Success Stories June 12, 2007, 11:08AM EST

Etsy: A Site for Artisans Takes Off

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"There's so much you can't plan for—so instead of trying to fudge the numbers," he says, the approach was, "We'll just launch it and see."

And so far, that approach has worked. Taking a page from eBay's playbook, the bulk of Etsy's revenues come from its 20-cent-per-item listing fee and the 3.5% per sale commission. Though the site doesn't have outside advertising, for $7 a day Etsy allows its sellers to buy a spot in the site's main showcase of featured items (billed as "seller's top picks," rather than ads). Kalin says those showcase spots sell out within minutes.

In its two years of operation, nearly $10 million worth of handmade goods has been sold on Etsy, with the average sale around $15 or $20 (see BusinessWeek.com, 2/26/07, "Bringing Your Art to the Online Market"). Jewelry is the top category in both listings and sales. Kalin says 95% of Etsy sellers are women (average age, 33), mostly stay-at-home moms and college students looking to supplement their income rather than make a full-time living. About 500,000 items currently are listed on Etsy.

Expansion Plans

Over the past few months, traffic volume has increased so rapidly that "just keeping the site up and running" has been the team's top priority. But with the spate of new hires, including a senior programmer swiped from eBay, the Etsy team hopes to make headway on some ambitious new developments. So with a growing staff that's set to reach 35 employees by the time the new San Francisco office opens at the end of this summer, the Etsy team has begun to formalize many of its formerly informal processes.

One innovation: There's an internal wiki, complete with digital whiteboards where employees can list their daily tasks—an outgrowth of real-world whiteboards the team used in the early days. "It's just a place to keep track of everything that's going on," Marketing Vice-president Matt Stinchcomb says. And so far, that's been quite a lot.

Next up on Etsy programmers' to-do list is a new payment system that will allow buyers to pay for items from multiple sellers in one transaction. And because Etsy sellers already hail from 84 different countries, making the site truly international—adding currency conversion, foreign-language support, and other features—is another project in the works for 2008. Though Etsy.com will always be the core of the business, down the road the team hopes to expand its offline ventures, too. "The big goal is to enable people around the world to make a living making things," Kalin says, and that includes the man himself.

To see a slide show with advice from Etsy sellers on selling their items online, click here.

Miller is a New York-based staff writer covering startups and small business. Miller is a graduate of Brown University.