Etsy is leveraging artificial intelligence to build detailed shopper profiles, tracking whether customers buy for themselves or as gifts, and adapting to life events like moving or back-to-school. This effort aims to restore the personal connection lost in recent years as the platform scaled. CFO Lanny Baker said the company was 'somewhat clumsy' in personalization before but is now dedicating resources to improve effectiveness.

The initiative has contributed to a turnaround: Etsy Marketplace’s gross merchandise sales reached $2.58 billion in the latest quarter, up 7.5% year-over-year, prompting an upgraded full-year outlook to mid-single-digit growth from low-single-digit. AI now powers over 70% of shopper profiles, with plans to expand coverage. Etsy is also integrating with AI platforms like Chat GPT for advertising and instant checkout within chatbots, targeting younger users early to build long-term loyalty.

Despite higher average order values from premium items and tariff-related price increases, demand has held strong. To focus on its core marketplace, Etsy sold Depop to eBay and cut ~12% of its workforce, with reductions aimed at improving customer experience by reducing internal barriers and hiring for search optimization. While recent growth is encouraging, analysts caution that a few quarters of momentum don’t guarantee long-term trends, though signs point to durability.