After launching over two decades ago, Etsy was a small-scale online vendor allowing people to sell handcrafted materials. However, during the pandemic, business exploded for the company when hordes of mask buyers flocked to the site for personalized face masks amidst COVID lockdowns. The stock price of the site quadrupled in 2020, and the number of businesses selling goods on the site more than doubled to a staggering nine million sellers between 2020 and 2023.
Etsy CEO Josh Silverman hopes to scale things back and return to the company’s core mission, “keeping commerce human.” Beginning this week, the company will institute several significant overhauls to its policies. Silverman said this is all to make it “crystal clear” what products belong on Etsy. The changes include new labels on its website and app showing how each seller created a particular item, all in the name of avoiding the AI-generated flood of content the site has received throughout the last few years.
When asked about the company’s larger motivations, Silverman said, “We’re positioning ourselves to answer the call for original goods and real people by dialing up the things that make Etsy, Etsy.”
These changes will also include a TV spot that shows ceramicists, clothing makers, and other artists crafting their unique pieces for sale, followed by a smashed robotic arm. This is a blatant stand against AI-generated content slowly infesting the site and the internet. The platform’s new rules require all items to incorporate “a human touch” as outlined by its creativity standards.
With the changes, Etsy is hoping it can keep buyers and sellers returning to its site at a time when e-commerce is increasingly being dominated by Amazon and upstarts like China-linked Temu and Shein, which provide shoppers with cheap goods delivered to their doorsteps in a few days. The stakes are enormous, as eMarketer estimates the global e-commerce market is projected to cross $6 trillion this year.
“I feel like there’s a race to the bottom in terms of commoditized commerce right now, and almost everyone in e-commerce is playing that race,” Silverman said. “They’re selling the same product and trying to sell it to you for 2 cents cheaper or ship it two hours faster.”
Etsy has struggled to navigate these changing market dynamics and keep up with these faster, lower-priced competitors. In its most recent quarter, gross merchandise sales, or the dollar value of items sold in its marketplace, slumped 3.7% from the prior year to $3 billion. The stock has lost over 80% of its value since peaking in late 2021. It’s down 32% in 2024, while the Nasdaq has gained 23% over that stretch and closed at a record on Monday. In December, Etsy laid off 11% of its workforce.
Etsy has for years been trying to balance preserving its image as a place for unique, handcrafted goods with an effort to bolster the selection of items to compete with its bigger rivals. Now, in an age dominated by AI, Etsy is taking an active stand against it and attempting to refine the quality of its content.
Temu and Shein have grown in the US recently, luring American shoppers with deep discounts on clothing, jewelry, home goods, and other products. However, their products do not have the handmade quality of Etsy’s.
“The solution to that for Etsy is not to try to play that game,” Silverman said. Instead, Etsy looks to bet on itself and the quality of the work that its very human sellers do.
