Consumers Aren’t Buying Many Handmade Trinkets Amid Economic Concern
As consumers continue to feel the economic strain, they are cutting back on buying boutique, handmade items from independent creators, per Etsy’s latest earnings call.
The marketplace shared in its first quarter 2024 financial results Wednesday (May 1) that it saw a 3.7% decline in gross merchandise sales (GMS) as consumers cut back.
“While U.S. unemployment is low and inflation data is mixed, consumer sentiment remains depressed. … Consumer wallets remain squeezed,” Etsy CEO Josh Silverman told analysts. “So, there’s often little left after paying for food, gas, rent and childcare. … These headwinds are real, do not appear to be abating and are impacting our sales.”
Indeed, many consumers are feeling financially pressured. According to “The Pessimism About Pay Rises Offsets the Effect of Falling Inflation” of the PYMNTS Intelligence series “The Paycheck-to-Paycheck Report,” 83% of consumers say they are at least somewhat concerned about near-term economic conditions.
Amid those concerns, shoppers are pulling back on nice-to-have purchases. The “Why One-Third of High Earners Live Paycheck to Paycheck” installment of the series found that 60% of shoppers have cut down on nonessential retail purchases.
In the quarter, Etsy tapped into the trend of seasonal sales, with consumers’ ongoing financial challenges prompting them to seek out more bargains and to concentrate their spending at peak times. The company announced its first “Spring Home Refresh Sales Event,” providing deals on home decor and outdoor furniture.
These kinds of targeted seasonal sales can drive significant engagement, though less so than broader savings events. As PYMNTS Intelligence found in its “Amazon’s First Annual Big Spring Sale Report,” which analyzed the event based on a survey more than 7,000 shoppers, 28% of consumers participated in Amazon’s spring savings event. This share is sizable, though it is significantly lower than the 36% to 40% of U.S. shoppers who participated in Prime Days sales 2021 through 2023.
“Our key focus for 2024 is to continue to build consideration for Etsy to help buyers think of us more often by making it easier to find the best stuff, driving association that there are great deals,” Silverman said.
Overall, consumers tend to prefer to visit stores at some point in their retail journey. According to the PYMNTS Intelligence study “2024 Global Digital Shopping Index: U.S. Edition,” created in collaboration with Visa Acceptance Solutions, which drew from a survey of more than 2,400 U.S. consumers, 26% of shoppers prefer to shop fully remotely, not interacting with brick-and-mortar stores during their purchasing journey.
When they do shop online though, consumers do choose marketplaces. The PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” which drew from a study of more than 3,500 U.S. consumers, found that a plurality of eCommerce shoppers choose marketplaces over brands’ or retailers’ online stores.
The study found that consumers find these marketplaces to offer easier access to product information and reviews, make it easier to track deliveries, offer faster delivery, provide better payment options and enable easier returns than other eCommerce channels, among other benefits.
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