Etsy is a specific category driven online marketplace that connects buyers and sellers. What makes it different is that buyers recognize Etsy as a marketplace where they can find unique products for their special needs. Here, sellers are mostly individuals who have built their expertise in different types of crafts. Buyers looking for gifts or looking for products that have some personal and differentiated touch on them visit Etsy. Etsy's top six retail categories include homewares and home furnishings, jewelry and personal accessories, craft supplies, apparel, beauty and personal care, paper and party supplies that contributed 80.0% of overall GMS (Gross Merchandise Sales) during the year 2020 (excluding face mask sales). After the acquisition of Reverb in 2019, Etsy also has presence in market for musical instruments.
So, we can clearly understand what Etsy offers to its sellers and buyers. Sellers get the accessibility to millions of buyers who are looking for specific items for personal use or gifts ranging from vintage products to handmade crafts. Buyers can find their desired products in the home page or through search by keywords or categories.
Since Etsy operates in a niche market of online retail, its TAM (Total Addressable Market) also needs to be addressed to get a clear view of the room for growth. Etsy currently operates in seven core geographies including United States, United Kingdom, Germany, Canada, Australia, France and recent addition India. According to Etsy's market opportunity analysis conducted in 2019, online market size across all relevant retail categories for the Etsy marketplace considering six of its seven core geographies represents USD 249 billion market opportunity. They also estimate that by 2023, the online market opportunity would expand to USD 437 billion. This estimation didn't consider the acceleration happened in the trend of shifting to online marketplace due to covid-19. This estimation also didn't consider the specific buyer group Etsy attracts who are less price sensitive and focused on specific product categories. However, we need to understand that Etsy's TAM can further expand through geographic expansion and acquisition of other specialized marketplace business as it did in 2019 by acquiring Reverb.
In 2020, Etsy's GMS (Gross Merchandise Sale) stood at USD 10.3 billion in 2020 which accounts for 4.14% of claimed market opportunity estimated in 2019. It needs to be noted that Etsy's GMS experienced a stellar 106.0% year over year growth in 2020, thanks to covid-19 induced acceleration in buyers' shift to online marketplace.
Etsy makes money from two primary avenues called marketplace revenue and service revenue. Marketplace revenue consists of listing fee, transaction fee, payments platform and offsite ads transaction. The company launched offsite ads offering in 2020. Service revenue is generated from onsite advertising services, Etsy shipping labels and other optional services for sellers. Marketplace revenue and service revenue contributed 75.0% and 25.0% to total revenue respectively. Etsy fees include USD 0.20 as listing fee for each item listed for up to four months, 5.0% transaction fee, 3.0%-4.5% for payment processing fee and 12.0%-15.0% fee for offsite advertising.
Etsy has generated a lot of attention for its core focus on specialized products that help buyers make a statement and express themselves as different from the crowd. Every seller in Etsy has some unique style that resonate with specific group of consumers. Vast range of unique products from independent sellers, social media buzz and growing thoughtful consumers make Etsy a strong marketplace. As discussed earlier, Etsy has a lot of room for growth considering the TAM and opportunity for geographic expansion and further acquisition.