2023-03-23 15:36:06 ET
Etsy, Inc. (ETSY)
Canaccord Genuity’s Virtual eCommerce Sustainable Advantage Forum Conference
March 23, 2023 01:30 PM ET
Company Participants
Josh Silverman - CEO
Rachel Glaser - CFO
Conference Call Participants
Maria Ripps - Canaccord Genuity
Presentation
Maria Ripps
Good afternoon, everyone, and welcome to our keynote session. For those of you who are just tuning in, I'm Maria Ripps, Internet Analyst here at Canaccord Genuity. And I couldn't be more excited to introduce Josh Silverman, Etsy's CEO; and Rachel Glaser, CFO. Since Josh and Rachel took over at Etsy in 2017, the number of active buyers on the platform has nearly tripled, and GMS quadrupled, and we think this is just the beginning of a long-term trend.
Josh, Rachel, thank you so much for joining us today.
Rachel Glaser
Thank you so much for having us, Maria. I'll just jump in quickly to remind people that you can find our Safe Harbor on Etsy's Investor Relations website.
Question-and-Answer Session
Q - Maria Ripps
Awesome. Josh, you and Rachel have been with the Company for about six years now, and the platform has been transformed a lot, including significantly better overall consumer experience, more advanced search and improving brand awareness. As we get started, can you maybe spend a minute talking about that evolution? And what are some of the key strategic priorities for you over the next year or two?
Josh Silverman
Yes. Great, thanks. Maria, thank you for having us. Great to be here. Happy to talk about that. So, I think, six years ago Etsy was many people perceived really only for a narrow niche of buyers across a narrow niche of purchase occasions. And we knew that that wasn't true, and I think we’ve really demonstrated that Etsy has far more mainstream appeal. And as we exit the pandemic, I think we’ve seen that millions and millions of people tried Etsy and discovered that Etsy is a great solution for almost everybody in a very, very wide range of purchase occasions. Especially the opportunity for Etsy now is to go from being a place you go to find things if you couldn't find it anywhere else, to really a starting point in your e-commerce journey. So maybe instead of I'm decorating my living room, I found everything else and there is one throw pillow or one end table I need that needs to fit very funky dimensions, and so I go to Etsy to search for that. Instead, come with I'm decorating my living room. I'm throwing a baby shower. I'm getting a new wardrobe for the spring, and really be better at these mainstream use cases for mainstream people. And I think that opens up a whole new opportunity for Etsy. And it's frankly an area where I think we've earned the right to aspire to be one of the main starting points.
And so, what's that going to require? That is going to require Etsy to feel more organized and more curated in those head terms. We do pretty well now. When you come and you have something very specific in mind, our search engine is quite good at translating what you wrote to what you meant when you know very specifically what you're looking for. And with 115 million things for sale on Etsy, it's very, very likely that we have what you're looking for. But we need to get better at now going from those very specific use cases to providing a much more organized and curated experience when you're much earlier in your journey. And I think that's a huge opportunity for us.
And then we've made great strides on trust. So, if we look back just over the past two or three years, the fact that now almost always your, the item is going to tell you what the expected delivery date is, the items are going to arrive on time. We've launched Etsy Purchase Protection. So, if it's not what you expected or doesn't arrive, we have your back guaranteed. These things, we've made great strides, and yet, I think there's still room to go in terms of communicating that to buyers and doing an even better job of making sure that things arrive quickly and that consumers knowjust how protected they are, because our sellers really do a great job.
And then last, but certainly not least communicating to the world all of the different purchase occasions for which Etsy is relevant. When you -- one surveys buyers and says, where can you go to buy things online? More and more people will be able to name Etsy just off the top of their head. But when you ask them, where's a place to go to buy home furnishings? Where's a place to go to buy jewelry? Where's a place to go to buy gifts? These are -- Etsy sells billions of dollars of product across each of these and yet very, very few people will off the top of their head have Etsy as one of the first three names in those situations. So, that's, I think, a huge opportunity for us to increase consideration.
Maria Ripps
Got it. That's very helpful. And you touched on a lot of points that we're going to talk about later today. So last year this event, you talked about how companies with a differentiated product offering and use experience would continue to take share in an increasingly commoditized world. Do you still think that's the case? And what are some of the important things you expect to see over the next few years as e-commerce evolves?
Josh Silverman
Yes. I do think that if we look forward 10 years, there will be fewer places to buy things online, not more places to buy things online. And I think, that's just a function of the human brain. We can only remember so many brands, and if you're not a brand that someone can remember, then you're just going to be downstream of Google or Facebook or someone else, and all of the economics will flow to those people. So, it seems to me very likely that there will be a lot fewer places to shop 5 or 10 years from now. And almost everyone in e-commerce is playing Amazon's game on Amazon's terms. They're trying to sell you the same products you can find on Amazon, and therefore the goal is can we ship it two minutes faster or sell it $0.02 cheaper? And I wish them the best of luck, but I'm really happy that's not what we're trying to do at Etsy.
At Etsy, we offer a true alternative to Amazon, something where this is a product made just for you, shipped to you by the seller themselves. The opportunity to have that customized or personalized, to have it come with the human touch, to have it come with the handwritten note from a seller, I think the purchase experience feels very, very different. And I think people are going to want the more all shopping consolidates around a very few players, the more people are going to want a true alternative. And -- so I think at Etsy, we do something that's very different from what Amazon does. I think it's something that's important and meaningful. And I think we can do it often enough to really earn one of those precious few spaces in people's brands.
Maria Ripps
That makes sense. I want to touch on financial outlook for a few minutes. Rachel, you mentioned on the earnings call that you started the year strong, but trends sort of decelerated in late January and into February. Can you maybe talk about what you are seeing in the business and sort of how that impacted the Q1 guidance at that time?
Rachel Glaser
Absolutely. So first, I'll start by reminding everyone that last year in Q1, we had relatively stronger period of time because we were still continuing with pandemic lockdowns, there were still supply chain constraints in the system that Etsy didn't have, and that really helped us a bit. Flash forward to this year, in 2023, we started off really strong in January and then started to see volatility in late Jan, early Feb. So by the time we were getting on our call in Feb, we talked about that volatility a lot. And we were observing through a lot of third-party data, credit card data and other things that as many people saw, there was some spending shift from consumer goods to things other kinds of consumer discretionary like services and household essentials like milk. And we were observing that.
But when we double-clicked on our own categories, the big categories that we are in, we saw that, for instance, home and living or apparel and accessories that we were actually holding up quite well within those categories. So, we felt confident that we were maintaining or growing share in our categories, but volatility relative to shifts in consumer spending overall. The guidance we gave assumed that that volatility at the midpoint would be maintained through the end of March. And if that volatility were to cease, we would see some upside at the high end; if it were to get worse, we would see some downside at the low end.
Maria Ripps
Got it. And we know you didn't provide annual guidance, but perhaps you could walk us through how you think about growth for Etsy this year and how this impacts your investment plans for the business? And you've talked about cost discipline, and it would be great for you to maybe unpack that a little bit for our audience.
Rachel Glaser
Yes, absolutely. So you're right, we did not provide annual guidance. We talk a lot about the way we forecast at Etsy. So, we start with our baseline. If everybody went home, like what would -- how much GMS would we get anyway. And then we start to layer on how much incremental GMS we get from the investments we make, both in marketing and product. And then, we do a range of scenarios. So we say, for instance, at a low end, we might see some significant headwind from macro factors; and at the high end, the macro factors do not -- are not reflected in Etsy's performance and that we can perform very well. That's how we do our internal guidance. And the reason we do that, I think the main theme to take across is that we plan for the worst so that we don't have any bad news. We are always investing for profitable growth. And so, we have to be thinking about that downside scenario when we're approving and leaning into investments like hiring of people.
And so, we've been very judicious in the way we want to moderate our spending, assuming that there could be some headwinds coming because there's -- that's a possibility that there's dark clouds on the horizon. So, that's what we talked about on our earnings call, and we did not give full year guidance, but we talked about that we see this range of scenarios. And the main takeaway we wanted people to understand is that having that uncertainty makes us be a little bit more cautious in our spending plans. And we think we've done very well with that. So for instance, a year ago, we decided to slow down the pace of our hiring. We're now at about the right size and shape, for instance, product development as a percentage of revenue. And as we see revenue grow, we're able to invest more and lean more into the hiring in those areas. So, that's how we think about it.
Maria Ripps
Got it. That makes sense. And then given how uncertain the macro environment is, what gives you confidence about the business doing well this year and into the future?
Josh Silverman
Yes. I mean, first, going back to where I started, doing something that's different and important that's relevant to often enough for people, I think, is the most important thing. I think Etsy does something that's different than what other people are doing in a way that's really important. I think people more and more, they may be able to buy fewer things, want to buy fewer things but they want those things to mean more, they're more conscious of the impact on the environment and wanting a human connection.
I think if you think about friendshoring versus offshoring, people are more conscious of where they are in the supply chain and who they're supporting. And I think all of those are trends that are in Etsy's favor over time. When I look closer in, I'm heartened by the fact that we think that on a category adjusted basis, category by category, we think we're holding or gaining share across each of these categories on top of the very, very significant share gains that we've made over the past couple of years.
So, for example, home furnishings has grown to be a very sizable part of Etsy's business. That is a category that's under some pressure right now. But its day will come again, and we think we are holding and gaining share in that category, and when we look at fashion and jewelry and wall art and other categories similarly. So I think on a category adjusted basis, we continue to feel good about where we are and importantly, our opportunity to grow share in the future.
When I really pull back and look at Etsy, $13 billion of sales in the grand scheme of e-commerce is still quite small when I look at things like GMS per buyer relative to other mainstream e-commerce sites, there's a lot of opportunity to grow. And so many of our customers who love us just don't know when to think of us or don't realize all the different range of occasions. And so, that gives me a ton of heart for where we can go in the future.
Maria Ripps
Got it. That's very helpful. So let's talk about buyer metrics and buyer behavior. Just while the macro backdrop was, of course, challenging and comps were notably difficult last year, Etsy still held on to a good portion of its COVID gains, as you just pointed out. What would you highlight as the key points of Etsy's value proposition for buyers? And what do you consider to be the main drivers of your strong repeat buyer behavior?
Josh Silverman
First, I think, during the pandemic, a lot of people turned to Etsy because they felt like they had relatively few other choices, maybe thinking that it wasn't going to be for them. And I think the vast majority of those people appear to have been delighted by the experience our net promoter scores are really strong. We were obsessed with at that time how do we make sure that buyers have a great experience that the items arrive on time, that they're as described, we know our sellers do a great job.
And so we're seeing those people come back again and again, they may have shopped with Etsy during the pandemic because they felt like they had very few other choices, but they're coming back now because they were delighted. And I think that's the most important metric is, are we offering something really important that people are finding great value? And I think we are. So if you look at, for example, the percentage of repeat buyers turn Etsy, if you look at how those cohorts are holding up mask buyers, we're seeing that all of these cohorts that we acquired during the pandemic are more valuable actually than the cohorts that we acquired pre-pandemic. And the pre-pandemic cohorts have grown a great deal as well. So, we feel really good about the stickiness. And honestly, I think it comes down to people having a really great buying experience.
Another thing I'll point to is we keep making the product experience better in ways that matter. One example is to buy on Etsy app. And we find that when someone downloads the Etsy app and uses the Etsy app, their purchase frequency goes up quite a bit. So, someone who's downloaded the Etsy app purchases an average of 3.8 days per year versus 2.4 days per year for someone who is shopping on the desktop.
And so, we had a 33% increase last year in downloads of the buyer on Etsy app on top of a 44% increase -- sorry, 47% increase the year before. And I think there's still a ton of opportunity to do more to convert our buyer base onto the app and then build more value into the app, so people want to come back again and again.
Maria Ripps
Those are pretty impressive metrics. And maybe just expanding on that a little bit. Last quarter, your new buyer acquisition and then a reactivation of lapsed buyers was pretty impressive. Is there anything to add in terms of what drove that strength and what you just talked about? And how should we think about your active buyer opportunity from here? Maybe talk about sort of the opportunity to attract new buyers to the platform?
Josh Silverman
Yes. So, at this point, a meaningful portion of women in the United States have shopped on Etsy and had really good experiences. So if a meaningful portion of women can jump on Etsy and have good experience, why can't the rest? I think the idea that we've gone from the perception that Etsy might be niche to now more of a growing awareness that Etsy is actually very mainstream, means that we continue to add new buyers at a rate far faster than we added pre-pandemic. And I feel great about that.
We're attracting more and more men on the platform now. And we have great offerings for men. And then the opportunity internationally we think is enormous as well as we've moved beyond the United States. Etsy is now a top 10 e-commerce site in almost all of our core markets. In markets like the UK now, we're really a top 5 e-commerce destination. We're making great progress in Germany, and we think there's a lot of opportunity in the rest of the markets as well.
So, I think there's a huge opportunity to keep adding new buyers. And then, the opportunity to reactivate lapsed buyers, there's about 100 million lapsed buyers on Etsy. We had a record number of lapsed buyers reactivated in the fourth quarter, as we talked about on our earnings call. And what's exciting there is a lapsed buyer has an even higher long lifetime value than a brand new to Etsy buyer. And there are people who are already familiar with Etsy and already liked Etsy.
When one goes and talks to lapsed buyers, the vast majority have a really positive impression and they don't think they've lapsed. When you ask them, why haven't you shopped the Etsy recently? Usually, what you hear is, what do you mean? I shop on Etsy all the time and you say, actually, haven't you shopped here in a year? And they say, "Oh, I didn't realize, gosh, I guess I just didn't think of it." And so it's just that shoulder tap.
So, this new -- we've launched a new TV campaign just in the last few weeks called Etsy Has It. And the point is to associate Etsy much more specifically with very specific purchase occasions. You’ll see Etsy Has It for home furnishings. Etsy Has It for fashion. Etsy Has It for gifts. And we're trying to build those very specific associations. So when you're in the market for something Etsy, we're building Etsy to be one of the top places you think of to start your journey.
Maria Ripps
That's great. Rachel, can we maybe briefly touch on the habitual buyer metric, which was still significantly higher than it was pre-pandemic, has been trending modestly down sequentially, I think, for the past couple of quarters. And can you maybe talk about what's driving that trend? Is it largely sort of post-COVID normalization?
Rachel Glaser
Yes, happy to. So first, defining habitual buyers. Those are buyers that shop six or more days a year and spend $200 or more on Etsy in the year. And then as you point out, in 2019, the percentage of our buyers that were habitual was 36%, and they're now up to 44% in 2022, which means that still only 8% of our buyers, which is up from 5% in 2019, are habitual. So we're super excited that there's a lot more room for growth in this really, really valuable segment because they drive a significant portion, about 40% of our GMS is coming from that small percentage of buyers.
In fact, habituals, even though they only need 6 days to qualify as a habitual, they actually shop on average 13 days per year, which we think is a perfectly reasonable and attainable goal for us to have.
When you think about mathematically what's happening with the decrease in habitual buyers because we had such a peak in buyers overall and habitual buyers during the pandemic times, and because that metric is a trailing 12-month metric, as those peak periods roll off, we're going to naturally see some deceleration. So, mathematically, that's what's happening.
I will point out that the buyers that are no longer habitual are not -- the vast majority of them are not churning out. They're just becoming repeat, meaning instead of shopping 6 or more times a year, which is kind of an arbitrary number we've created for ourselves to qualify somebody is habitual, maybe they shop 5 times a year. And when you think that habitual buyers only declined about 9% year-over-year, that means that we have a lot more buyers that are coming into the habitual category that weren't habituals before.
So, we had about half of the buyers that became habitual were or repeat and the other half were either new or lapse. So we're really excited about the potential, the stickiness of this category for people to come back. And when the shopping event is right for them, they become habitual and have lapsed on to that to get the reminder to get to habituate more of our buyers to shop more often.
Maria Ripps
Great. That's very helpful. Josh, you mentioned your brand marketing campaign a few minutes ago, and I just wanted to expand on that for a minute. So, brand marketing continues to move higher as a percent of total advertising spend, reaching roughly 25%, I think, last year. Talk about some of the metrics that give you confidence to continue leaning into upper funnel marketing strategies? And then, what are some of the different ways in which you plan to allocate your brand marketing spend this year?
Josh Silverman
Yes. Great. So, we're very focused on a full funnel [ph] marketing picture. And so, where Etsy has typically done the best is at the bottom of the funnel. I'm looking for -- I'm furnishing my living room, I find every other piece, but there's this quirky last thing I can't find. And so maybe I go to Google or I go to Etsy and I find it either on Google or directly on Etsy. Most of our traffic does come direct to Etsy, which is a huge benefit of ours. But we want people to think of us earlier in the journey. When one surveys consumers and just says, name three places to buy things online? Many people will now come up with Etsy, which wasn't true three years ago. We are now seen as a mainstream brand that's top of mind. When you ask them, what you think of Etsy? They say things like, oh, I love Etsy, it's great, it aligns with my values, it's got great stuff, it makes you feel really good.
When you ask them, name 3 places to buy home furnishings. Very, very few people will say Etsy, very, very few. Even though it's our largest category and our sellers sell billions of dollars of home furnishings, we're not in the top 10. I don't even know how many because we cut off our survey at 10 and Etsy is not in the top 10. When you ask the same of fashion. Very few people. The only place we make the top 10 is gifts and even there, I think we're number 9 in our survey.
So, there's a huge opportunity to build consideration. So they love Etsy generally. But when should I think of Etsy during the course of my day. Of course, if you do spend some time on Etsy, you can realize that almost everything you're buying, Etsy has a version of it that's really compelling and at a fair price. So the answer to win is most of the time actually.
So, above the line can be a place to tell that story. And also, we're very focused on what we call mid-funnel, so things like YouTube videos and other things where we can talk to people who are in the midst of a wedding -- planning a wedding about what Etsy rent for weddings or who have a new baby to talk about why Etsy's great for furnishing the nursery or people who are planning Thanksgiving or gifting or on and on and on.
So, we're really focused above the funnel at the high end on building awareness in the mid-funnel for building consideration in very specific categories. How do we measure success? Well, we do look very much with an ROI lens. When we ran that TV campaign, did it drive more visits that resulted in more buyers or what's the lifetime value of that reactivating existing buyers, bringing new buyers and adding more frequency for our currently active buyers, it does all 3 of those. And what impact do we perceive that it had there and what's the ROI. We also look at what did it do to the brand funnel. So things like intent to buy on Etsy, top of mind consideration or unprompted awareness for Etsy. And we're getting better at being able to look at what does 1 point in improvement in unprompted awareness likely mean in terms of life time and value for our customers going forward.
And so, we look at all of those, but what matters most is we have a very strong ROI lens on as we invest in upper funnel activities. We do it when and if we believe that it has confidence -- good returns for shareholders.
Maria Ripps
Got it. That's very helpful. And then, Rachel, you have also significantly increased your performance marketing spend over the past few years. Can you maybe talk about how you view the returns from that investment? And it would be great to hear about how this investment might change if the macro environment changes for the better or worse?
Rachel Glaser
Sure. And I think this is the sister answer to the answer Josh was just talking about it, but the other part of the funnel.
Maria Ripps
The other side of it, yes.
Rachel Glaser
So for etsy.com, let me talk about etsy.com as a standalone. We drove -- our performance marketing spend of about $2.5 billion in GMS last year. Our spend was down a little bit, almost flat, but down a tiny minuscule about on performance market. And our GMS was up a little bit by a few percentage points. And what that tells us is that we have really -- we have stability in our efficiency of our spend.
And I wanted to give a few notes on how -- to remind you how to think about them. So first, at the top of the notes, are -- we have about 35% of our spend is offset by our off-site ads program. So, when we spend on PLA and there's a successful sale from a seller's listing, they pay a slightly higher transaction fee.
The other note to think about is sometimes when we spend we may not make the GMS on that performance marketing spend, but it shows up as revenue because of Etsy Ads or in other ways. So, it would be wrong to only be thinking about the percentage of GMS that comes from paid and ignore the incremental revenue that we're getting from that investment.
Another point is that sometimes we'll spend on performance marketing. And it shows up as nonpaid GMS. In other words, somebody might have come to Etsy be considering a product and come back later by typing in www.etsy.com, and they're coming -- and we get the sale later. So those are some ways that may not be counted if you're just trying to take Etsy's performance marketing spend and Etsy's paid GMS spend in period. The last point is, of course, our spend is -- we invest for an LTV where the majority of the return comes within a 90-day period, but there is a tail on that investment that comes in some future period.
So that's sort of how the mechanics of our performance marketing program works. I think we -- one of the things is that we use humans and algorithms to help us determine how much to spend and when and our program is always to keep spending until the last marginal dollar of spend is no longer ROI positive. And the algorithm will lean in or pull back accordingly depending on where the demand is and what the CPCs are. So, we've been able to really have a lot of precision around our marketing ROI thresholds
And the only exception to that would be sometimes we're either warming up a performance marketing channel that might be less mature, but we have some discretion about when we want to be making those investments. And same thing with regular PLA performance marketing in new markets where we can tolerate a slightly lower ROI so that we can learn and optimize in those markets and that we have discretion in as well.
Maria Ripps
That's great. So let's talk about platform innovation. So with well over 100 million handmade unbranded items on the platform, you said that there were two biggest friction points for buyer that center around, number one, finding what they're looking for; and number two, also related to having trust to make a purchase. So I'd love to unpack each of those areas. Maybe I'll ask you sort of two separate questions here.
So first on Search, you've invested a lot in this functionality in recent years. So given the momentum with AI and chat-based search tools, could you maybe talk about some of the main investment priorities and how you envision sort of Search evolving over the next 2 or 3 years?
Josh Silverman
Yes. Maybe if I do a very quick run through where we are today. In 2022, we launched 120 search experience -- search experiments that were positive to GMS. And so we launched them to the full site, which generated hundreds of millions of dollars of incremental GMS. And many of those views really cutting-edge neural technology to translate what you said to what you meant. And so, we're getting a lot better at that. One step that I think is maybe interesting, 90% of purchases in 2022 came from the Search -- first page of Search results.
That tells you that Etsy is doing a better job of finding what you're looking for and putting it front in the center on the first page of Search results. But there's a huge opportunity for us to do better in the future. You don't walk into a local boutique and shout at the salesperson, blue, jeans, bell bottoms. You say I'm looking to refresh my wardrobe for the spring. I need a couple of outfits that I can wear to the office, I'm going to go to a party on Saturday night, and I need something cool that it's got a bit of a 70s theme.
And then I'm looking for something that's good in the following weather, whatever, you have a conversation. And I think Etsy has tremendous amounts to gain from turning Search from being a very keyword based into a very conversational experience and a multimodal experience, oh, how about this, and we can show you a picture. Well, I actually I like that, but could you do it short sleeve instead of long sleeve, could you do it in this color instead of that color? The answer on Etsy is almost always yes.
And so, the idea that we combine images and text into a conversation that allows you to take a journey and give us so much more context, I think Etsy has maybe more to gain than most from where that technology can help take us and we are really excited to lean in. We've got great scientists at Etsy, and the opportunity to partner with a lot of the leading players out there, I think, to bring some really exciting things to life. And I think it can also have productivity benefits and a lot of other benefits. So we're really excited about where generative AI can go in terms of being helpful to take our current neural and strong Search to even the next level.
Maria Ripps
Great. And then maybe a second part of the long question. Can you talk about some of the sort of big investments you've made in trust, things like the Star Seller program, simplified return policy? I think shipping cost and transparency, Purchase Protection Program, et cetera, all of those great things that you've launched over the past year or so, what would you say as some other sort of key focus areas for continuing to build trust in Etsy in 2023?
Josh Silverman
I mean, trust is the life blood of Etsy. It matters so much because we're asking you to buy from a largely unbranded seller an unbranded item. When you're buying a bag of M&Ms, you know what's inside and so you don't really care so much who you're buying it from. But when you're buying an item on Etsy, we build the brand Etsy to be trusted, and we lend that brand to each of our sellers so that our sellers can be more successful. And we've been investing a lot.
So, we've made really step function changes in things like the percentage of items that have an expected delivery date. Now almost every item on Etsy has an expected the delivery date. If you go back 3 years ago, that largely wasn't true. The percentage of items on Etsy that arrival within that delivery date that are on time is now really on par with many e-commerce leaders out there and within what customers expect, which wouldn't have been true three years ago.
We now have listing level returns instead of only shop level return policies. Etsy launched last year, Etsy Purchase Protection. So if the item isn't as described or it doesn't return, you know that with the click of a mouse, we've got your back, and you can get a full refund. We've really made tremendous gains in making sure that Etsy is really trusted and safe. And now it's incumbent upon us to really make sure we communicate that well to the world so that they understand all the benefits and just how safe and reliable it is.
One thing I'll say that's foundational about Etsy is our sellers really do a great job on Etsy. And so we can launch something like Etsy Purchase Protection and have it be quite affordable for Etsy because, in fact, our sellers do a very good job of delivering what they say they're going to deliver on time and as described.
Speaking of trust, we get the opportunity to earn that or not every day, and I'm incredibly proud of how our team responded to Silicon Valley Bank. On Thursday of last week -- 2 weeks ago, it feels like a lot of time, two few weeks ago from now, we all -- the whole world discovered the Silicon Valley Bank has suddenly gone into receivership.
On Friday, our team negotiated new -- a deal with another payments provider, worked the weekend to reroute all of -- we use Silicon Valley Bank to route all of our payments to our sellers in the United States. So, it was the rails by which we send payments to our U.S. sellers. And over the course of a weekend, our team built all new payments flows to have that route to a different payment provider such that payments were flowing again by Monday morning.
So, as a result of something is unexpected as the fall of Silicon Valley Bank, 0.5% of sellers waited one business day to receive their funds. I'm just incredibly proud of how the team did. And I think it's a testament to -- we understand the responsibility that Etsy has and how important we are in the life of our sellers and our buyers. And I think the team does a really great job of living up to that responsibility and demonstrating that we can earn people's trust.
Maria Ripps
Yes. That's great. That's great. I wanted to address your take rate for a minute next. Rachel, you've moved your take rate up pretty much every year you've been at Etsy. Can you maybe talk about the opportunity to expand take rate more from here?
Rachel Glaser
I will. I'm going to talk fast because I think we're getting close to the end of our time. So, you're right. Every year, we've -- since Josh and I have been in the Company, we've brought take rate a bit, not always through transaction fee increases. In fact, we've only done that twice in the history of Etsy. But through adding more services to our sellers, the goal is for it to be a win for the sellers, a win for the buyers and a win for Etsy, so not just a lining of Etsy's pockets. And a good example of that are -- when we introduced offsite ads and Etsy Ads to our sellers and effectively, that brought take rate take rate up. We haven't given any -- well, we haven't given any guidance for the full year of 2023, and we specifically haven't given any guidance beyond the -- what we guided to for take rate for Q1. But thinking -- but just talking sort of academically, there are lots of ways we see that we can add more services that are beneficial to sellers and also could result in a take rate increase for the Company. Things like just as a simple example, right now, Etsy Payments, only 93% of our GMS has run through Etsy Payments, there's still 7% of GMS in other parts of the world that doesn't have an Etsy Payments solution. Just as a very simple example.
So, we always use that lens of, is there a fair exchange of value that Etsy can provide a service to our sellers for which we would be able to have a fee in exchange for that? And we've also got a track record of when we do any kind of change to our fee structure that we reinvest the majority of that incremental revenue back in the marketplace to make it better.
Maria Ripps
Yes. And we have just a few minutes left here, but I do want to squeeze in a couple of questions on long-term financials. And maybe first on sort of long-term revenue growth. You clearly operate in a large market with an estimated TAM of $2 trillion. So, how are you thinking about long-term growth potential for the business? And what needs to happen for the platform to return to double-digit GMS growth?
Rachel Glaser
I'll start this one, if Josh wants to pile on it. You mentioned the TAM, and that's one of the things that makes it just so incredibly excited that there's just in the categories we're in and the markets that we're in, we estimate there's a TAM that's got a T in front of it, not a B in front of it. So, $2 trillion. Etsy was $13 billion or so in GMS last year. And there's so much opportunity in the categories that we're in, both from a buyer growth and more GMS per buyer, meaning new plus reactivated buyers plus frequency of GMS per buyer.
So, we haven't given a long-term growth target since 2019 when we did our Investor Day. And at that time, we said we would grow between 16% and 20% as a CAGR over a 5-year period. That 5-year period would have completed in 2023, would have brought us to about $9 billion in GMS. We're already at $13 billion. And we said EBITDA would be at 30% or higher. We've been at over 30% multiple times. Etsy as a stand-alone is over 30%, as you can tell from all of 2022's results and also the guide we gave for Q1 of 2023.
So, we have a lot of conviction in the opportunity for all the reasons Josh said earlier, demographic, geographic and gender. There's a lot of reasons for us to believe there's much further potential for Etsy, but we haven't -- you're right, I haven't given a further long-term guidance since then.
Maria Ripps
And I guess any thoughts on sort of long-term consolidated EBITDA margin over time?
Rachel Glaser
I'll say that the businesses that we have invested in, our subsidiary businesses are all pretty young and just kind of starting out. So, it would be a mistake, there in -- Depop, for example, is in really large attractive market. That's why we bought it. It would be a mistake to cut off the investment in them. We're not -- collectively, we're only investing we say 400 basis points of a contraction to EBITDA margin, but that's not all that doesn't equate to the investment dollars that equates to the fact that they are a lower margin on -- than Etsy is on revenue. And so, even if they were profitable today, they would be dilutive to our margins. So, I think we're investing appropriately in businesses with large opportunities. So I think we talk about collectively the GMS being less than 15% of Etsy's total. And I think that's the appropriate context to put them in when we talk about that.
Maria Ripps
Got it. Well, it was a great discussion, but we can't let you go without asking you our top question of the day. And I know, Josh, you sort of touched on this in the beginning of this discussion, but what is your one prediction about the e-commerce space that you think might surprise people over the next two or three years?
Josh Silverman
I think it's going to consolidate. I think there'll be a lot fewer places to shop online. And maybe you nod your head and say that feels right. But if you look at all of the investments that are going into allowing hundreds of thousands and millions of different places to buy things, that would suggest that the market thinks that there will be hundreds of thousands and millions of different brands in different places to buy things online. And I think that's unlikely. I think it's going to be fewer and fewer places to shop online. And I think if you want to compete successfully against Amazon, you've got to do something which is really different than what they do. It's got to be important in the difference. And it's got to be relevant often enough during your daily life that you would actually commit it to memory and come back that brand again and again. And I think Etsy is one of a very small handful of brands that meets that category. So, I think that the potential for us is really enormous.
Maria Ripps
That's great. Rachel, anything you'd like to add?
Rachel Glaser
I think Josh said it all. I think the size of the prize is enormous. We're hugely optimistic. And I think we have a really superb team to execute.
Maria Ripps
That's awesome. We're going to leave it there, Josh, Rachel, thank you so much for joining us.
Josh Silverman
Thank you, Maria.
Rachel Glaser
Thank you.
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Etsy, Inc. (ETSY) Presents at Canaccord Genuity's Virtual eCommerce Sustainable Advantage Forum Conference (Transcript)