By now most of us would be familiar with the concept of the flea market; rows of stalls touting artisanal goods, vintage items, and homemade craft. These markets are usually cute and quaint.

Etsy has managed to adapt this concept to build a peer-to-peer eCommerce website worth $195.6 million since its launch in 2005, with over 54 million registered members.

With big players like Amazon and eBay in the market, what marketing strategy did Etsy use set themselves apart, secure their first customers, and become the largest online craft fair?

1: Carve out a niche market: focus on specialized products to attract their target audience

Unlike eBay and Amazon, where buyers can get literally anything they can imagine, Etsy focuses on handmade or vintage items and craft supplies, ranging from art, photography, clothing, jewelry, bath and beauty products, knick-knacks, and toys.

Made up of primarily independent artists as sellers, Etsy has come to be synonymous with artisanal craftsmanship. This proves a large draw with artsy types, or those hoping to find unique items that are not commercially mass-produced.

As a result, buyers associate the site with a certain level of artistic quality, and are likely to tell their friends about “that amazing artist on Etsy who makes really cool sweaters.”

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2: Create a sense of community: reflects members’ values and adding an element of human intimacy to the shopping experience

Many who make a living or supplement their income by selling goods online say they like the tight-knit community feel of Etsy, which offers online forums and real-life gatherings for members, and also social media features that allow users to browse other members and their favourite shops.

Etsy also embeds social media widgets on the page of each listed item, allowing users to easily share said item on Twitter, Pinterest, Facebook, or Tumblr.

Robert Kalin, co-founder and chief executive of Etsy, said the site caught on because “many people now want their buying habits to reflect their values.”

Shoppers feel good about their purchases because the experience is similar to that of supporting an independent crafter or local artist at a flea market, and are likely to share their experience with like-minded friends.

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3: Rethinking marketing strategies: grassroots involvement taking advantage of member community and curated promotion predicting trends

One of the advantages of having a strong online community is the ability to create buzz without spending a single penny.

Etsy user Susan Schumann was responsible for getting #etsyday as a top trending topic on twitter and roping in 250,000 other members to post a little sign she made - “Did you Etsy today?” - on their cars or in their favourite coffee shops.

Schumann was surprised many of her friends hadn’t heard of the site and decided to take matters into her own hands - after speaking to Etsy’s lawyers, of course. Schumann said, “I felt that if we could all unite today not to promote our own shops but to promote the whole handmade artisan movement, we would all benefit in the long run.”

Etsy’s 54 million-strong user database also gives it the advantage of a massive audience to market to. The company sends out daily “Etsy Finds” emails that are usually put together by a staff member or a popular merchant.

These display a handful of items arranged around a central theme or color scheme, inadvertently predicting trends of the season that will be talked about by buyers and sellers alike.

4: Change with the times: redefining policies to help sellers keep up with overwhelming demand

When Etsy was started in 2005, the company unbendingly positioned itself as a disciple of crafting and making.

But in the fall of 2013, Etsy announced a change in policy that allows users to hire outside staff and manufacturers to help produce their goods on a much larger scale to keep up with overwhelming demand.

With this change in policy, Etsy not only hopes to attract a larger swathe of sellers and consumers but also to spark a discussion on changing the way things are manufactured, making it more local, sustainable and human-centered.

Here’s a quick recap on how Etsy became a wildly successful eCommerce site through word-of-mouth:

1. Identify your niche area, set yourself apart from competitors
2. Create a sense of community, give users an experience they won’t find in competitors
3. Take advantage of the size of your community to advertise
4. Predict trends that your target market will enjoy
5. Adapt policies to change with users’ needs

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