Esty’s Irish unit posts loss despite 56% rise in turnover

The Irish arm of artisan goods marketplace Etsy slipped into the red last year despite reporting a huge jump in turnover.

The ecommerce site, which allows people sell hand-made and vintage items, has seen revenues grow sharply at its Dublin-based subsidiary, with sales rising from €59.4 million to €82.3 million between 2016 and 2017. Turnover was up an additional €45.7 million last year to €128 million, newly filed accounts show.

A breakdown of 2018 turnover shows some €100.8 million derived from marketplace transactions, with the remainder coming from services.

Etsy makes money through charging users to list goods on its platform and via a sales fee.

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Despite the rise in sales, the Irish unit recorded a €13.1 million pre-tax loss, which it attributed in part to a contribution it made in relation to a deal undertaken by its parent last year. Etsy entered into a referral agreement with German competitor DaWanda shortly before that entity closed down in August, allowing it to significantly expand its reach in central Europe.

Criticism

The filings show the company paid out some €30.2 million towards the referral agreement in 2018. Last month, it made a subsequent payment of €1.6 million to DeWanda.

The latest accounts also show Etsy Ireland last year wrote down the value of its intellectual property (IP) by €28.6 million.

Accumulated losses at the Irish unit now stand at €134.3 million, up from €80.3 million a year earlier.

Etsy, whose mission is to “keep commerce human”, faced a wave of criticism from users after designating its business in Ireland as an unlimited liability company in 2015 so that it didn’t have to publicly disclose financial information about the unit. The company has, however, published annual accounts for the subsidiary for both 2017 and last year.

Etsy currently employs 50 people locally with staff costs totalling €4.9 million in 2018.