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Etsy Inc., once known as a quirky marketplace for handmade, artisanal and vintage items, seems to be moving further away from its origins amid a much tougher e-commerce landscape and the impact of AI.<\/p>\n
Etsy The commercial is part of Etsy\u2019s push of a new user interface featuring Gift Mode, which lets shoppers search for gifts for a specific type of person or occasion \u2014\u00a0combining generative AI and human curation to give gift buyers some unusual options.<\/p>\n But are these moves desperate and costly efforts to try to reach potential new buyers, coming on the heels of Etsy\u2019s plans to lay off 11% of its staff<\/a>?Or could running a TV ad at the most expensive time of the year actually lead to more sales on the once-fast growing marketplace? <\/p>\n Etsy believes these moves will help the company grow again, and its research shows the average American spends $1,600 a year on gifts. \u201cThere is no single market leader and\u00a0Etsy sees a real opportunity to become\u00a0the<\/em>\u00a0destination for gifting,\u201d Etsy\u2019s Chief Executive Josh Silverman said in a recent blog post<\/a>.<\/p>\n Etsy is clearly under pressure after seeing its gross merchandise sales more than double in 2020 during the pandemic, when it became a go-to place to buy handmade masks and all kinds of items for the home, from vintage pieces to antiques to castoffs. From personal experience as an Etsy seller, I saw sales at my own small vintage-clothing shop more than double in 2020 and then fall back in 2021, while still remaining higher than in 2019. In the last two years, sales have slowed, and some other sellers have witnessed similar patterns, based on their comments in seller forums.<\/p>\n The number of sellers and buyers on the platform has increased on the same level as gross merchandise sales. But e-commerce competition has also gotten more fierce.<\/p>\n \u201cOur main concern with\u00a0Etsy\u00a0is growing competition in the space from new players like Temu,\u201d said Bernstein Research analyst Nikhil Devnani, in an email. Temu and fellow Chinese online retailer Shein have raised a lot of investor jitters, as Etsy\u2019s gross merchandise sales have slipped over the last year and are forecast to fall again in its upcoming fourth-quarter earnings report later this month.<\/p>\n Devnani said a Super Bowl ad could potentially help the marketplace gain visibility, something it has always lacked. <\/p>\n \u201cOne dynamic they\u2019ve talked about a lot is that brand awareness\/recollection is still low, and this keeps frequency low,\u201d he said, noting that Etsy buyers shop on the site about three times per year, on average. \u201cThey want to be more top-of-mind \u2026 Super Bowl ads are notoriously expensive of course, but can be impactful\/get noticed.\u201d<\/p>\n The company\u2019s big focus on Gift Mode, however, could be a risky strategy. How many times a year do consumers look for gifts? And in a note Devnani wrote in October, before the company\u2019s Gift Mode launch, he said that one of the concerns investors have is that Etsy is too niche. \u201c\u2019How often does someone need something special?\u2019 is the rhetoric we hear most often,\u201d he said. Etsy, then, is counting on buyers returning for other items for themselves. <\/p>\n Etsy CEO Silverman believes buyers will come back again and again to purchase gifts. Naved Khan, a B. Riley Securities analyst, said in a recent note to clients that he believes Gift Mode plays to Etsy\u2019s core strengths, offering \u201cunique goods at reasonable prices\u201d versus the mass-produced products sold on Shein, Temu, Amazon.com Inc. Consumer spending has changed, though. At an investor conference in December, Silverman said that consumers are spending on dining out and traveling, instead of buying things. <\/p>\n But while investors still view Etsy as a niche e-commerce site, some buyers and sellers see it overrun with repetitive, non-relevant ads. Complaints about a decline in search capabilities, reliance on email and chat for support, and constant tech changes are common on seller forums and Facebook groups. AI-generated art offered by newer sellers as a side hustle<\/a> has also become a thought-provoking, debated issue. And there are complaints about mass-produced items making their way on the site. <\/p>\n Etsy said that in addition to its human and automated efforts, it also relies on community flags to help take down infringing products that are not allowed on its marketplace, and that community members should contact the company when if they see mass-produced items for sale on the site.<\/p>\n It also continues to work on search. On its last earnings call, Silverman said the company was moving beyond relevance to the next frontier of search, one \u201cfocused on better identifying the quality of each\u00a0Etsy\u00a0listing utilizing humans and [machine-learning] technology, so that from a highly relevant result set we bring the very best of\u00a0Etsy\u00a0to the top \u2014\u00a0personalized to what we understand of your tastes and preferences.\u201d <\/p>\n The pressure could build on the company if its latest moves don\u2019t generate growth. Etsy recently gave a seat on its board to a partner at activist investor Elliott Management<\/a>, which bought a \u201csizable\u201d stake in the company in the last few months.<\/a> Marc Steinberg, who is responsible for public and private investments at Elliott, has also has been on the board at Pinterest Elliott Management did not respond to questions. But in a statement last week, Steinberg said he was joining the board because he \u201cbelieve[s] there is an opportunity for significant value creation.\u201d Some sellers fear that the pressure from investors and Wall Street will lead to Etsy allowing mass-produced products onto the site. In its fall update<\/a>, Etsy said the number of listings it removed for violating its handmade policy jumped 112% and that it was further accelerating such actions.<\/p>\n Etsy\u2019s stock before the news of Elliott\u2019s stake was down about 18% this year. Its shares are now off about 3.65% this year, after recently having their best day in seven years on the news that Steinberg joined the board.<\/p>\n Etsy is a unique marketplace that for many years had a much better reputation than some of its rivals, like eBay
\n ETSY,
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\n will be marketing to a whole new audience on Sunday, when its first Super Bowl commercial will run. The 30-second ad is quirky; it depicts a generic 19th-century American leader who\u2019s flummoxed over how to reciprocate France\u2019s gift of the Statue of Liberty. With the help of an anachronistic smartphone, he and his team search on Etsy using its new Gift Mode option, and find its \u201cCheese Lover\u201d category after determining that the French love cheese. Voil\u00e0 \u2014\u00a0they decide to send the French some cheese.<\/p>\n\n
\n AMZN,
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\n and other sites. <\/p>\n
\n PINS,
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\n since December 2022.<\/p>\n
\n EBAY,
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\n But since going public and answering to Wall Street, the need to provide growth and profits for investors has become much more of a driver. The Super Bowl ad and Gift Mode may bring a broader awareness to Etsy, but will it be the right kind of awareness? Sellers like me hope these new efforts will stave off the continuing fight with the likes of Temu and other vendors of mass-produced products, and help Etsy retain the remaining unique aspects of its marketplace.<\/p>\n<\/p><\/div>\n