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How Etsy Is Helping Lead the Shift In E-Commerce

NEW YORK (TheStreet) -- Ahead of a potential initial public offering, Brooklyn-based Etsy has been expanding into new markets, particularly in Asia, as consumers clamor for items that are made by small businesses. The company's marketplace model is leading the shift in e-commerce, particularly as eBay (EBAY - Get Report)

"You can't buy laptops, electrical chargers and other mass-produced goods manufactured by companies like Samsung on Etsy," said Etsy Chairman Caterina Fake in an interview with TheStreet. "Etsy has always been very much about small businesses, creative individual businesses. I always think of Etsy as empowering small, individual businesses like carpenters, soap makers and others. These are businesses that are not well represented on eBay."

Fake noted that eBay was initially an auction-based model but, over time, it moved to a marketplace model. Etsy recently purchased Grant St. (for a reported $10 million), a marketplace for creative technology, showcasing the fact that Etsy is committed to this model for sellers around the globe. "It shows a shift of how e-commerce is being done these days."

The move comes as Etsy is seeking to expand into new markets, outside of just the U.S., where it's seen tremendous growth. In 2013, over $1.3 billion worth of goods were sold on Etsy last year, and 2014 is shaping up to be another strong year for the company, particularly in international markets. Fake did not give any numbers for 2014 when asked, but noted the company has a lot of growth ahead of it. "We haven't really captured all of the opportunities that are out there for us globally," Fake said. "There is a whole marketplace for it that's forming around it, and it seems like a good time for investment."

Fake would not comment on when Etsy would go public, only to echo comments made by Union Square Venture partner Fred Wilson that Etsy is well positioned to go public. "Indeed, Etsy has been showing tremendous growth and and has shown maturity as a company," Fake stated. It is believed that Etsy is looking for an offering later this year or in 2015, but Fake would not confirm that.

As the company potentially gets ready to show itself to the public markets, Fake admitted that Etsy has its work cut out for it in Asia and elsewhere, particularly in Europe, where the company made some early mistakes.

"We made a lot of mistakes early on in trying to bring our people to the local markets," Fake said during the interview, conducted at TheStreet's New York headquarters. "International is really hard to pull off, with a Web site that is as community oriented as Etsy. It's got a very strong community, very strong voice. If you try to bring an American voice to an international market, it can't work. It has to be local people, local voices, local community. I think that we didn't do a good job at the outset of speaking in that voice."

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