Etsy sales skyrocket, bigger story than 'just masks': Etsy CEO

Etsy posted a mixed first quarter earnings report amid the coronavirus pandemic. Etsy CEO Josh Silverman joins Yahoo Finance’s On The Move to break down the latest earnings report and discuss the surge the company has seen is mask sales during the Covid-19 pandemic.

Video Transcript

JULIE HYMAN: Etsy reported its numbers after the close of trading yesterday. Consolidated gross merchandise sales up over 32% year over year to $1.4 billion. Sales overall up 35%. And there were an awful lot of people buying masks on Etsy. The CEO Josh Silverman is joining us right now.

So 12 million masks is what you guys sold, $133 million worth of gross merchandise sales for you guys. How did this evolve? Was it something where your sellers just saw that there was a need for these and started making them like crazy? Or is there something that you also did from your side, encouraging sellers to make them?

JOSH SILVERMAN: Yeah, I think it's a great testament to the dynamism of the Etsy marketplace, both the Etsy sellers and the Etsy team. So in the first couple of days of April, the CDC changed its guidelines and recommended that Americans wear fabric face masks. And we effectively woke up to discover traffic that was similar to cyber Monday. But everyone in the world wanted only one product, which is a fabric face mask. And that's a product that's in incredibly limited supply at that time.

And so we needed to change many things in hours. We needed to change our search engine within hours, because at that moment if you searched for masks, we were delivering Halloween masks and face cream, which is what masks had always meant to our search engine before. But within 12 hours we changed our search engine and retrained it to mean fabric face masks.

And then we had-- that-- that earned us one of the top couple spots in Google SEO, which served us incredibly well through all of the month of April and into May. But we also then needed to recruit sellers. So within two weeks, we had recruited over 20,000 sellers. And at this point there's over 60,000 Sellers that are making and selling masks on Etsy. And we continue to sell hundreds of thousands of masks per day.

And you know, whether masks continue to be a really hot product on Etsy or not, we'll see in the months to come. But I do think it really highlights just how dynamic Etsy can be. You know, the Ford Motor Company can't turn on a dime to start producing, you know, thousands of ventilators in days. But we were producing-- our sellers were producing hundreds of thousands of masks within days. And we think that's exciting.

I also do want to point out that non-mask sales in the month of April were up 79% year over year. So the story of April is much bigger than just the story of masks.

ADAM SHAPIRO: Hey, Josh, it's Adam. Good to have you here. One other part of this story, though, is that you've had to invest $11 to $13 million to help the seller community. As we go forward, as the economy starts to open up, will you continue that kind of investment? And what-- what are you hearing from those sellers about the business you just reference without the masks?

JOSH SILVERMAN: Yeah, we think now more than ever, it's really important that we have our sellers' backs. And so we did invest between $11 and $13 million, almost all in the second quarter, in the form of fee waivers. So we did not charge them for off-site advertising for a little over a month. We waived fees on the first 100 listings for face masks. And then we waived fees for a set of other sellers who have been particularly hard hit as well.

And we think that, you know, having our sellers' back is a lot of what we-- what we're about. Many sellers on Etsy are really thriving now. And you know, in almost every category, sellers on Etsy are really doing very, very well. But there are some categories that have still been really hard hit, like with the weddings category. Weddings would normally be a really big deal on Etsy. And weddings are down over 50% year over year, wedding-related purchases.

So you know, we'll have to see what that investment level would look like in the months to come. But we do think it's important that we have our sellers' back.

JULIE HYMAN: Josh, to get back to the mass question for a moment, I'm curious about shipping, because I know that's something where you have supported sellers as well. There is shipping-- free shipping for orders over $35. And in some cases you've helped the sellers to provide that. But what do you do about speed in this environment. I mean, when you have a giant like Amazon that's also delaying shipments of some items, have there been delay issues with people getting the masks quickly, because there is, in some cases, a fairly urgent need here if people want to go out of the house and run various errands?

JOSH SILVERMAN: Yeah, such a great question. And it again speaks to the hard work that the team has done at Etsy. So not only did we change our search engine so that the definition of fabric face masks was right. But we've worked really hard to distribute demand across all of these sellers because, you know, one seller could get thousands of sales in a day. But then it would take them a long time to be able to fulfill those orders.

So we've modified our search engine so that demand gets really distributed across all of these tens of thousands of sellers. And as a result there are fabric face masks available today on Etsy which are both stylish and ready to ship right away. And we're tracking shipment times really carefully

DAN HOWLEY: I just want to touch on the idea of price gouging and potentially having nefarious actors sell through Etsy. You know, that was a problem on Amazon, where they had to crack down on people selling, on Facebook marketplace, same thing, selling surgical masks, not trying to make a profit on that. How do you ensure that your sellers don't do something along those lines? And how do you ensure they're not price gouging?

JOSH SILVERMAN: So important. And we've been paying such close attention to that from the very beginning. So our trust and safety team has been working 24/7, screening all of these sellers to make sure that they're legitimate, that they're not committing fraud, and that they're not price gouging. And so it's something that we've paid very close attention to. And we're really proud of the buying experience on Etsy.

We're also paying very close attention to make sure that people aren't making medical claims. We're not claiming that fabric face masks will protect you from COVID. And that's very clear on the site. And we also don't allow sellers to make medical claims that are overreaching. All we're doing is reflecting what the CDC itself recommends.

MELODY HAHM: Hey, Josh, melody here. So back to see you. Thanks for chatting with us today. I know you acquired Reverb last year, which is a used and new music kind of paraphernalia marketplace. When you think about, you know, the wedding industry was hit. Obviously, you see this momentary surge in masks. Are you seeing some interesting niche areas getting a lot of traffic that perhaps you may be surprised by yourself?

JOSH SILVERMAN: Yeah, so let's talk about Reverb for a second. Reverb's sales in the month of April were up 50% year over year. So it's also seeing tremendous strength in many of the same ways that Etsy is. So people are taking up a musical instrument while they're sequestered at home. And you know, the retail shops are closed. And even many online places can't ship right now because they can't bring people into a logistics facility. But because Reverb, like Etsy, is a two-sided marketplace, the seller is shipping directly from their home.

So Reverb is very much open for business and is shipping and is gaining a lot of market share and is delighting customers. And people are turning to Reverb, learning about Reverb, and having a great experience. And we hope and think that that's going to be lasting.

That's true on Etsy as well. So I do want to say again, you know, non-mask sales on Etsy are up 79% year over year in spite of the fact that weddings, one of our traditionally biggest categories this time of year, is down more than 50%. So many categories like home and living, things you do to nest are doing really well right now. Gardening supplies are doing really well. Craft projects you can do with your kids are doing really well. Self-care, things like soaps and creams and things to sort of pamper yourself a little bit, all of those categories are doing super well on Etsy.

And we think a lot of people are trying Etsy either for the first time, or they haven't been back in a little while and trying us for categories they hadn't tried us in before. And they're having a great experience. And so we think that this is something that could be a real moment for Etsy.

JULIE HYMAN: I'm still feeling inadequate that I haven't taken up a musical instrument during this period. Josh Silverman, thank you very much for joining us. Josh is the CEO of Etsy. It's good to see you. be well.

JOSH SILVERMAN: Thank you.

JULIE HYMAN: Thank you.