Etsy Focuses on Personalization Amid ‘Highly Fluid’ Trade Situation

Etsy is focusing on personalization efforts amid what its CEO calls a “challenging” macroeconomic environment.

The eCommerce website reported earnings on Wednesday (April 30) showing consolidated gross merchandise sales (GMS) of $2.8 billion down 6.5% year-over-year and down 5.7% on a currency-neutral basis.

GMS for the Etsy marketplace fell 8.9% — 8.1% on a currency-neutral basis — to $2.3 billion, while the number of active buyers on the platform dipped 3.4% to 88.5 million.

“The macroeconomic backdrop has been challenging for Etsy for a considerable period of time, and our outlook right now anticipates that there’s no major change, that things on the macro front stay relatively consistent with where they are,” Etsy CEO Josh Silverman said during an earnings call.

Looking ahead to the remainder of the year, the company is focusing on personalization to improve its traffic. Silverman said Etsy is working to incorporate ad and recommendation data into its search models. The company is also making stronger connections between first- and third-party data to tailor engagement.

“This will help us create an Etsy that will ultimately feel like your personal boutique every time you visit us,” Silverman said.

“We’re already seeing signs of success here. Our personalized homepages get nearly double the engagement of non-personalized homepages, and with the help of machine learning during the first quarter, we increased the share of personalized email and push notifications by over 10 percentage points, with AB tests confirming a clear lift in engagement compared to prior more generic content.”

On the subject of tariffs, Etsy finance chief Lanny Baker said the company’s exposure to the levies seems low for now, given that just a little more than 1% of gross merchandise sales comes from U.S. imports of products from sellers in China.

“The current trade search situation is highly fluid, and it’s challenging to confidently predict when and where specific tariffs will go into effect or how those tariffs may impact demand more broadly,” said Baker.

Speaking at the recent Semafor World Economy Summit in Washington, D.C, Silverman warned that the tariffs on China could harm Etsy’s individual sellers.

“Unfortunately, in this environment, nuance is not our friend,” Silverman said. “Some of these broad-brush policies that are intended for others … might really hurt 8 million Etsy sellers.”

While sellers get 90% of their supplies close to home, Silverman noted that if raw material prices creep up, sellers would have to pay more and could pass that cost along to their customers.

“If the result is inflation and American consumers feeling much poorer, that would be very bad for Etsy sellers,” Silverman said.

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