Etsy focuses on personalized shopping and discovery, investing in AI and app improvements instead of price wars, aiming for long-term growth and engagement.
Etsy does not want to compete in “the race to the bottom” through low prices and fast delivery, Silverman said. The company is instead focusing on personalized experiences that highlight its unique product offerings as a key differentiator.
The effort is not without a cost. Silverman estimates that the changes incurred an opportunity cost amounting to “a few hundred million dollars” in gross merchandise sales. Fourth quarter revenue reached $852 million, up 1% year over year but short of the company’s goal.
“We temporarily shifted our way of working to be less focused on near-term conversion driving experimentation in favor of creating holistically better customer experiences focused on quality, reliability and making our app a place for discovery,” Silverman said.
The price tag may have contributed to lower gross merchandise sales, which declined 6.8% year over year to $3.7 billion in 2024, according to a company earnings report. However, Etsy expects the benefits of its investments in the shopping experience to start emerging in the second quarter of 2025, according to CFO Lanny Baker.
“We think that’s been very important and foundational,” Silverman said. “We think that sets Etsy up much better for the future. I’m really happy we did it.”
The retailer wants to draw more customers to its app, which accounts for more than 40% of GMS but just 25% of visits, according to Silverman. An improved Etsy app represents a potential $1 billion GMS opportunity.
The company is launching entirely revamped navigation to improve discoverability and inspiration, according to Silverman. Further changes will help facilitate Etsy’s focus on browsing experiences that emphasize discovery and inspiration.
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“It’s really the start of a fundamental shift in how we interact and engage with our buyers, creating a powerful flywheel designed to elevate the entire Etsy experience,” Silverman said. “As our services become more browsable and engaging, we can capture an order of magnitude more data about our buyers’ interests, inclinations and habits, both collectively and individually.”
Etsy is capturing information about items and images customers hover over, swipe past quickly or enlarge, according to Silverman. This browsing behavior information will help the company roll out LLMs that can better predict buyer preferences and offer more personalized experiences.
The goal of this effort is “creating more personalized experiences like window shopping in a store curated just for you,” Silverman said.
