Etsy, Inc. Operates the world's largest marketplace for handmade, vintage, and craft supply items, generating revenue primarily through a 6.5% transaction fee on every sale, $0.20 listing fees, payments processing, and optional seller services like on-site advertising and shipping labels. This stream consists of three components: transaction fees (6.5% of the final sale value, up from 5% in 2022), listing fees ($0.20 per item for a four-month listing period), and payments processing fees. The irony is, Services revenue breaks down into on-site advertising (Etsy Ads and Offsite Ads), where sellers pay cost-per-click fees for prominent placement, and shipping labels, where Etsy provides discounted shipping to sellers and records revenue net of costs. The third revenue stream is Other Revenue, a minor category including fees from third-party payment processors in markets where Etsy Payments is not available. Both platforms target the same demographic as Etsy's younger buyers but with mass-produced goods that undercut handmade pricing. The company's 24.2% take rate is significantly higher than eBay's approximately 13.25% and Amazon's 15% referral fee plus fulfillment costs, indicating that Etsy has pricing power in its niche that generalists lack. However, this pricing power is fragile: if buyers migrate to cheaper alternatives for non-unique items, seller volume and revenue could decline. The competitive landscape is further complicated by social commerce — Instagram Shopping, TikTok Shop, and Pinterest all enable direct sales from creators, bypassing marketplace fees entirely. Active sellers on the Etsy marketplace declined to 5.6 million in Q4 2025 from 5.7 million in Q4 2024, and the company introduced a seller setup fee in early 2024 to combat low-quality listings, which initially caused a seller purge. However, seller retention inflected positively in Q4 2025, with sequential growth for the first time since the fee introduction. Etsy's second moat is its take rate of 24.2%, which is among the highest in e-commerce and demonstrates pricing power — sellers accept this fee structure because Etsy delivers buyers they cannot find elsewhere. The early fee structure was deliberately low: $0.10 to list an item and 3.5% commission on sales, designed to attract artisans who felt eBay was 'a faceless corporation' whereas Etsy was 'a movement.' By mid-2006, Etsy had 10,000 sellers and 40,000 buyers.