Etsy crushed earnings estimates even in the face of Amazon competition (ETSY)

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Vintage and handmade goods online marketplace Etsy beat analyst estimates in a strong Q2 2016 report.

This most recent report solidifies the company's place as a top online marketplace for artisan sellers and smaller online merchants. E-commerce platforms should be looking to Etsy as a model for how to build boutiques focused on artisan goods with sustainable revenue.

Key metrics from the Q2 2016 report showed significant growth for Etsy:

• Total revenue for Etsy during Q2 reached over $85 million, representing 39% year-over-year (YoY) growth.
• Revenue from marketplace sales totaled $37 million, marking 23% YoY growth. This excludes revenue from Etsy's Seller Services, which includes the fees that merchants pay to sell on the platform.
• The company sold nearly $670 million worth of goods during Q2, a 22% YoY increase.
• The number of active sellers grew 11% to reach 1.6 million merchants.
• Active buyers grew 20% YoY, with 26 million shoppers buying goods from Etsy sellers.

Etsy's success in the second quarter of this year comes even as it faces heavy competition from Amazon. Capitalizing on Etsy's early success, Amazon launched its own artisan-only marketplace called Handmade at Amazon last summer. The e-commerce giant holds some clear advantages over Etsy, including its broad, global user base.

Most notably, merchants who sell on Handmade at Amazon are eligible to participate in Fulfillment by Amazon. Outsourcing logistics, shipping, and customer service to Amazon is a huge value to small merchants without their own fulfillment operations.

However, Amazon has likely seen more roadblocks in growing this marketplace than expected. In Amazon's Q2 2016 earnings report, no mention of Handmade at Amazon's performance was made. Furthermore, sellers have apparently been unhappy with the marketplace.

Last November, it was reported that sellers on Handmade at Amazon were seeing low engagement rates despite heavy promotion and prior success on other marketplaces. Etsy's promising Q2 performance could push Amazon to double down on its own handmade marketplace to maintain competitive footing in this space.

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