Etsy Prioritizes Mobile App and Loyalty Program to Up Consumer Engagement

In 2024, Etsy focused on strengthening its core offerings, specifically its mobile app and the launch of its new loyalty program, to retool customer engagement and increase purchase frequency.

During Etsy’s fourth-quarter earnings call Wednesday (Feb. 19), CEO Josh Silverman acknowledged the challenges the company faced, including declining gross merchandise sales (GMS), but emphasized investments in improving customer experiences, particularly through its mobile app, would pay dividends in the long run. One of the key initiatives aimed at addressing these challenges is Etsy’s loyalty program, Etsy Insider, which was in its beta phase by late 2024.

Core Differentiation

“2024 was a challenging year,” Silverman told analysts during the call. “We’re disappointed, as we know you are. We’re leaning into our core differentiation. Consumers are shopping and spending their time differently. We temporarily shifted our way of working and are less focused on near term in favor of creating holistically better customer experiences and making our app a place for discovery. We believe it will be well worth it.”

Etsy is focusing on driving more app usage, as it represents 25% of visits but holds potential as a $1 billion opportunity, Silverman said. Company officials plan to enhance browsing experiences to collect more data on user behavior and tailor recommendations based on interests.

“The app is our highest conversion channel, and we’re launching new navigation that leans heavily into discovery and is designed to showcase the possibilities Etsy has to offer,” he said.

“We’ve been talking to people who land on mobile [and] they should be on the app. We’ve received some friction with that, but we are seeing an increase in app downloads we think is encouraging. We’re going to lean into that work and shift more customers to the app.”

Etsy Insider

Meanwhile, Etsy’s loyalty program, Etsy Insider, aims to increase customer retention and drive more frequent shopping by offering benefits like free U.S. shipping, discounts, and early access to exclusive items. The program offers two paid membership options: seasonal ($18) and annual ($72). Seasonal membership, billed every three months, includes benefits like free U.S. shipping, exclusive discounts, and early access to merchandise. Annual membership, billed annually, provides all seasonal benefits along with a birthday bonus and, for members who signed up before Jan. 30, a limited-edition gift designed by an Etsy seller.

“We are encouraged by early indications from the loyalty program,” Silverman said. “People like free shipping and they seem to buy more product.

“Now the work to do is what’s going to happen with churn rates and what the unit economics look like. We’re going to expand the pool and grow in a more organic way. We have the number of subscribers we hoped for and it’s a petri dish big enough to be learning from.”

Rewards and Navigation

PYMNTS Intelligence data shows 41% of U.S. shoppers prioritize loyalty rewards when deciding where to make purchases. Consider 35% said they consider rewards to be very or extremely important.

Additionally, a PYMNTS Intelligence report, “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” created in collaboration with Adobe, revealed 40% of consumers said they consider how easy it is to navigate an online store when selecting a digital merchant.

Etsy Chief Financial Officer Lanny Baker cited the “silver lining” of fourth-quarter reactivated buyers grew 1.3%, to 9.8 million; while for the three-month period, active buyers slipped 2.6%, to 89.6 million; new buyers dropped 17.6%, to 6.9 million; repeat buyers decreased 2.5%, to 36.1 million; and habitual buyers fell 9.5%, to 6.4 million.

Looking ahead, Silverman remains optimistic.

“We are moving with urgency to increase buyer engagement, drive more sales, and return to GMS growth,” he said. “By infusing discovery more deeply into the Etsy marketplace, we are working toward building more joyful shopping journeys for our buyers while simultaneously unlocking a wealth of insights about their evolving tastes and preferences. This will support our vision to craft increasingly personalized and resonant experiences that feel uniquely tailored to them.”