Etsy Inc. announced upgrades to its online search and discovery experience as it navigates slowing merchandise sales and increasing competition.

The updates, announced Aug. 28, are designed to make it easier for shoppers to find high-quality items and explore a broader range of products on the creative marketplace, said Nick Daniel, the chief product officer at Etsy, in a corporate blog post. Additionally, he said, Etsy launched a new webpage offering sellers tips to improve their search rankings.

“We believe the work we have done to improve search and discovery, paired with a more data-empowered community of small businesses, will help us better match our buyers to sellers that deliver what they’re looking for, with an experience they can trust,” Daniel said.

Etsy is No. 20 in Digital Commerce 360’s Global Online Marketplaces Database. The database ranks the 100 largest such marketplaces by third-party gross merchandise value (GMV). Digital Commerce 360 projects Etsy’s total GMV in 2024 will reach $11.94 billion.

Etsy total gross merchandise value (GMV) by year

Elevating Etsy search and discovery

Earlier this year, Etsy began refining how it determines search rankings, placing greater emphasis on listing quality. This includes looking at factors like detailed descriptions, high-quality photos and a seller’s customer service track record, according to Daniel.

Etsy’s goal is to make it easier for buyers to find products they can trust without sifting through hundreds of listings, he said. Daniel noted that the company wants search results to feature “the highest quality options, from a range of reliable sellers.”

The changes are already paying off. A 30-day experiment conducted in July and August showed a rise in four- and five-star reviews across the platform, along with fewer refund requests — clear signs that shoppers are more satisfied with their experiences on Etsy, according to Daniel.

Benefits for Etsy sellers

Etsy is also improving the shopping experience by surfacing a wider range of products from more sellers. These adjustments can be particularly helpful when shoppers aren’t quite sure what they’re looking for, he said.

For instance, a search for “Halloween accessories” won’t just show ghost earrings but will include a range of items, from Halloween-themed hair clips to spooky home decor.

The changes are benefiting sellers, as well. Serving up a wider array of listings resulted in 70% of shops on Etsy having more visibility in search, according to a company experiment. The figure represents shops that received at least one impression, though the company did not specify the dates of the experiment.

To give sellers more transparency and control over search visibility, Etsy launched the Etsy Search Visibility Page on Aug. 28. The page offers tips on improving search rankings, with insights on listing image quality, return policies, response times, and shipping prices. Sellers can also track the impact of their changes in real time.

Addressing market challenges

In its fiscal Q2 ending June 30, 2024, Etsy reported its third consecutive decline in gross merchandise sales (GMS), totaling $2.95 billion, down 2.1% from $3 billion last year.

Acknowledging the “challenging environment” for its type of goods, CEO Josh Silverman stressed that the company is focused on reigniting growth in the Etsy marketplace and expanding its market share, as competitors like Temu and Shein put pressure on established players. Additionally, last year, craft retailer Michaels launched its MakerPlace marketplace.

In Q2, Etsy refined its seller standards to improve the quality of items on the platform and introduced features such as lists, reminders, occasion pages, and gift teaser videos. Its “Made for You” microsite, which launched globally in June, has already attracted hundreds of thousands of users, the company said.

Moreover, this month, Etsy is launching a paid Insider membership program, starting with a closed beta for select U.S. buyers. The program, called Etsy Insider, offers perks such as free shipping, special offers, donation boosts, and a birthday bonus.

The company has made notable strides in enhancing the customer experience, particularly in gifting, which saw a 4% year-over-year GMS growth. Gifting now represents about 27% of Etsy’s GMS and is outperforming some other online gift-focused competitors.

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