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  1. Home
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Why an Etsy, Pinterest Partnership Makes Sense

If Pinterest is pinning its hopes of profitability on e-commerce, Etsy would be an excellent choice.
By KEVIN CURRAN May 09, 2019 | 04:05 PM EDT
Stocks quotes in this article: ETSY, PINS, TWTR, FB

One of the biggest IPOs in recent memory could be an equally big opportunity for Etsy (ETSY) to shore up its market strategy.

Etsy has plummeted after reporting guidance that came up short of bullish expectations on Wednesday evening and deepened the dive on Thursday.

However, the engagement the company generates for sales could be bolstered by a potential partner that has historically been a key traffic driver. That company is, of course, recent IPO name Pinterest (PINS) .

Etsy appears to recognize the additive effect of pins funneling to its platform, laying out a guide to advertising on Pinterest on its website.

"Pinterest is fun, easy to use, and as any frequent pinner will tell you, even a bit addictive," an Etsy blog post from 2017 states. "Millions of people use Pinterest every day to explore their interests, find products to buy (like yours), and connect with people who share similar interests. The more people pin, discover, and repin your products, the more likely new customers will be to discover your business."

That logic not only applies to sellers, but to Etsy more broadly, particularly by reducing the friction between social media users perusing Pinterest that could be purchasers on a more streamlined partnered platform.

Further, it would add a much-needed social media aspect to the business that will now compete with Facebook's (FB) marketplace offerings on Instagram and Facebook flagship.

For Pinterest, a potential pairing would unlock a key e-commerce opportunity that it is building most of its advertising story on at present and could catapult the company into its long-desired profitability stage.

The wish list nature of the site interaction makes it much more suggestive of consumption, giving it a behavioral edge on the Facebook and Twitter (TWTR) advertising models at present. Simply plugging that directly into purchases could be a key final step to capitalize on that behavioral difference. Also, unlike these competing advertiser models, the user base of both companies is largely female, which fuels further synergy in terms of product targeting.

"These are highly motivated users, they tend to buy, they tend to act," Manhattan Venture Partners head of research Santosh Rao explained in an interview with Real Money. "The advertisers get the views that they want, and they get the return on their investment."

So too could an e-commerce player like Etsy looking to access that user base.

"At some point, they'll become e-commerce," Rao said. "Users come there for actions. Users are thinking of buying, looking for ideas."

Interestingly, Pinterest currently commands twice the valuation of Etsy, meaning it could be the prime mover in any potential relationship after years of tinkering with product pins.

If the company is attempting to seize on what executives have called a "missed opportunity" in e-commerce in the past, Etsy could be the most logical partner.

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TAGS: Mergers and Acquisitions | Takeover Possibility | Earnings | Investing | Stocks | Software & Services | Technology | Advertising | E-Commerce | Stock of the Day

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