Etsy Inc. reported a fifth consecutive quarterly decline in gross merchandise sales (GMS) during the holiday quarter (Q4), as shoppers pulled back on discretionary spending.
The ecommerce marketplace also continued to face pressure from competitors such as Amazon, which attract buyers with lower prices and fast delivery. Consolidated GMS — the total value of items sold on Etsy’s platforms — fell 6.8% in its fiscal Q4 ended Dec. 31, 2024, compared with a year earlier.
Still, while facing these challenges, Etsy’s consolidated revenue for the quarter rose 1.2% year over year to a record $852.2 million. Full-year 2024 revenue also climbed 2.2% over 2023, reaching $2.81 billion.
“Despite facing significant GMS headwinds in 2024, we are proud to have delivered year-over-year revenue growth and very strong profitability, while simultaneously investing in our future,” CEO Josh Silverman said in the earnings announcement.
As 2025 gets underway, Silverman said Etsy is building on initiatives launched last year. These include improvements to help shoppers find higher-quality items and a focus on discoverability in its mobile app.
“We are moving with urgency to increase buyer engagement, drive more sales, and return to GMS growth,” he said.
Etsy ranks No. 20 in the Global Online Marketplaces Database. The database is Digital Commerce 360’s ranking of the 100 largest marketplaces by third-party gross merchandise value (GMV). Etsy’s musical instrument marketplace Reverb is No. 45, while its used-clothing marketplace Depop ranks No. 54.
Etsy’s core marketplace, GMS struggle as seller count drops
In Q4, Etsy reported consolidated GMS of $3.74 billion across its marketplaces. This was down from $4.01 billion a year earlier.
On its core Etsy marketplace, GMS fell 8.6% year over year to $3.3 billion. The company blamed weak discretionary spending, a shorter holiday season, shifts in category mix, and intense promotional competition. Etsy said GMS was particularly weak in October and November but showed relative acceleration in December.
Active buyers on the Etsy marketplace fell 2.6% in 2024, to 89.6 million, down from 92 million in 2023.
Active sellers saw an even sharper drop, down 20% to 5.6 million from 7 million the year prior. Etsy attributed the decline to a new onboarding fee for new shops and initiatives such as updated seller standards.
“As intended and expected, our new seller setup fee, combined with enhanced trust and safety efforts, resulted in a decline in active sellers last year,” Silverman said during the earnings call. However, the result has been a “healthier seller base,” he said, noting that a higher percentage of sellers are now making sales.
Meanwhile, Q4 marked Depop’s strongest GMS growth since Etsy acquired the marketplace in 2021. For the full year 2024, Depop’s GMS climbed nearly 32% year over year to $788.9 million. In the U.S., GMS surged about 60%, making Depop the fastest-growing fashion resale platform in the country, Silverman said.
Revenue hits record in Q4 despite GMS decline
Etsy said its record Q4 revenue of $852.2 million was driven by services revenue, primarily Etsy Ads.
Consolidated net income for the quarter was $129.9 million, up 56% year over year. This was partly due to $27 million in restructuring and exit costs recorded in Q4 2023. Full-year net income for 2024 was $303.3 million, a 1.4% decline from 2023.
Strong gifting trends were a highlight of 2024. Gifting GMS outpaced overall sitewide GMS and grew as a percentage of total sales, Silverman said.
“We made shopping for gifts on Etsy easier through meaningful targeted product improvements, expanded our gift card offerings, and evolved our marketing to drive awareness for gifting moments all year long,” he said.
The Etsy app has also emerged as a major growth driver. Now the platform’s highest-converting channel, the app generates over 40% of marketplace GMS, despite making up only about 25% of total visits, according to Silverman.
“We estimate that getting Etsy’s app penetration in line with our peers represents up to $1 billion GMS opportunity,” he noted.
Etsy focuses on quality, personalization, and loyalty
As Etsy gears up to celebrate its 20th anniversary this year, Silverman stressed the company’s focus on differentiation. Last year, Etsy introduced a quality score into its search algorithms, prioritizing listings with positive reviews, on-time shipping, and other high-caliber indicators.
The strategy appears to be paying off. Sellers made “millions of actions to improve their listings,” leading to better reviews and enhanced customer experiences, Silverman said. In 2025, Etsy plans to make the quality score more dynamic by factoring in item uniqueness and competitive pricing. The company is also testing a large language model (LLM) to identify the craftsmanship and skill levels that go into items, he said.
Using advanced LLMs, the company hopes to predict buyer preferences more accurately, creating a more curated, window-shopping feel, he said.
Silverman also gave an update on Etsy Insider, its paid loyalty program launched last fall. While still in closed beta, early results show members purchase more often, value the free shipping perks, and engage more with Etsy’s marketing, he said. The company plans to refine the program into 2025, focusing on building a scalable economic model.
Early Q1 shows mixed signals, but Etsy remains optimistic
So far in 2025, Etsy has seen some bright spots, including strong Valentine’s Day and gifting-related sales, chief financial officer Lanny Baker said during the earnings call.
Baker, who joined Etsy in January, also noted that Etsy’s subsidiaries are expected to help drive consolidated GMS growth this quarter.
Despite the positive trends, Etsy said it expects GMS to decline in Q1 2025 at a rate similar to the 6.8% drop in Q4.
While Etsy hasn’t provided a specific full-year GMS outlook, Baker highlighted several factors that could drive improved performance beyond Q1. Year-over-year comparisons will ease in the second half of 2025, he said. He said Etsy expects to see returns on its 2024 product investments and plans to accelerate experimentation to drive near-term GMS growth.
Check back for more earnings reports. Here’s last quarter’s report on Etsy sales.
Do you rank in our databases?
Submit your data and we’ll see where you fit in our next ranking update.
Sign up
Stay on top of the latest developments in the online retail industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, X (formerly Twitter), Facebook and YouTube. Be the first to know when Digital Commerce 360 publishes news content.
Favorite