Impact Update (Published August 2018)

Impact Update (Published August 2018)

1IntroductionContents135791113IntroductionKeeping Commerce HumanInside the world of EtsyPositive impactDriving a positive impactThe story of how wecreate valueKeeping Commerce HumanEtsy, Inc.Behind the scenes: Etsypeople making Etsy workCommitted to diversityand inclusionEcosystem15 Our ecosystem17 A resilient business—and planet19 Our path to 100%renewable electricity20 The bigger pictureSellersEtsy sellers: Changing livesthrough creativity23 Forces of imagination2125BuyersEtsy buyers: Bringing“special” to lifeThe details27 Transparency Report29 The Etsy approachto business30 About this reportPositiveimpactEtsy, Inc.EcosystemSellersBuyersThe detailsImpact Update2KeepingCommerce HumanAt the very heart of Etsy is our mission: KeepCommerce Human. This mission is rooted inour belief that, although automation and massproduction are parts of modern life, creativitycan’t be automated and human connectioncan’t be commoditized. This is what makesEtsy and our marketplace distinct from massretailers. We exist as a business in order toKeep Commerce Human.Staying true to our mission means thinking of allthe stakeholders who depend on us, and workingto deliver value to each of them. In 2017, wesharpened our focus on our core marketplace andbrought greater clarity to our impact work. Ourimpact strategy is focused on three key pillarsthat guide our approach to driving positive changewhile nurturing and growing our marketplace: Making creative entrepreneurship a path toeconomic security and personal empowermentby ensuring opportunities for our sellers, makingcharitable and in-kind donations, and advancingpublic policies that affect our community. Enabling equitable access to the opportunitieswe create through increasing representation ofunderrepresented groups and ensuring equity inour workforce, building a sustainable supply chain,and increasing underrepresented populationswithin our seller community. Building long-term resilience by eliminatingour carbon impacts and fostering responsibleresource use with specific goals and targetsin place.Consumers today are demanding higher standardsfrom the businesses they support. We believe thatthe companies that will continue to be successfultomorrow are those that care not just about profit,but about people, communities, and the planet, too.That’s what Keeping Commerce Human is all about.Join us on our journey. Although we’re excitedabout the progress we’ve made so far, we knowthat there is more work ahead of us. Transparentand regular reporting is a critical step to holdingourselves accountable, which is why we’re proud topublish this report—a detailed look at our businessand impacts.As we move forward, we believe that we can—andshould—be both a great business and a greatcorporate citizen. We like to say that economicempowerment is our day job, so our businessmodel and impact strategy are mutually reinforcing.As a socially responsible company, we believe weneed to hold ourselves to an even higher bar forexcellence in execution. There are many countingon us and the stakes are high. We are emboldenedby our belief that Etsy can continue to createvalue for all of our stakeholders.Josh Silverman,Chief Executive OfficerYou’ll find more information about our impactstrategy on page 5.Photo by Winnie Au

3IntroductionPositiveimpactEtsy, Inc.EcosystemSellersBuyersThe detailsImpact Update4Inside the world of EtsyThe Etsy marketplaceIn 2017, we connected1.9 million creators with33.4 million thoughtfulconsumers in nearly everycountry in the world. Thereare more than 50 million itemsfor sale across dozens of retailcategories on Etsy.com. In 2017,our marketplace generated 3.3 billion of Gross MerchandiseSales (GMS), the highest-everlevel for our company.Our tools and servicesWe offer a range of tools andservices that are designed to makeit easy for creative entrepreneursto start, manage, and scale theirbusinesses—from shipping andtracking items to managinginventory, running ad campaignsand promotions, creating beautifulcustom websites, and evenbookkeeping and accounting.Etsy 2017 marketplace highlightsOur employeesAs of December 31, 2017,we had 744 employeesworldwide, with 452employees located in ourheadquarters in Brooklyn,New York. Of thoseemployees, 237 were inengineering, 97 in product,161 in member operations,102 in marketing, and 147in other corporate teams.GMSNumber of active sellersNumber of active buyersPercent Mobile GMSPercent International GMS% of active sellers usingEtsy Payments 3.3B51%1.9M*33%33.4M*49.9%*As of December 31, 2017.Etsy 2017 financial highlightsRevenueGross profitNet incomeOperating expenses 441.2M 290.2MThe markets we serveEtsy buyers and sellers arelocated all over the world. Oursix core geographic markets arethe United States, the UnitedKingdom, Canada, Australia,France, and Germany. In 2017,33% of our GMS was generatedbetween an Etsy seller, Etsybuyer, or both, located outsideof the United States. 81.8M 278.3MUnless otherwise noted, all numbers in this report are for the full year 2017.Photo by Morgan Blake

5IntroductionPositiveimpactEtsy, Inc.EcosystemSellersBuyersThe detailsImpact Update6Driving a positive impactWe’ve developed an impact strategy that outlinesthe specific ways we intend to make positive changein the world. It’s based on using our core business togenerate positive economic, social, and ecologicalvalue for our community and our stakeholders whilenurturing the Etsy marketplace.Each element of this strategy reflects the impactwe want to have on our community and our worldwhile advancing and complementing our businessstrategy. We know that today’s consumers areholding businesses to higher standards for goodcorporate citizenship. We want to best positionEtsy to succeed by offering unique solutions thatare good for people, the planet, and profit.The Etsy business drives our positive impactand our impact initiatives drive our business . Forexample, helping sellers earn more sales directlycorrelates to growth in our marketplace. Similarly,there’s a wealth of business research showingthe positive relationship between diversity andinnovation and we believe that fostering a morediverse workforce will drive ideation to propelour business forward. And reducing a company’scarbon footprint can lead to lower operationalcosts. Aligning our mission, values, and impactstrategy alongside our business strategy iscritical to growing sustainably and positioningus for continued success.Summary of key impact resultsWe strive to deliver value to all of our stakeholders, and this report outlines many of theways we are delivering on that commitment. Below are just a few key highlights.O U R G OA LSW E’R E M A K I N G T H E M H A P P E N BYMake creativeentrepreneurship a pathto economic security andpersonal empowerment.Enable equitable accessto the opportunitieswe create.Ensuring the economicopportunities Etsy createsmeaningfully benefitsa broad swath of ourseller community.Meaningfully increasingrepresentation ofunderrepresentedgroups to ensure equityin Etsy’s workforce.Fostering economicsecurity and personalempowerment for creativeentrepreneurs throughcharitable and in-kindcontributions.Building a diverse,equitable, and sustainablesupply chain to supportour operations and bringvalue to both Etsy and ourvendors.Advancing public policiesthat increase economicsecurity and reduceadministrative burdensfor creative entrepreneurs.Increasing the presenceof underrepresentedpopulations within theEtsy seller community.Nurturing a diverse andinclusive workforce**1.9MEcologicalBuild long-term resilienceby eliminating our carbonimpacts and fosteringresponsible resource use.55%of Etsy employees are women.50%Paving a pathway toentrepreneurship andeconomic empowerment:women.53%29%of sellers first sold theirgoods on Etsy.women.of sellers started their shopto meet a financial challenge.EcologicalPowered30%of our global operations withrenewable electricity in 2017.Both our Board of Directorsand Executive Team are at leastactive sellers around the world.49%Utilizing and sourcingenergy responsibly, sowe can power ouroperations with 100%renewable electricityby 2020 and reduce theintensity of our energyuse by 25% by 2025.Our engineering team isWe established guidelinesaround hiring and training tohelp ensure equity and thatour workplace is one wherepeople from all backgroundsfeel welcome.In 2018, we joined withApple, Akamai, and Swiss Reto enter a power purchaseagreement to meet our100%renewableelectricity goal.This blazes a trail forother smaller companiesto participate in therenewable energy market.In 2017, we divertedA ripple effect: Etsy sellerscontributed to 4.7BDeveloping a planand setting a goal in2018 to mitigate thecarbon impacts of ourmarketplace that alignswith business growth.Running zero wasteoperations by 2020.Generatedin sales in 2017 forOur Strategy for ImpactSocialSocial 3.3BThis alignment highlights our commitmentto use the power of our business as a forcefor good in the world.EconomicEconomicin economic activity inthe U.S. in 2017, accordingto ECONorthwest.*Empowering womenaround the globe87%of sellers are womenvs. 33% of small businessowners in the U.S.***87%of waste from landfill acrossour global operations.*ECONorthwest data to be included inforthcoming Etsy report later in 2018.**As of December 31, 2017.Photo by Emily Andrews***According to Kauffman Foundation’sNational Entrepreneurial DemographicsIndex of 2017.

7IntroductionPositiveimpactEtsy, Inc.The story of howwe create valueHint: It involves people. People make Etsypossible. We provide a meaningful spacefor sellers to turn their creative passionsinto opportunity. We enable buyers todiscover unique items made with care.And we treat our employees and ourcommunity with respect. We’re herebecause we believe that the world needsless of the same and more of the special.EcosystemSellersBuyersThe detailsImpact UpdateWe make it our goal as a business to create value for ourcompany, our employees, our sellers, our buyers, and ourshareholders—each of which plays a role in Etsy’s futuresuccess. Our business strategy is focused on creating valueby growing our marketplace in our core geographies andowning special purchase occasions throughout the year.We aim to empower our passionate community of2 million Etsy sellers to compete and win againstmass retailers by providing a marketplace for uniquecommerce to flourish and grow.We believe that we can achieve these goals by executingon our four key initiatives:Improving trust and reliability. We want to ensure thatthe Etsy brand delivers a dependable and trustworthybuying experience and improve conversion.Enhancing search and discovery. We’re helping buyersbetter navigate the over 50 million items on Etsy.comto find just the item they are looking for.Building world-class marketing capabilities. We arefocused on driving traffic to Etsy.com by utilizing our ownmarketing efforts and the efforts of our sellers, primarilythrough digital acquisition marketing, search engineoptimization (SEO), social channels, and email.Providing best-in-class services and tools. We planto continue to invest in free tools and paid services tohelp Etsy sellers start, manage, and scale their businesses.Photo by Emily AndrewsPhoto by Stacy Keck8