. You’ve also seen how 85% of surveyed consumers trust the brand for its focus on handmade, small-business support, and ethical sourcing, which pushes a large portion of sales through organic channels.
I hope you feel you’ve uncovered critical insights about why Etsy continues to thrive. It’s not just one edge; it’s five tightly woven advantages that produce a $12.6 billion GMS engine: the platform’s massive product variety, brand trust, strong community of 8.1 million sellers, sophisticated AI personalization, and a growing international presence. Each piece adds momentum to the rest, securing Etsy’s position as a leader in the realm of creative e-commerce.
You and I both know that true understanding leads to rational, profitable investing decisions. By reading about Etsy’s approach today, you’ve sharpened your knowledge and added another layer to the mental database you’re building. This ongoing accumulation of insights compounds over time—week by week, month by month—equipping you to compare businesses with greater clarity and confidence. I appreciate you joining me for this deep dive, and I trust you feel more empowered and ready to make informed choices in your investment journey. Keep exploring, keep analyzing, and let’s stay ahead of the curve together.
Let’s keep sharpening your edge, one business model at a time.
See you tomorrow.
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Etsy was a huge covid beneficiary, but there is no way to know what part of the incredible GMV growth they experienced at the time is real versus just Temu sellers. They are taking the right steps to restore quality but it will take time and until the GMV is "clean" I would stay away.
Fantastic letter, a big thanks for highlighting this coverage and giving such thorough analysis.