CNBC Media Money

Empire
Published: Thursday, 31 Mar 2011 | 4:53 PM ET
Text Size
By: Julia Boorstin
CNBC Correspondent



Etsy is like eBay, but for a niche market — handmade goods. If you've not one of the site's eight million shoppers, imagine a hipster's DIY dream of handicrafts and art. Instead of buying something mass-produced from a giant corporation, you get to browse for a unique gem.

Etsy
Source: Etsy.com
Over 800,000 people sell their homemade products on the site, everything from jewelry and clothing, to furniture and music. There's a lot that makes Etsy different from eBay [EBAY 31.84 0.45 (+1.43%) ], beyond the fact that sellers set prices rather than hosting auctions. On Etsy every item has a story, and the company considers its sellers a community. You can search items not just by variety, but also by the location of the seller. So if you want, you can opt to support just your local Brooklyn or Silverlake handicrafts.

Etsy may be all about shoppers finding unique items, but it's also a serious business. Here's how it works: it's free to set up a "shop" on the site. It costs 20 cents to list an item and Etsy gets 3.5 percent of every transaction. And that's an increasingly large pie: sales topped $314 million last year and are growing fast.

Etsy's COO Adam Freed tells us this is just the beginning.

In addition to international growth the company is seeing growth in all of its categories. And the company is rolling out more features to make shopping more personal. And the more personal the experience, the more the company expects shoppers to buy.

Investors are on board: Etsy has raised over $50 million from top VCs including Accell Partners and Union Square Ventures. And individual investors are also hungry for a piece of the business. Etsy was the third most traded company on Second Market last quarter, behind only LinkedIn and Facebook.

Etsy's community has had its problems. Just this month it faced major outcry after buyers found that feedback posts, purchases and user profiles, and on occasion even real names, were made public. The company responded by tightening its privacy settings. COO Freed tells us that it takes its members (shoppers) privacy very seriously, and that the company made a fast feature change as soon as it realized there was an issue. Freed seems to understand that even with "communities" like Etsy's, people need to be able to maintain their privacy.