The peer-to-peer e-commerce site Etsy (NASDAQ: ETSY) recently announced an expansion of its revenue stream with the introduction of Pattern by Etsy-the company's first subscription service designed to allow merchants to easily design their own websites to sell products outside of Etsy's online marketplace. With a $15/month price tag after a free trial month, Pattern is positioned to compete with other website template companies like Squarespace and GoDaddy (NYSE: GDDY) but has a built-in appeal for Etsy merchants as the ability to purchase directly through Etsy's payment method is embedded within each site. Previously, Etsy merchants would have to link to their Etsy store to sell products listed on the site, or create an entirely new website to host their products and use an external payment service like PayPal (NASDAQ: PYPL) to process the orders.
Etsy has a large base to sell its Pattern service to with over 1.6 million merchants. The main selling points to turn merchants into Pattern subscribers are the ease with which to make the site as well as the lack of Etsy branding on any Pattern-created sites. Merchants can create a site to sell their own homemade goods without any visual giveaway that it has been created by Etsy-a potential perk for extreme, small-business minded consumers. Additionally, the automatic integration with merchants' Etsy stores is a major breakthrough, so if an item sells out on Etsy it will automatically be removed from the Pattern site. Going hand in hand with this, Etsy will provide merchants with data analytics based on both a merchant's Etsy-based sales as well as purchases from their Pattern store. Additionally, Etsy's recent push to drive more mobile traffic spilled over into Pattern's interface with every Pattern-designed site able to support custom viewing experiences on mobile and tablet devices.
In designing Pattern, Etsy released that a third of Etsy's merchants said if a simple tool was available that they would be interested in setting up their own online stores separate from the main Etsy site. Further, half the company's merchants are already selling goods on non-Etsy based sites despite a majority of sales coming from Etsy. But it is still undetermined whether Etsy can take this data and turn them into subscriptions despite harsh competition from outside website hosting and design companies. Additionally, Amazon's Handmade marketplace (NASDAQ: AMZN) that launched in Q4 2015 may influence subscription rates as it has provided many Etsy merchants with another customer-base without a monthly fee.
Pattern's debut comes almost exactly a year after Etsy's lackluster IPO, clearly part of a push to make the company more attractive in the eyes of Wall Street with more diversified income streams. If Etsy can first convert its current merchants into Pattern subscribers and tout this achievement, the company may find more handmade goods merchants flocking to the site in the hopes of setting up personalized sites.