Riding The Etsy Boom To An IPO
When Kimberly Hamlin decided to start selling high-end masks to brides, grooms and the rest of their bridal parties on Etsy last summer, she headed straight to the JOANN store around the corner from her house in Grand Rapids, Michigan, to thumb through bolts of lace, cotton and beaded fabric. The choices they offered trounced any other store, and now she is there three to five times a week to pick up fresh supplies for what has quickly become a thriving online business.
“I spent thousands of dollars last year on supplies at JOANN,” says Hamlin, 46, who often places orders online and picks them up at the store. Demand for her masks has been off the charts, and is not showing any signs of slowing. She expects to hit 3,000 orders this week and is working eight to ten hours a day from her dining room table to keep up. Already she’s had to replace one broking sewing machine.
Hamlin is one of millions of customers that JOANN has attracted during the pandemic who frequent the fabrics and crafts store to pick up supplies necessary to make masks and a plethora of other items they sell on Etsy, eBay or online storefronts powered by Shopify. Small business owners now make up a quarter of its customers, according to the company. They buy in bulk and have become a welcome source of growth for the 78-year-old chain—and put JOANN in a prime position to go public (once again) on Friday.
“We believe that the growth of online marketplaces, such as Etsy, eBay, Shopify and other platforms, is driving the expansion of our customer base, and the success of online marketplaces is directly linked to our growth,” the company stated in filings ahead of its IPO.
JOANN is coming off a strong year in which it added more than eight million new customers and saw sales at existing stores climb 38% since May 1. That helped the company pull in net income of $174 million on sales of $1.9 billion in the 39 weeks ending October 31, 2020.
It is in part riding on the coattails of pandemic winners like Etsy, eBay and Shopify, which have helped small businesses get online quickly at a time when e-commerce is booming. The number of active sellers on Etsy jumped 62% last year to 4.3 million, driving sales on the platform to more than double to $10.2 billion. Shopify processed $120 billion worth of goods in 2020, twice the amount from the year before. EBay sold $26.6 billion in products, up 21% year over year.
Investors have piled into all three companies, pushing Etsy’s stock price up by 240%, Shopify up by 128% and eBay up by 55% in the last twelve months. JOANN is likely hoping to be rewarded in a similar manner by investors once it becomes a publicly-traded company. The company priced its shares at $12 apiece on Thursday evening, below its initial range of $15 to $17.
Forbes.com, by Lauren Debtor