Dive Brief:

• With an average of 100 million-plus visits per month in the U.S. in the last year — less than Amazon or eBay but more than 10 times the traffic of its nearest crafts marketplace rival, Redbubble — and growing direct traffic, Etsy is solidifying its dominance in that niche, according to research from market intelligence SimilarWeb.

• More than 43% of Etsy’s traffic goes directly to its website, and traffic coming from paid sources is converting to more loyal direct visits, a "real sign of brand strength," according to a blog post from SimilarWeb Content Marketing Manager Daniel Sevitt. Etsy’s proportion of branded search is at almost 65%, which Sevitt notes is significantly higher than similar sites.

• The growing dominance and signs of growing loyalty could help Etsy weather the fallout from its recently announced seller fee increase from 3.5% to 5%, effective July 16. Many sellers are grumbling about the hike, though Etsy shareholders are pleased.

Dive Insight:

Last month, CEO Josh Silverman marked his first anniversary in the role, which he took at a time when the handcrafts marketplace was facing activist pressure from investors and increased competition from Amazon.

"We believe the cumulative effect of our recent product enhancements are improving the buying and selling experience in a noticeable way and creating a virtuous cycle that will help drive future growth," Silverman told analysts last month, according to a transcript from Seeking Alpha.

His year has gone well so far. First quarter gross merchandise sales grew 19.8% to $861.1 million year over year, expanding 200 basis points from the fourth quarter and marking the third consecutive quarter of sequential growth. That was underpinned by 9.4% year-over-year growth in active sellers and 16.9% year-over-year growth in active buyers, the company said in May.

The site's conversion rate was also up more than 13% year over year for the peak month of December when it hit 5.1%, according to SimilarWeb. "Continuing to optimize the conversion funnel is vital for an e-commerce site like Etsy, and Etsy is proving its ability to optimize the loyalty it generates with increase sales per visit," Sevitt said.

Engagement is strong compared to the competition, including zazzle.com and artfire.com, SimilarWeb found, garnering longer visits and higher pages per visit. Each Etsy user logs an average 2.6 visits per month, a sign that they like the brand enough to return often.

"Etsy has carved out a niche all of its own in the U.S. online retail sector," Sevitt said. "While traffic to etsy.com sees less traffic than, say, ebay.com in the U.S., the actual overlap of products on offer at each site is fairly small." 

While the turnaround is taking hold amid signs of solidifying loyalty among sellers, that is being tested by the company's recent moves, including the fee increase, which also applies to shipping. Some sellers, in forums regarding the boost, speculated that is part of an effort to incentivize free shipping offers in order to compete with Amazon's Handmade Marketplace. Etsy also miffed sellers in April with signs it is backing away from its wholesale opportunities.