Etsy relying heavily on its mobile application amidst ongoing decline in growth
In the second quarter of this year, Etsy's flagship marketplace saw a slight dip in Gross Merchandise Sales (GMS), falling 5.4% year over year to $2.4 billion. However, the online marketplace giant is not resting on its laurels. Instead, it is leveraging Artificial Intelligence (AI) and mobile strategies to boost its performance.
CEO Joshua Silverman has emphasized the importance of the Etsy app to the company's strategy, stating that it has significantly improved in Q2. Etsy is primarily using AI to enhance its search and recommendation features, with one key implementation being the "gift mode." This feature uses generative AI to analyze user preferences and deliver personalized product recommendations, improving user experience and stimulating sales.
In addition, Etsy offers real-time listing feedback powered by AI. This feature provides instant tips to sellers for optimizing their product titles and descriptions, thereby improving search rankings within Etsy and on Google.
On the mobile front, Etsy is emphasizing automation and streamlined seller tools to simplify product management, order fulfillment, and inventory updates. These automation capabilities save time by reducing manual tasks, allowing sellers to scale their businesses more effectively on mobile platforms while maintaining quality listings and customer engagement.
The company is also working to create more diverse and engaging recommendations by scoring items across a broad range of interests. Etsy aims to capture nonobvious connections to encourage discovery, improving its ability to predict and match buyer interest over time.
Etsy's AI-driven strategies focus on tightly integrating SEO and marketing success directly into the seller's workflow. By combining creative product design with AI tools and automation platforms, Etsy enhances discoverability and operational efficiency, particularly for sellers using mobile devices for managing their storefronts.
The company's efforts are designed to make it easier for sellers to create optimized, discoverable listings and for buyers to find relevant, personalized products. Rafe Colburn, who recently returned as Chief Technology Officer, is leading these initiatives.
While Etsy's net income for Q2 was $28.8 million, down by $24.2 million compared to last year, the company is retooling its ranking platform to better leverage the capabilities of Large Language Models (LLMs) in generative AI. This move is expected to further improve Etsy's search results by understanding listings, users, and their activity more deeply.
The company's smaller U.K.-based Depop marketplace had GMS of $249.6 million, a 35.3% increase year over year. The U.S. GMS for Etsy grew 54%. Etsy's approach at Depop has already shown success in improving its ability to predict and match buyer interest over time.
Etsy is also making strides in reducing its marketing via linear cable television and shifting to more marketing via streaming platforms. The number of active buyers on Etsy overall dropped by 3.4% to 93.3 million, while the number of active buyers on Etsy's flagship marketplace decreased 4.6% to 87.3 million in Q2.
Despite some challenges, Etsy remains committed to enabling sellers and improving the user experience on its platform. The company completed the sale of Reverb on June 2 and added tools for sellers in April. Sellers' policies have upset sellers in the past, but Etsy is working to address these concerns and empower sellers to succeed on the platform.
In conclusion, Etsy's implementation of AI and mobile strategies includes personalized AI-powered recommendations, real-time AI feedback, automation tools, and the integration of AI-driven SEO and marketing insights. These efforts aim to improve sales performance and user experience on its flagship marketplace, making it easier for sellers to create optimized, discoverable listings and for buyers to find relevant, personalized products.
- Etsy's strategic implementation of AI not only enhances search and recommendation features but also extends to reducing manual tasks for sellers through automation on mobile platforms, with the aim of improving operational efficiency.
- The company is leveraging Large Language Models (LLMs) in generative AI to better understand listings, users, and their activity, with an expectation of improving search results on its flagship marketplace.
- In response to some challenges, Etsy remains dedicated to improving the user experience on its platform, focusing on enabling sellers, optimizing listings, and personalizing recommendations to better match buyer interest.
