Quarter after quarter, Etsy continues its mission to become a go-to destination for high-quality, affordable, reliable and convenient merchandise.
This holds true despite the challenging environment for consumer discretionary spending, according to Josh Silverman, CEO of Etsy, who said Etsy has been able to gain the attention of consumers through focused product launches and a series of initiatives that aim to fine-tune the Etsy experience.
“There’s no doubt that this is an incredibly challenging environment for spending on consumer discretionary items,” Silverman said in a statement “It’s therefore important to acknowledge that this volatile macro climate will make it challenging for us to grow this quarter.”
The company reported progress on Wednesday (Nov. 1) with $3 billion in consolidated gross merchandise sales (GMS), with a 1.2% year-over-year (YoY) increase. The Etsy marketplace GMS reached $2.7 billion, up 1% YoY. Active buyers rose by 4% YoY to 92 million, driven by international growth.
While GMS per active buyer declined by 6% YoY to $127, it stabilized sequentially. Consolidated revenue was $636.3 million, with solid growth in Etsy Ads and other revenue sources. Etsy’s consolidated net income was $87.9 million, boosted by the absence of a prior impairment charge. They ended the quarter with $1.1 billion in cash and investments and repurchased $297 million of their common stock.
While distinctive and one-of-a-kind items usually hold a special place with shoppers, the influence of inflation tends to draw attention towards essential goods. This shift in focus has ramifications for platforms like Etsy, which initially built its reputation on offering unique creations but is currently in the process of reshaping its image to become a destination not only for niche products but also for a more extensive array of offerings.
“Buyers too often think of us only for very specific needs are at the end of their shopping journey when they can’t find the item somewhere else,” Silverman said in May, noting that Etsy intended to position itself as a go-to marketplace instead of a once-in-a-while shopping experience.
Nonetheless, as of August, PYMNTS reported that even a simple Google search for Etsy yields results describing the platform as an American eCommerce company “focused on handmade or vintage items and craft supplies.” Google itself still perceives Etsy as primarily catering to niche markets.
As mentioned in the company’s press release regarding earnings, the company is continuing to adapt and enhance its platform to cater to the needs and preferences of both sellers and buyers.
One of Etsy’s ongoing efforts is to refine its Search & Discovery features to create a more curated and organized shopping environment. Etsy has reportedly been working to improve search results by considering factors like the visual appeal and overall quality of items.
In addition, Etsy has been exploring new search functionality, moving from keyword-based searches to more conversational approaches. A pilot program introduced Etsy Guided Search, powered by generative artificial intelligence, which offers creative and highly specific product suggestions.
To enhance the overall buyer experience, Etsy has introduced promotional events and value messaging. Flash sales, special discounts like Best of Home at 40% off, and other offers have boosted visibility for seller-funded promotions, contributing to increased conversion rates and higher average order values.
Etsy has also made efforts to remind buyers about abandoned cart coupons, further driving conversions. In a bid to provide more visibility for sellers and deals, Etsy has launched a dedicated Deals tab within its app.
Additionally, Etsy has been working to create unique shopping experiences in key categories, with a focus on Home & Living, Style, and Gifting. For instance, they’ve introduced a revamped Gift Finder, now available in the app, and redesigned Home & Living category landing pages. With the introduction of three different registries for Wedding, Baby, and Gifting, Etsy is customizing its platform to cater to specific purchase occasions.