Mutually Beneficial

Etsy, the handmade-item e-commerce extravaganza featuring more than 400,000 active sellers, has been putting out the welcome mat for new community members since 2005. Now it has a new kind of customer in mind: web developers and application builders who can form new distribution channels for the company through the Etsy API. The on-demand application programming interface (API), developed in conjunction with Mashery, gives third-party developers creative access to the “back-office” workings of the website, while at the same time allowing Etsy to retain some control.

Chad Dickerson, Etsy’s CTO, considers it a winning solution for everyone involved. But, he says, it didn’t have to turn out that way.

“We have a number of really interesting flash applications on the site,” he says. “We had built an API that developers within our own company, the people who work for us, could use to build applications for our site.” One of the things Dickerson noticed upon joining Etsy in September 2008 was that some outside developers “had basically figured out how [the company’s API] worked. They kind of reverse-engineered it. So we had a choice at that point. We could either shut those applications down and tell those developers that they couldn’t use our systems and data, or we could basically look at the desire for these developers to build applications as an opportunity to engage. We chose the latter.”

Consider CraftCult.com; Dickerson certainly did. Even before the Etsy API was made available, Craft Cult used the retailers’ applications to allow Etsy sellers to track who was viewing their online shops and when. The “heart-o-matic” feature also showed how many items the sellers had available, how many had been sold and which viewers had given the seller a favorite “heart” designation.

“We became aware of them because of our community forum, but also because they were driving a lot of traffic to Etsy,” Dickerson says. “We really liked their application, and thought it fit in well with what Etsy was all about. So we decided to use them as testers for our official API.” Going from “unofficial” to “official,” he says, means that if something is changed on the Etsy site, it won’t inadvertently alter the way Craft Cult works.

“The great thing about the world of APIs -- and this is true with the Etsy API -- is that it’s mutually beneficial,” Dickerson says. “We provide data and information to Craft Cult, for example, and they drive traffic back to us. Really good traffic, with people who are really interested in what Etsy is all about. In addition, they sell advertising. We get the traffic, and they’re able to build an environment in which they can sell those ads.”

Dickerson says the Etsy API also encourages developers to invest more time in building their services; there are already several iPhone applications, he says, “and had we not offered the Etsy API, it wouldn’t have made a lot of sense for those developers to build the iPhone applications. Essentially we’ve endorsed all of the activity we’ve been seeing, and now developers can feel confident about developing on the Etsy platform.”

Proof in the pudding
Though the API has Etsy’s name on it, it’s also a product of Mashery, a leading provider of API on-demand management solutions. Launched in 2006, Mashery’s retail/e-commerce customers include the likes of Best Buy, Shopping.com, buy.at and CafePress.

Oren Michels, Mashery’s co-founder and CEO, says the idea of the open API was a long time coming; while building partnerships in business development for another company, he couldn’t physically keep up with the integration, “which is a nasty word for lots of work that is repetitive and boring that developers hate to do,” he says. He knew he wasn’t alone in his frustrations, and so the revelation came: When dealing with large numbers of partnerships, the same infrastructure was going to be needed by a variety of companies. So why not build it on a multi-tenant platform, allowing control of its distribution? The company had its first customers within a few months of the initial announcement, and since then, about 70 customers have signed on.

There’s a lot of interest from the retail industry in particular, Michels says, “because retail is one of those great businesses where you don’t have to spend time worrying about whether people come to your site, or if they’re referred to you by someone else. The proof is in the pudding. It’s easy to measure: Are you selling more stuff?”

Retailers are asking fundamentally different questions about e-commerce than they were seven or eight years ago, he says. “Now we see a new distribution channel that is like e-commerce but it involves getting your products and services available on third-party sites. That’s pretty compelling, and it’s something with which people who don’t embrace the concept are certainly going to have a challenge.”

Even the largest retailers with the most popular e-commerce sites are only drawing “a tiny fraction of the people web surfing,” Michels says, and if they want to continue to grow sales “they can’t just sit around waiting for people to come to their site. It’s getting really expensive and difficult to create new traffic and find new users who don’t know you exist.”

These days, he says, when companies, products or services grow very quickly, “it’s because something happened on a third-party site, or because they were in the media somewhere. Something has happened somewhere other than their store that caused people to visit their store. What we’re saying is that whatever that’s going to be, you need to create a construct that will allow people to create these serendipitous moments. That’s what an open API does for us -- we don’t know what’s going to happen, but here are all the building blocks you need.”

Changing the shopping experience
As e-commerce sites are changing, customer expectations are evolving too. Shoppers assume a certain amount of information will be available; beyond price and availability, they want “a better and more interesting” shopping experience.

“Customers still want to do things involving social shopping,” Michels says. “They want to know what their friends are buying, or do decent and interesting comparison shopping within a store and between stores, within a particular manufacturer and between manufacturers. They expect that they should have new tools built for them, whether they’re on a particular store’s site or on a third-party comparison site. They expect to get that data, be able to make an informed decision and to easily go and buy” a product.

Dickerson agrees. One of the things he’s learned -- especially while working on developer relations at Yahoo! -- is that for any website to be successful, it simply must participate in the wider web. He points to the fact that Etsy is one of Twitter’s top 200 accounts (more than a million followers) as an example of getting the brand “out there” however possible.

“Regardless of how large your site is,” he says, “the rest of the web is always going to be larger.”