Etsy is leveraging AI to boost personalization

Dive Brief:

Etsy is tapping AI for push notifications, emails and personalized homepages, company executives told analysts in a first-quarter earnings call Wednesday. 
Engagement nearly doubled upon adding personalized homepages, CEO Josh Silverman said on the call. The company also tested using generative AI to create personalized marketing copy during the quarter.
In Q1, buyer conversion rate on Etsy’s app increased year over year, Silverman said. The company saw an upward year-over-year trend in monthly active users and increases in app downloads for first-time users.

Dive Insight:

Etsy is going all in with AI integration across its platform. As the company continues to update its language learning models to create more personalized experiences, Etsy is incorporating ad and recommendation data to tailor engagement and retention.

“We believe these efforts are beginning to fuel a stronger customer relationship flywheel, powered by new experiences that capture more and better data, which feeds advanced artificial intelligence and machine learning to deliver deeper personalization to drive buyer engagement and frequency over time,” Silverman said on the call. 

For the first quarter, Etsy reported consolidated revenue of $651.2 million, up 0.8% year over year. However, gross merchandise sales across the Etsy marketplace dropped nearly 9% year over year to $2.3 billion, and active buyers fell 3.4% to 88.5 million.

Etsy is working with third-party AI-based shopping platforms in an effort to build on its in-house AI success. The company is participating in a research preview of OpenAI’s Operator, an AI agent created to conduct web-based tasks, such as ordering a personalized mug, on behalf of users. Etsy also enabled in-app purchases for Microsoft’s AI assistant Copilot.

Silverman said Etsy is just getting started with creating personalized browsing and discovery journeys. Using AI, Etsy is working to build a customer experience where the first trends and items a user sees is based on their activity. Data on purchased and viewed items is used to create what appears highest in a curated collection, which Etsy added earlier this month.

Etsy has continuously been using AI to improve consumer-facing elements of its marketplace. Chief Product Officer Nick Daniel told Retail Dive in April the company has used AI to help create alt text for images, summarize product reviews and enhance accessibility and SEO. The company can also better estimate delivery dates with AI.