Etsy Focuses on App Users as Revenues Tick Up

Etsy says a renewed focus on its app paid off in its most recent quarter.

The eCommerce retailer released quarterly earnings Wednesday (July 30) showing sales creeping up 3.8% for the quarter and 2.3% for the half-year.

Speaking during an earnings call, CEO Josh Silverman said the company’s performance during the quarter was related to a strategic shift Etsy embarked on last year, which included efforts to make it more browsable and intuitive.

As user experience has improved, Silverman said, gross merchandise sales (GMS) from the app have outpaced non-app GMS, accounting for nearly 45% of total GMS in the quarter.

“What our data suggests is that when we get a buyer to adopt the app, we see their lifetime value go up, and we’ve gained confidence that that’s causal not correlated,” he said.

“And it makes sense, right? The fact that Etsy’s right there in your pocket, whenever you have a spare moment, you can pull it out.”

He added that the company is now starting to fight for time, “an inspiration that when you’re waiting for the subway or there’s a commercial on TV, you pull out your app, and we want you to go to Etsy and spend that time just being immersed in all of the different things that you can find on Etsy.”

Chief Financial Officer Lanny Baker touched on the company’s consumer landscape, saying Etsy has seen a “slightly healthier consumer spend across all the different cohorts,” both higher-income and lower-income.

“We have not seen any big shifts in spending across those related to tariffs or trade announcements that have happened,” Baker said.

“And so kind of the general read is that the consumer that we’re seeing looks a little bit better, slightly better than it was perhaps three months ago. With the higher-income households, it’s a little bit healthier.”

PYMNTS spoke earlier this year with Etsy Chief Product Officer Nick Daniel about the company’s hybrid approach to artificial intelligence (AI).

“As a marketplace of over 130 million creative items that are made, designed and handpicked by individual sellers, surfacing the right item to the right buyer at the right time is a unique challenge,” Daniel said.

Etsy is pursuing a strategy it calls “algotorial curation,” which blends staff recommendations with advanced machine learning algorithms to scale curation across its inventory. The process begins with human experts spotting trends and choosing listings that exemplify these trends.

“After a collection is identified, our engineers use machine learning to expand it from roughly 50 human-curated listings to about 1,000,” Daniel said. “Finally, we use [large language models (LLMs)] to make sure the full collection is aesthetically cohesive, represents a variety of products and meets our standards for quality.”