Etsy 2015 Annual Report Download - page 19

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In addition, we believe that our quarterly operating results and key metrics may vary in the future and that period-to-period comparisons of our operating
results may not be meaningful. For example, our overall historical growth rate may have overshadowed the effect of seasonal variations on our historical
operating results. These seasonal effects may become more pronounced over time, which could also cause our operating results and key metrics to fluctuate.
You should not rely on the results of one quarter as an indication of future performance.
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Our financial performance has been and will continue to be significantly determined by our success in attracting and retaining active sellers and active
buyers. For example, our revenue is driven by the number of active sellers, seller engagement, the number of active buyers, buyer engagement and our ability
to maintain a trusted marketplace. We must continue to encourage Etsy sellers to list items for sale and use our Seller Services and encourage Etsy buyers to
purchase items in our marketplace.
We believe that many new Etsy sellers and Etsy buyers find Etsy by word of mouth and other non-paid referrals from existing Etsy sellers and Etsy buyers. If
existing Etsy sellers are dissatisfied with their experience on our platform, they may stop listing items in our marketplace and may stop referring others to us.
Likewise, if existing Etsy buyers do not find our platform appealing, whether because of a negative experience, lack of buyer-friendly features, declining
interest in the nature of the goods offered by Etsy sellers or other factors, they may make fewer purchases and they may stop referring others to us. Under these
circumstances, we may have difficulty attracting new Etsy sellers and Etsy buyers without incurring additional marketing expense.
Even if we are able to attract new Etsy sellers and Etsy buyers to replace the ones that we lose, they may not maintain the same level of activity, and the
revenue generated from new Etsy sellers and Etsy buyers may not be as high as the revenue generated from the ones who leave our marketplace. If we are
unable to retain existing Etsy sellers and Etsy buyers and attract new Etsy sellers and Etsy buyers who contribute to an active community, our growth
prospects could be harmed and our business could be adversely affected.
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We have built a trusted marketplace that embodies our values-based culture, emphasizing respect, direct communication and fun. Our reputation depends
upon our Etsy sellers, their unique offerings and their adherence to our policies. We establish trust in our marketplace in a variety of ways. For example, our
policies are designed to encourage transparency and clearly outline the rights and responsibilities of Etsy sellers, Etsy buyers, wholesale partners and
manufacturing partners participating on our platform. We strive to give the Etsy buyer comfort that she is purchasing unique goods from a small business that
adheres to certain principles. Our Integrity team uses a combination of machine learning, automated systems and community-generated flags to review items
and shops that may violate our policies. We also have sophisticated tools to detect fraud and we strive to prohibit bad actors from using our platform. We ask
our large wholesale retail partners to agree to the Etsy Wholesale Retailer Commitments, which are a set of guidelines to follow when working with Etsy
sellers and are intended to foster relationships that lead to mutual success. In addition, manufacturers who apply to join Etsy Manufacturing must commit to
ethical expectations and to operating a safe and just workplace, with transparency and reliable customer service.
Transparency is one of our core values and Etsy's transparency with our community helps to support the trustworthiness of our marketplace. For example, we
publish an annual Progress Report that details our progress toward our ideals and shares our hopes for the years to come. In 2015, we also released a
Transparency Report, which, among other things, describes the steps we take when items that do not meet our guidelines are listed on our platform, or when
listed items are alleged to infringe third party rights.
We also establish trust by emphasizing the person behind every transaction. We deepen connections among members of our community through our direct
communication tools, seller stories on our website and our in-person events, which highlight personal relationships as a key part of the Etsy experience. For
example, Etsy sellers are encouraged to share their stories and use new tools, such as shop videos, to reach Etsy buyers on our platform and on social media.
We also recognize that sometimes transactions don’t always go as planned. When that happens, our Case System provides a way for Etsy sellers and Etsy
buyers to communicate with each other to resolve disputes.
We also encourage our employees to build meaningful connections with other members of our community. For example, each of our employees, including
management, is expected to perform support rotations to help foster connections with Etsy sellers and Etsy buyers and to help us better understand their
needs.
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