Etsy prioritizes its mobile application as persistent decreases continue
Etsy, the popular online marketplace for unique and handmade goods, has announced a series of improvements aimed at reigniting growth and enhancing the user experience on its platform.
Six years ago, Etsy acquired Reverb, a secondhand musical instrument site. However, the company recently completed the sale of Reverb on June 2, allowing it to focus solely on its core business.
In Q2, the number of active buyers on Etsy's flagship marketplace dropped by 3.4% to 93.3 million, and overall Gross Merchandise Sales (GMS) fell 5.4% year over year to $2.4 billion. Despite this decline, Etsy's revenue rose 3.8% to $672.7 million in Q2. The U.S. GMS for Etsy grew 54% in Q2, indicating a strong performance in the domestic market.
To address these challenges, Etsy is making several significant changes. The company is improving the app experience, advancing search ranking algorithms, and introducing new seller tools. Specifically, Etsy is testing more signals in its search algorithms to improve search quality and growing its AI-powered discovery experience with additional themes to create a more browsable shopping environment, especially on the app, where GMS have grown year-over-year and sequentially. New seller tools have also been released to simplify shop operations.
These efforts are part of Etsy’s broader strategy to deepen buyer engagement and strengthen customer relationships. The company is investing in personalized retention and marketing strategies, including strong paid social channel performance and optimized product listing ad data feeds. Etsy has also invested in brand differentiation and emergent AI technologies to create sustainable growth opportunities.
On seller policies, Etsy’s recent focus has been on simplifying shop operations with new tools, but no specific major policy changes were detailed in the latest reports. The company is continuing to invest in marketing and efficiency improvements such as better segmentation in Google Product Listing Ads to enhance profitability and visibility for sellers.
Etsy's Chief Technology Officer, Rafe Colburn, has returned to the company, and the new approach aims to understand listings, users, and their activity more deeply to deliver better search results. The new approach is expected to improve Etsy's ability to predict and match buyer interest over time.
CEO Joshua Silverman stated that the app is key to Etsy's strategy for injecting strength into its flagship marketplace. Silverman believes that by bringing sellers to the forefront by highlighting them and creating more seamless connections between them and buyers throughout the shopping journey, Etsy can create a more engaging, user-friendly marketplace experience.
In addition, Etsy aims to shift its marketing away from linear cable television and towards streaming platforms, and is turning more to partnerships and influencers for awareness and credibility. The company is also creating more diverse and engaging recommendations by scoring items across a broad range of interests and clustering them.
Etsy's smaller U.K.-based Depop marketplace had GMS of $249.6 million, a 35.3% increase year over year. These initiatives aim to reignite GMS growth and create a more engaging, user-friendly marketplace experience. Some sellers have been upset with Etsy's site fees and policies in the past, but ongoing work is being done to enable sellers.
In summary, Etsy’s improvements include: - Enhanced search quality with more algorithm signals - Expanded AI-powered discovery features for better browsing, especially on the app - Introduction of tools to simplify operations for sellers - Personalized marketing to increase buyer engagement and retention - Efficiency gains in paid advertising to support marketplace profitability
These initiatives are expected to drive growth and enhance the overall user experience on Etsy's platform.
- Etsy's new strategy involves a focus on technology, particularly in enhancing search quality with more algorithm signals and expanding AI-powered discovery features to improve browsing, especially on the app.
- In the realm of finance and business, Etsy is investing in personalized marketing strategies to increase buyer engagement and retention, and is also focusing on efficiency gains in paid advertising to support marketplace profitability.
- The company is also leveraging technology in music and entertainment by aiming to shift its marketing away from linear cable television and towards streaming platforms, and by creating more diverse and engaging recommendations using AI technologies.
