Heavens to Etsy

Anyone who makes his own underwear, or who wants to purchase the handiwork of someone who makes his own underwear, is likely to have made use of the website Etsy.

Etsy is a Brooklyn-based enterprise that sells handmade and vintage goods, and its value has been assessed at about $300 million. However, as The Wall Street Journal noted today, skeptics “fear the company’s growth could be hampered by its ironclad rule that sellers can use the site only to offer goods they have made themselves.” What’s more, the number of items listed for sale on the site has begun to dip slightly.

Yet Etsy executives insist that they’re not worried about getting bigger. “Size of the marketplace is not a problem,” Etsy’s chief operating officer, Adam Freed, told the Journal. “It’s about staying true to our values.”

As we’ve notedPeter Drucker often wrote about sensible business growth. Some businesses, such as bakeries, may simply not be high-growth businesses to begin with. Others are more capable of expansion but require particularly careful handling. In the case of Etsy, we suspect that Drucker would approve of the company’s approach.

[EXPAND More] For one thing, selling hand-made goods requires maintaining certain standards of quality and craftsmanship, characteristics easily sacrificed if production is ramped up too swiftly. “Quantity without quality is the worst thing and will result in total failure,” Drucker warned.

For another, the world has no shortage of mass-produced goods. The personal touch seems to be precisely what Etsy users prize. “A growth strategy has to center on the targets of opportunity—that is, the areas in which a specific company’s strength are most likely to produce extraordinary results,” Drucker wrote in The Changing World of the Executive. “The last step in formulating a growth strategy is to think through what the specific strengths of our business are, the specific contributions customers pay our business for, the specific things we do well—and then focus them on the anticipated changes to identify a company’s priority opportunities.”

What do you think? In a world of fast-growing Internet companies is Etsy’s slower approach to growth the right one?[/EXPAND]