[this is an edited version of an email I sent round the studio yesterday. It's a semi-cohesive rant more than a well thought manifesto... caveat emptor]
Etsy is a marketplace for handmade things. Think Ebay with a very specialised clientele . In itself this is a very clever idea. The type of users they are attracting (artisans, crasftsmen etc) are by their very nature passionate about what they do. In the same way Flickr builds a community around photography, Etsy is building a community around craft. That it comes with a revenue stream is a bonus.
That is not the only clever thing about this site though. They are also making effective use of "social software" tricks and tools such as folksonomy and user networking to enhance the shopping experience for their customers. Notice how, using tags, they keep a flat category list and generate sub categories on the fly, increasing the 'findability' of other products.
<out on a limb> Rigid catalogue structures are a thing of the past. </out on a limb>
These tags encourage browsing, bringing even deep sections of the catalogue to the fore, and they allow people to view products how they choose ("I'm looking for a present for a friend who likes papercraft and printing. Show me all the goods in the Paper section that involve silkscreening")
Also notice that they give you other ways of slicing up the catalogue space, view by colour for instance.
They have a blog too, to keep customers abreast of what's happening behind the scenes.
We're going to see more and more convergence of these two threads in web development, online shopping and social software, as ecommerce developers learn from bloggers and personal publishers what it means to create a social network. What does blogging bring to the commercial table and how that power of conversation can be used within web applications, not only to improve the bottom line, but also to enhance the shopping experience and create community and conversation around these places.
Markets are conversations after all.