Unraveling the Business Model and Psychological Influences Behind Etsy's Success

Unraveling the Business Model and Psychological Influences Behind Etsy's Success

How does Etsy make money | Business Model & Marketing Strategy. The Etsy marketplace connects creative artisans and entrepreneurs with thoughtful consumers looking for items that are intended to make both every day and meaningful occasions feel special and reflect their sense of style. Economic Impact: Make creative entrepreneurship a path to financial security and personal empowerment. Social Impact: Enable equitable access to the opportunities. Ecological Impact: Build long-term resilience by eliminating their carbon impacts and fostering responsible resource use. In fact, in a 2020 survey of Etsy buyers, 88% of buyers surveyed agreed that Etsy has things that you can’t find anywhere else. Etsy also gives freedom to the sellers to list items other than handmade and vintage guidelines at an extra charge. (note: Does it mean sellers can sell any existing goods? If so, they are curators.) Sellers can upload videos showing the products and the production process, and more conversations between buyers and sellers are encouraged to drive further personalization. Human Connection Best-in-class search and discovery: Making it easier to find just the right item even when a buyer doesn’t have the right words to describe it. (note: Just curious, how? The search engine is good? Recommendations like Pinterest?) Etsy introduced Offsite Ads, a powerful and risk-free advertising platform that gives sellers access to some of the highest-trafficked platforms on the internet without any upfront costs. (note: How it works?) Discovering and identifying influencers to advocate the platform in the relevant niche was of top priority to Etsy to achieve its brand awareness and sales goals. (note: From what I understand so far, this is right. It seems the most important thing to bootstrap and grow the platform.) Etsy makes money from sellers by charging various fees for selling on its marketplace and fees for some other services. Etsy purchases offsite advertising from a network of participating partners, such as social networks and search engines. Etsy pays the upfront costs to promote Etsy sellers’ listings on multiple internet platforms without any upfront costs for sellers. Etsy charges 15% on those orders if a buyer purchases through that listing. (note: Ah, I see. This is interesting.) Find your niche– Don’t try to become Amazon on Day1..

"Why You Believe The Things You Do". What you believe to be true is influenced by how much you want it to be true. The more something helps you deal with uncertainty, the lower the bar is for you to believe it’s true. Visa Founder Dee Hock once said, “We are built with an almost infinite capacity to believe things because the beliefs are advantageous for us to hold, rather than because they are even remotely related to the truth.” There’s a thing in the legal world called Gibson’s Law, which states that, “For every PhD there is an equal and opposite PhD.” So there’s one reason you believe the things you do: A belief’s allure can eclipse its truth. Gordon Allport and Leo Postman – came up with what they called leveling and sharpening effects in memory. So in your recollection you emphasize some memories (sharpening) and discard others (leveling). What you think is true is heavily based on what you’ve experienced, and you remember the parts of your experiences that make good stories, confirm stereotypes, and connect dots between other experiences. The core of a scientific lifestyle is to change your mind when faced with information that disagrees with your views, avoiding intellectual inertia, yet many of us praise leaders who stubbornly stick to their views as “strong.” One, when you change your mind you can feel like all the hard-fought effort you put into establishing your previous beliefs was wasted. Two, when you change your mind, moving from one belief to another, it can be hard to take the new belief seriously – changing beliefs offers proof that the new belief may be short-lived, especially in the eyes of others. Beliefs are not just about what we know; They are social signals that offer clues about how we established our beliefs, our confidence in our intelligence, and our ability to pass reliable truth to other people. A lot of times we’re not interested in truth – we’re interested in the elimination of uncertainty, and that fact alone causes us to believe things that have little relation to reality..

Combining the two seemingly unrelated topics of Etsy's business model and the psychology behind beliefs may seem like a stretch, but there are common points that can be connected to provide unique insights. Both Etsy and belief formation are driven by human connection and the desire to eliminate uncertainty.

Etsy's success lies in its ability to connect creative artisans and entrepreneurs with consumers who are looking for unique and personalized items. The marketplace not only provides economic opportunities for sellers but also empowers them through creative entrepreneurship. Additionally, Etsy's commitment to social impact ensures equitable access to these opportunities. By fostering responsible resource use and eliminating carbon impacts, Etsy also contributes to building long-term resilience.

One of the reasons why Etsy thrives is its emphasis on human connection. Through best-in-class search and discovery features, Etsy makes it easier for buyers to find exactly what they're looking for, even when they struggle to put it into words. This could be achieved through a sophisticated search engine or personalized recommendations similar to platforms like Pinterest. Etsy's introduction of Offsite Ads further amplifies its reach by allowing sellers to access high-trafficked platforms without any upfront costs. By leveraging influencers in relevant niches, Etsy effectively boosts brand awareness and drives sales.

Now, let's shift our focus to the psychology behind belief formation. Humans have an innate capacity to believe things because those beliefs serve advantageous purposes rather than being rooted in truth. We tend to believe what helps us deal with uncertainty, even if it lacks a solid basis in reality. This phenomenon is often driven by our desire to eliminate uncertainty rather than seeking the truth.

Our beliefs are heavily influenced by our experiences, especially the parts that make good stories, confirm stereotypes, and connect dots between different experiences. This is known as the leveling and sharpening effects in memory. We tend to emphasize certain memories while discarding others, shaping our perception of what is true based on our selective recollection.

Interestingly, changing our beliefs can be challenging due to the investment we've made in establishing our previous beliefs. It can feel like all the effort put into forming those beliefs was wasted. Additionally, changing beliefs can be met with skepticism from others who may view the new belief as short-lived. Beliefs serve as social signals, conveying information about our intelligence, confidence, and ability to discern reliable truth.

In conclusion, Etsy's success stems from its ability to foster human connection and provide a platform for creative entrepreneurs to thrive. By connecting buyers and sellers, Etsy creates a marketplace that offers unique and personalized items. On the other hand, belief formation is influenced by our desire to eliminate uncertainty rather than seeking the truth. Our beliefs are shaped by our experiences and can be resistant to change due to the investments we've made in them.

To apply these insights in our own lives, here are three actionable pieces of advice:

1. Embrace uncertainty: Instead of seeking beliefs that merely eliminate uncertainty, embrace the unknown and be open to changing your mind when faced with new information.

2. Challenge your beliefs: Actively seek out information that contradicts your current beliefs. Engage in critical thinking and consider multiple perspectives to avoid intellectual inertia.

3. Recognize the social influence: Be aware that beliefs serve as social signals and can be influenced by external factors. Don't let the fear of judgment hinder your willingness to explore new ideas and change your beliefs when necessary.

By incorporating these practices, we can foster personal growth, intellectual flexibility, and a more nuanced understanding of the world around us.