The Transformation of Etsy - A Case Study

Hey everyone, welcome to day 16 of our series! If you joined us for yesterday's post, you'll remember we explored the challenge many Tech for Good companies face: would they compromise on their values in order to stay profitable and grow? Today's post is a follow-up on that, and we're looking at a real-world example: Etsy. Our case study aims to highlight how a well-intentioned platform crumbled because of its overly profit-seeking behaviour.

Etsy started out as a platform celebrating handmade crafts and vintage goods. It was famous for helping small businesses and independent creators gain visibility and reach a wide audience. It was a platform where you could buy unique gifts, lovingly made by talented people. This used to be the cornerstone of Etsy's existence.

However, in recent years, Etsy's commitment to independent creators and artists has been overshadowed by the pressures of maximising its profits, particularly after its IPO in 2015. This shift in focus led to a significant change to the site as they started allowing mass-produced goods to absolutely flood the platform. This move was a big step away from Etsy's original mission, which was to champion small-scale, independent creators.

While Etsy used to be a platform for unique handcrafted items, it quickly started to look like any other e-commerce site, littered with low-value, dropshipped products from places like AliExpress. The influx of cheap, mass-produced tat not only diluted the uniqueness of Etsy but also made it harder for genuine artists to stand out. The charm of what made Etsy special was ruined.

In 2022, creators even went on strike to protest these changes, but their concerns seemed to fall on deaf ears. This apathy from Etsy highlighted the growing disconnect between its management and the community that once formed the backbone of the platform. The shift towards a more generic marketplace was a clear sign of enshittification (a term we wrote about before), which refers to how a service initially great for all parties can degrade over time.

Etsy's journey illustrates how difficult it can be for a business to stay true to its original values, especially when faced with the demands of shareholders and the relentless pursuit of profit. It's a sobering reminder of how a platform's initial promise of supporting creativity and small-scale businesses can be overshadowed by the allure of financial gain.

Ultimately, Etsy's transformation is a cautionary tale of how a values-driven platform can lose its essence when profit becomes the overriding priority. It underscores the need for Tech for Good companies to navigate growth while continually holding onto the values that define them.