Etsy Inc. is leaning further into artificial intelligence (AI) with a new set of tools designed to cut routine work and help sellers connect with more buyers.
In its latest seller update, Etsy described the new features as “responsible innovation.” They include a new AI-powered writing assistant and bulk listing suggestions, as well as buyer-facing updates such as AI-generated review highlights.
The push comes as the creative marketplace looks to steady its gross merchandise sales (GMS). Etsy’s GMS declined last quarter, even as revenue ticked up.
Etsy ranks No. 20 in the Global Online Marketplaces Database. The database is Digital Commerce 360’s ranking of the 100 largest marketplaces by annual third-party gross merchandise value (GMV).
Etsy’s new AI tools for messaging and seller efficiency
The rollout builds on updates to seller tools that Etsy made earlier this year.
Etsy said the latest tools target seller communication and listings. The online marketplace noted they are powered by AI and are optional, not mandatory, for sellers to use.
“We’ve heard from many of you that you’re open to using AI-powered tools, as long as they respect your voice, your craft, and your control,” Etsy told shop owners in the Sept. 2 update. Its new beta writing assistant, for example, uses shop information such as item descriptions and past messages to draft replies that mimic a seller’s voice. Sellers can edit or ignore the drafts, but Etsy said the main advantage is speed.
According to Etsy’s own conversion metrics, sellers who respond to buyer questions in under two days generate, on average, a 27% higher conversion rate than those who wait longer.
For now, the feature is limited to select U.S. sellers, with plans to expand, it said.
“Whether you need a little extra help editing your writing or just want to get some time back in your day, the writing assistant is here to help you respond to buyer questions faster, without losing the human touch,” Etsy said.
In addition, Etsy is testing bulk title and attribute suggestions. The tool, located in a seller’s Search Visibility dashboard, scans a listing’s text, images, tags and reviews. Then, it recommends clearer titles. Sellers can apply the changes in bulk, accept suggestions as-is, or adjust them to fit their shop’s voice, Etsy noted.
Help with discovery
Etsy said it is also using AI behind the scenes to reshape how buyers discover products.
On the company’s Q2 earnings call, executives noted that Etsy is overhauling its search ranking system with generative AI to make results more relevant.
“We’re creating more diverse and engaging recommendations by scoring items across a very broad range of interests and clustering them to capture nonobvious connections to encourage discovery,” chief growth officer Kruti Goyal told investors on the call.
In the latest update to sellers, Etsy noted that it now has smarter search ranking, as well as image-based matching in search. Both are designed to connect sellers with more buyers, it said.
Additionally, Etsy is rolling out AI-generated review summaries for buyers that surface recurring themes, such as “fast shipping” or “well made.” They are similar to Amazon’s AI-generated review snippets on product pages.
“We’ve seen that buyers respond positively to these insights, which can help strengthen trust in your shop and drive sales,” Etsy said in the update.
Efforts to boost buyer confidence and efficiency
Delivery estimates are also getting an upgrade. In addition to seller inputs like processing times and shipping services, Etsy said it now factors in other details. These include shipping history and carrier data, such as recent transit times. The AI-powered estimates are meant to give buyers a clearer sense of when their order will arrive and to build more trust at checkout, it said.
Overall, Etsy said its latest tools are designed to cut down on repetitive tasks, freeing up sellers to focus on creativity and connecting with customers. It stressed that the tools are meant to support, not replace, sellers.
“We know AI is a fast-evolving space, and we’re committed to moving thoughtfully and transparently — with your creativity and control always at the center,” the company said. “As we expand and improve these tools, we’ll continue to listen closely to your feedback, build with intention, and keep you updated as we introduce new features.”
Seller and buyer retention at stake
Etsy is rolling out the changes at a time when its marketplace activity is slipping.
For the second fiscal quarter ended June 30, Etsy’s GMS declined 4.8% year over year to $2.81 billion. Despite the struggles, revenue grew 3.8% to $672.77 million.
Active sellers fell 7.8% year over year to 8.12 million, while active buyers declined 3.4% to 93.33 million. In addition to its namesake marketplace, the totals include Depop, Etsy’s used-clothing platform, and Reverb, the music gear marketplace it sold in June. Before Etsy sold Reverb, it ranked No. 45 in Digital Commerce 360’s Global Online Marketplaces Database. Depop currently ranks No. 49.
To help reverse the slide, CEO Josh Silverman told investors the company is leaning on product improvements and AI-driven personalization. Executives said that includes agentic AI tools, with an eye on boosting engagement during the holiday season.
Silverman added that Etsy’s app outpaced non-app channels in year-over-year growth. It also accounted for nearly 45% of GMS in the quarter.
“While we’re, of course, not satisfied with the year-over-year decline, we do believe this sets us back on a path to growth,” Silverman said.
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