Etsy Vs Amazon Stock: Which Is Best? - Financhill

Etsy Vs Amazon Stock: Which Is Best?

Etsy Vs Amazon Stock: Which Is Best? Amazon.com, Inc. (NASDAQ:AMZN) is one of the largest companies and stocks in the world. This e-commerce mega-giant has assets in cloud computing, streaming, artificial intelligence, consumer products, and more.

Amazon CEO Jeff Bezos is the richest man in the world by a large margin, with a net worth of $180 billion and rising as of July 8, 2020 – that’s over twice Warren Buffett’s $73 billion fortune. And that even accounts for the $62.3 billion worth of shares given to his ex-wife MacKenzie Scott, who is now the richest woman in the world.

Amazon is one of the biggest whales in the ocean, and Etsy Inc (NASDAQ:ETSY) is a goldfish by comparison, which makes an Amazon vs Etsy comparison almost unfair.

Etsy doesn’t have 150 million paying Prime customers every month nor a physical retail footprint through a Whole Foods acquisition. There are no Etsy vans delivering packages in your neighborhood; the company lacks the supply chain infrastructure of the world’s largest e-commerce site.

Yet over 60 million people flocked to Etsy to buy everything from vintage and handmade furniture to jewelry and facemasks during the 2020 novel coronavirus pandemic.

In fact, the company’s second quarter 2020 earnings report showed 29 million face masks were sold through Etsy shops. It’s one of the most popular online side businesses at a time when unemployment is at historic highs over 10% of the workforce.

So is Etsy a better buy than Amazon?

Is Etsy Stock A Buy?

Etsy was founded in 2005 as an arts and crafts marketplace that soon gained traction and started expanding to provide other offerings.

Despite there being a glut of ecommerce sites at the time (Amazon and Ebay among them), Etsy found a niche by supporting handcrafted and DIY goods.

This niche (along with its loyal fanbase) helped the company to grow to the point that it eventually went public through a 2015 IPO – which valued the company at $3.5 billion.

Unfortunately, the IPO was immediately followed by an investor lawsuit for misinformation given that could affect the price, which soon fell.

Among the allegations was that a percentage of the items being sold on the site infringed on copyrights, trademarks, or patents. It took the company three years to return to the IPO price, but it did clean up its image while larger sellers ramped up production to increase profit margins.

Soon, it had enough money to start acquiring companies like AI startup Blackbird Technologies and music gear marketplace Reverb.

Etsy was already profitable when COVID-19 hit, and it issued a call for sellers to make facemasks to help fight the crisis. This earned it massive profits, tripled its stock value from the start of the year, and highlights a not-so secret weapon Etsy wields that Amazon does not.

What Etsy Does That Amazon Cannot

If you tried to buy an N95 mask on Amazon during the coronavirus crisis, you know they were sold out along with isopropyl alcohol, Lysol disinfectant spray, hand sanitizer, and other necessary supplies.

The entire supply chain felt the strain as panic shopping cleared shelves in grocery stores around the nation and even Amazon’s Prime warehouse network was emptied of certain necessities in April 2020.

By August, those masks are still hard to find on Amazon, and public mask mandates meant everybody needed to find a way to cover their faces. This global crisis created a distributed workforce of 110,000 individuals and small businesses who answered the call and created a plethora of custom cloth masks on Etsy.

This handcrafted marketplace beat every major retailer to the punch in reacting to the changing marketplace. That’s something Amazon simply cannot do.

In fact, Amazon is fighting accusations that it’s manipulating its marketplace to squeeze its own sellers out. Amazon has a very strained relationship with its third-party sellers, contracted delivery force, even its own employees.

Some major brands, like Birkenstock and Ikea, have even left the platform. Even if they stayed, factory shutdowns would’ve made it impossible to keep up with the work-from-home army manning Etsy stores. And Amazon’s attempts to launch its own Amazon Handmade store hasn’t taken any of Etsy’s shine.

Etsy thus far doesn’t have the negative image Amazon gained in the media. Its work culture is based on human connections and crafting, and its corporate offices show this with regular instructional classes.

And its dedicated workforce of independent sellers are profiting right alongside the company with little fear of their designs being stolen by the hosting marketplace. Etsy even helps makers partner with manufacturers for an unparalleled experience.

Will Etsy Be Acquired by Amazon?

Although a comparably small fish, Amazon has definitely noticed Etsy, as evidenced by the creation of Amazon Handmade in 2015.

The company even references Etsy to compare its fee structure within Seller Central, and many analysts at the time considered this to be a death blow for the marketplace.

Not only has it not been phased, but it even flourished without the need of executing on an exit strategy.

Etsy itself has acquired several companies mentioned above using revenues that have been increasing each year. In 2019, the company earned $818.79 million, up from the $604 million it earned in 2018.

Its shops sold over $346 million worth of masks during the second quarter of 2020 alone. These sales will certainly not sustain, but it’s a good bet an Etsy seller somewhere will be prepared for the next trend.

Not only is Etsy not looking to sell, but it’s likely going to continue buying emerging marketplaces that help it grow its footprint.

Amazon vs Etsy Stock: The Bottom Line

Etsy is nowhere near the behemoth Amazon is, but it’s not a small business either. This public stock has been around the block, and it wasn’t fazed by Bezos and company’s attempts at muscling into its target demographic. Instead, the company is flourishing on its own and proving ecommerce can exist outside Amazon.

Millions of new visitors flocked to Etsy during the coronavirus crisis, and leadership is hoping it can turn as many of those people as possible into repeat customers. If successful, the company could become a retail and internet powerhouse.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.

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