etsy-vs-shopify

Shopify vs. Etsy

Business / By /

Etsy and Shopify are both e-commerce platforms. However, Etsy is skewed toward fashion e-commerce, and it works primarily as a marketplace where it makes money by charging a take rate on each transaction. In contrast, Shopify is more of a facilitator, where the company offers a comprehensive e-commerce software platform at a subscription price. At the same time, it also provides a set of merchant services on top of that.

Business Model ElementShopifyEtsySimilaritiesDifferencesCompetitive Advantage
Customer SegmentsBusinesses and entrepreneursIndependent artisans, crafters, and vintage sellersBoth platforms cater to entrepreneurs and businesses. Shopify targets businesses and entrepreneurs looking to create their own online stores. Etsy focuses on independent artisans and crafters.Shopify’s focus on businesses and entrepreneurs creating their online stores. Etsy’s specialization in providing a marketplace for independent artisans and crafters to sell unique products.Online Store Creation (Shopify), Niche Artisan Marketplace (Etsy).
Value PropositionE-commerce platform for customized online storesUnique, handmade, and vintage productsBoth offer opportunities to buy and sell unique products. Shopify provides a platform for creating customizable online stores. Etsy emphasizes handmade, vintage, and craft items.Shopify’s value proposition centers on providing tools for businesses to create and customize their e-commerce stores. Etsy’s focus on offering a marketplace for unique handmade and vintage products.Customizable E-commerce (Shopify), Unique Handmade Products (Etsy).
ChannelsOnline platform for creating and hosting online storesOnline marketplaceBoth operate as online platforms. Shopify serves as a platform for creating and hosting online stores. Etsy acts as a dedicated online marketplace.Shopify’s primary function as an e-commerce platform for hosting online stores. Etsy’s specialization as a marketplace for handmade, vintage, and craft products.E-commerce Platform (Shopify), Dedicated Marketplace (Etsy).
Customer RelationshipsOnline support, customer serviceCommunity, trust-basedBoth platforms offer online support and customer service. Shopify provides customer support for businesses and entrepreneurs. Etsy fosters trust through community engagement and artisan relationships.Shopify’s customer support for businesses and entrepreneurs. Etsy’s focus on building trust through a sense of community and trust-based relationships with artisans and buyers.Business Support (Shopify), Community Engagement (Etsy).
Key ActivitiesDeveloping and maintaining the e-commerce platformHosting listings, promoting artisansBoth engage in hosting and maintenance activities. Shopify focuses on developing and maintaining the e-commerce platform. Etsy is involved in hosting product listings and promoting artisans and sellers.Shopify’s core activity of providing an e-commerce platform for online stores. Etsy’s emphasis on promoting artisans, hosting listings, and assisting sellers in showcasing their unique products.E-commerce Platform Development (Shopify), Artisan Promotion (Etsy).
Key ResourcesE-commerce platform, technical infrastructureOnline platform, seller communityBoth rely on their respective online platforms. Shopify’s key resources include its e-commerce platform and technical infrastructure. Etsy’s resources include an online platform and a community of independent artisans.Shopify’s focus on technical infrastructure and hosting e-commerce stores. Etsy’s resource advantage lies in its community of independent artisans and crafters.Technical Infrastructure (Shopify), Artisan Community (Etsy).
Key PartnershipsBusinesses, entrepreneurs, app developersIndependent artisans, craftersBoth platforms engage with various partners. Shopify collaborates with businesses, entrepreneurs, and app developers. Etsy partners with independent artisans and crafters.Shopify’s partnerships with businesses, entrepreneurs, and app developers for providing services and apps. Etsy’s specialized partnerships with independent artisans and crafters who list their products on the platform.Business and App Partnerships (Shopify), Artisan Collaborations (Etsy).
Revenue StreamsSubscription fees, transaction fees, add-on servicesTransaction fees, listing feesBoth generate revenue through transaction and listing fees. Shopify charges subscription fees, transaction fees, and offers additional add-on services. Etsy earns revenue from transaction and listing fees.Shopify’s diversified revenue streams including subscription fees and add-on services. Etsy’s primary revenue sources being transaction and listing fees for artisans and sellers.Diversified Revenue Streams (Shopify), Transaction-Focused (Etsy).
Cost StructurePlatform development, maintenance, marketingHosting, maintenance, marketing costsBoth incur costs related to platform maintenance and marketing. Shopify’s costs include platform development, maintenance, and marketing expenses. Etsy’s costs encompass hosting, maintenance, and marketing efforts.Shopify’s focus on platform development and marketing expenses to attract businesses. Etsy’s costs related to hosting, maintenance, and marketing efforts, with a specialization in promoting artisans and unique products.Platform Development (Shopify), Artisan Promotion (Etsy).

 

 

Related Visual Stories

Who Owns Shopify

who-owns-shopify
The founder and CEO of Shopify, Tobias Lütke, owned or controlled 7,891,852 Class B multiple voting shares and 5,250 Class A subordinate voting shares, representing approximately 33.8% of the aggregate voting power attached to all of the Company’s outstanding voting shares. Another key stakeholder is John H. Phillips, an angel investor who placed an early bet on Shopify.

Shopify Business Model

shopify-business-model
Shopify is an e-commerce platform that enabled over 2 million merchants by 2021 to commercialize their products. While Shopify works with a subscription-based business model, it makes most of its money via merchant services, which are additional services provided to merchants. In 2023, the company generated over $7 billion in revenue, of which over $1.8 billion (26% of total revenue) was from subscriptions and $5.2 billion (74% of total revenue) from merchant solutions.

Shopify Cost Structure

shopify-cost-structure
While Merchant services drive most of the revenue for Shopify, in reality, subscriptions have a much larger contribution margin. Indeed, in 2023, on $7 billion in revenue, Shopify generated $3.15 billion in gross profits or about 50% gross margins. However, if we drill down its cost structure, we can see how gross margins from merchant services stood at nearly 39%. Meanwhile, gross margins from subscription services (Shopify’s MRR was $149 million in 2023) reported over 80% gross margins, thus making its subscription business critical to sustaining the overall Shopify business model.

Shopify Profitability

shopify-profitability
Shopify was finally profitable in 2023, with $132 million in net profits, while it was not profitable in 2022, generating over $3.4 billion in net losses. In 2021, driven by the massive wave of e-commerce throughout the COVID-19 pandemic, Shopify had turned to profitability in 2021, generating over $2.9 billion in net income, while it became unprofitable again in 2022 and back to profitability in 2023.

Shopify Revenue

shopify-revenue
Shopify generated $7.06 billion in revenue in 2023; it generated $5.6 billion in revenue in 2022, and over $4.6 billion in revenue in 2021.

Shopify Revenue Breakdown

shopify-revenue-breakdown
The company generated $7.06 billion in revenue in 2023, of which $1.84 billion was from subscription revenue and $5.22B in merchant revenue. In 2022, Shopify generated $5.6 billion in revenue, of which $1.5 billion (almost 27% of total revenue) was from subscriptions and $4.1 billion (more than 73%) from merchant solutions.

Shopify MRR

shopify-mrr

Shopify Employees

shopify-employees
Shopify had 8,300 employees in 2023, compared to 11,600 employees in 2022 and 10,000 in 2021.

Shopify Revenue per Employee

shopify-revenue-per-employee
Shopify generated $850,602 in revenue per employee in 2023, compared to $482,759 in 2022, and $461,186 in 2021,

Shopify Merchants

shopify-merchants

Shopify Competitors

shopify-competitors
In just fifteen short years, Shopify has grown from humble beginnings to become one of the fastest-growing eCommerce platforms online. The Shopify eCommerce solution is perhaps best suited to users who desire an easy, flexible and affordable starter solution for their online store. The provider now has upwards of 820,000 stores accounting for 20% of the total market share. However, the continued success of any company in the dynamic digital market is never guaranteed.

Related Visual Stories

Etsy Revenue

Etsy Revenue
Etsy generated $2.75 billion in 2023, compared to $2.56 billion in 2022, $2.33 billion in 2021, and $1.72 billion in 2020.

Etsy GMS

Etsy GMS
Etsy generated $13.16 billion in Gross Merchandise Sales (GMS) in 2023, compared to $13.32 billion in 2022, $13.49 in 2021, and $10.28 billion in 2020.

Etsy Active Sellers

Etsy Active Sellers
Etsy had 9.03 active sellers in 2023, compared to 7.47 million in 2022, and 7.52 million in 2021.

Etsy Active Buyers

Etsy Active Buyers
Etsy had 96.48 million active buyers in 2023, compared to 95.07 million in 2022 and 96.33 million in 2021.

Etsy Employees

Etsy Employees
Etsy had 2,420 employees in 2023, compared to 2,790 in 2022, and 2,402 in 2021.

Etsy Revenue Per Employee

Etsy Revenue Per Employee
Etsy generated $1,135,693 per employee in 2023, compared to $919,753 in 2022, and $969,656 in 2021.

Is Etsy Profitable?

Etsy Profits
Etsy is profitable as it generated $307.56 million in profits in 2023, compared to a net loss of $694.29 million in 2022, and $493.5 million in 2021.

Etsy vs. Shopify

etsy-vs-shopify

Etsy Funnel

etsy-marketing-strategy
In 2022, Etsy had 88.3 million active buyers, over 35 million repeat buyers, and 7.6 million habitual buyers. Etsy’s funnel is skewed toward enabling active buyers to become habitual buyers, which is critical for long-term sustained growth in a two-sided digital marketplace.

Etsy Flywheel

etsy-flywheel

eBay Business Model

ebay-business-model
eBay’s core business is a platform business model that makes money from transaction fees through its marketplaces. In short, eBay primarily makes money by charging fees on successfully closed transactions. For instance, in 2021, on an $87 billion worth of gross merchandise value sold on eBay, the company generated $9.77 billion in transaction revenues at an 11.19% take rate (fee).

How Much Does eBay Take?

how-much-does-ebay-take
In 2021, eBay’s take rate was 11.19%. It means that eBay takes a cut of over 11% for each transaction happening through the platform. For instance, in 2021, on a total of over $87 billion in gross merchandise value on top of the platform, the company generated almost ten billion in transaction revenues.

eBay Bidding System

how-does-ebay-bidding-work
eBay bidding is a way for buyers to bid on a product whose sale price is decided by auction. The bidding process itself is automated, with eBay acting on the buyer’s behalf.

eBay Organizational Structure

ebay-organizational-structure
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

Depop Active Sellers

Depop Active Sellers
Depop had 1.8 million active sellers in 2023, compared to 1.8 million in 2022, and 2 million in 2021.

Depop Active Buyers

Depop Active Buyers
Depop had 3.6 million active buyers in 2023, compared to 3.3 million in 2022, and 3.7 million in 2021.

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