Mad Money

Etsy CEO: We're in a different business than Amazon and other big online retailers

Key Points
  • "Mad Money" host Jim Cramer sits down with Etsy CEO Josh Silverman at his company's headquarters to hear about how Etsy is carving its own space in the world of e-commerce.
  • Silverman says that the advantages of Amazon don't quite translate into Etsy's model.
Etsy CEO on Amazon
Etsy CEO on Amazon

When Amazon entered the handmade business, many investors thought Etsy was doomed.

But Amazon's push into crafts hasn't derailed business at Etsy, which has seen its stock rise more than 100 percent since Amazon launched Amazon Handmade in 2015.

For Etsy CEO Josh Silverman, who took the helm of the specialty retailer in May 2017, Etsy's ability to fend off Amazon stems from differing business priorities, he told CNBC on Wednesday.

"If you think about the traditional strategic advantages of the mass e-tailers, it's about price, it's about convenience and it's about selection," Silverman told "Mad Money" host Jim Cramer.

Companies like Amazon typically achieve their low prices by buying products in bulk — 1,000 or 10,000 at a time — and passing the discounts on to consumers.

"Well, if you can buy 1,000 of anything, it doesn't belong on Etsy," Silverman said. "In terms of convenience, they warehouse everything in advance so they can ship it to you [the] next day. Well, a great many items on Etsy are made to order, so you simply can't warehouse them in advance."

As for selection, Silverman emphasized that Etsy's pool of 1.9 million sellers produce some 50 million handmade items for the website. Although Amazon's total product count is in the hundreds of millions, "no one else comes close" in the handmade world, he said.

"It's just not obvious that their advantages transfer directly into our space," Silverman said of mass e-tailers like Amazon. "If you're going to one place over and over again every day to buy all of the commodities of life, when you want something special, you want the antidote to that. You want something that feels different. And Etsy is all about special."

Etsy's online ecosystem serves some 30 million buyers. Gross merchandise sales, or how many goods are sold and bought on Etsy's platform, grew to $1 billion in the most recent quarter.

Silverman said on Wednesday that growing gross merchandise sales would benefit most specialty e-commerce retailers: "the more we can grow gross merchandise sales, the more everybody wins."

Etsy has also been investing in improving its search and discovery capabilities, buying machine learning play Blackbird in 2016 and moving its infrastructure to the Google Cloud.

But Etsy has another key mission: to make its platform easy-to-use for its sellers so they can focus on making products instead of "being businesspeople," the CEO said.

Over 75 percent of Etsy's sellers run one-person businesses, about 87 percent are women and some 97 percent work from home. Almost every county in the United States is home to an Etsy seller, Silverman said, emphasizing how important ease of use is for his platform.

"As the nature of work changes, as automation is changing the nature of work, creativity can't be automated. So the opportunity to take your creative power, your creative energy and turn that into a business we think is really important," Silverman said. "I think it's a movement that's happening across America and across the world."

Watch Josh Silverman's full interview here:

Etsy CEO: We're in a different business than Amazon and other big online retailers
Etsy CEO: We're in a different business than Amazon and other big online retailers

Disclosure: Cramer's charitable trust owns shares of Amazon.

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Correction: This article has been updated to reflect that Etsy CEO Josh Silverman took the helm of the specialty retailer in May 2017.