Following the Etsy Q4 2024 results, I wanted to go through all the key points mentioned, what they might mean for Etsy sellers and what we can do going forward.
Making the Best of Low GMS
GMS is usually the most important figure for sellers as it tells you how healthy the marketplace is and is an indicator of how much opportunity there is for seller success. The ongoing downward trend in Etsy’s GMS is very concerning and while I think they could do some things better, I do agree with their analysis that a lot of this decrease is due to the economic climate and buyers having less to spend.
While there is not much we can do about the economy, we can adapt to it. It was mentioned that lower household income buyers underperformed relative to higher household income buyers, which isn’t surprising given that spending on Etsy is mostly discretionary rather than essential. This suggests that premium items may not be doing as badly, so don’t be afraid to create higher-end products and price them accordingly. At the other end of the scale, I have noticed that my lower ticket items are doing better than anything else so if you can create lower priced items, they may be less profitable but as long as you are making some profit from them, they can keep your business ticking over.
Is the Reduction in Etsy Sellers a Good Thing?
Active sellers on Etsy decreased by a massive 600k in the last quarter. A seller is defined as active if they have had at least one charge or transaction over the previous year. Etsy were asked a question on the types of sellers they were losing:
“One thing we’ve seen is that the percentage of sellers who have made a sale successfully has grown as the volume of sellers has come down a little bit. That reflects some purposeful friction that we’ve put in the seller sign-up and seller acquisition process to make sure that the sellers on the market really have the will and the skill to be successful in the Etsy marketplace.” – Lanny Baker, Etsy CFO
It didn’t really answer the question on the sellers they were losing but implies that they are losing non-serious or maybe fraudulent sellers and are not acquiring sellers at the same rate to replace them due to the new sign-up process and fees. It’s difficult to speculate without information on the sellers who have left but hopefully this will mean the marketplace is less diluted by rubbish, making it a better place for buyers and easier for serious, honest sellers to be seen and make a living.
A positive aspect for sellers is that although GMS is down, GMS per active seller is up. For Q4 2023, this figure was $514 but in Q4 2024 it was $589, up nearly 15%. It could be that due to this, sellers were not as impacted by GMS being down, however realistically it’s more likely that a lot of the sellers who have left were not getting many sales anyway and did not have a big impact on the spread of GMS.
Changes to Etsy Search
Etsy are happy that sellers are making changes to their listings based on the recommendations in the seller dashboard and think they’re seeing good results from that, so it’s a good idea to keep an eye on those recommendations as they may impact your search visibility.
The ‘quality score’ was also introduced last year, which was the customer service metrics of shipping on time, good reviews and responding to customer messages. These are pretty basic things that good shops should be achieving anyway but in 2025 they want to build on that by adding ‘higher order’ insights into the quality score, like level of craftsmanship.
“In 2025, we’ll make the quality score more dynamic and robust. For example, we’re looking at how we might tackle higher order questions such as how unique the item is or is it priced competitively. We’re even testing an LLM that identifies the skills and level of craftsmanship that goes into an item. There’s no army of humans we could have hired to answer these types of questions before the advent of GenAI and advanced LLMs.” – Josh Silverman, Etsy CEO
So how can sellers optimise for these higher order insights? Making sure your listing photos are good quality and showcase your craftsmanship is a good start, maybe adding in close ups where appropriate. Another thing that might be helpful is to fill in the ‘Core Details’ section in your listings (screenshot below) as the questions here seem to be trying to determine the ‘level of craftsmanship’.
Maybe your craftsmanship isn’t your selling point. For many shops the real craftsmanship is in the product design. In this case, you can focus on what makes your products unique, what differentiates you from your competitors and bring this to the forefront of how you sell your products.
Etsy App
It sounded like there will be a lot of opportunities for visibility within the Etsy app (for buyers). As a seller, it’s important to start using this app to get to know how it works and where your listings may feature as well as to see how your listings are appearing.
Gifting and Personalisation
Etsy has been trying to establish itself as the go-to place for gifts for the last year and they said in their investor’s report that gifting is going well relative to the rest of the marketplace. Additionally, they said that buyers are loving personalisation, so Etsy are going to be promoting that as well as increasing the functionality for sellers offering it.
Searching on Etsy today, I noticed a row of listings at the top of most searches on desktop headed ‘Personalise these finds’, as in the screenshot below. This is a new thing that I’m seeing – usually it has been Etsy’s Picks at the top recently, which as you can see is still a clickable option that changes the top row.
Most of these listings that I looked at didn’t have full personalisation options – most had 2 variations with different options for the customer to choose from. This is a great chance to possibly appear at the top of search if you have customisable products. It may depend on the product as to whether this will work for you though – I tend to list my products that have different visual options, such as colour, as separate listings as I think the main listing photo will determine whether a buyer will click on it and see the other options, so you could lose sales of other options from buyers scrolling past.
Adding personalisation to products sounds like it might curry favour with the Etsy algorithm, so if you have the capability to do that with your products and it fits with your workflow, this could be worth a try. Perhaps you are able to add vinyl decals to a product, custom engraving or embroidery. If you can’t personalise the product, maybe you could offer personalised packaging.
I can see why Etsy would go down this route as they want to be seen as the marketplace for something special. However, I am hoping this is not going to be a big push from Etsy, as many products just don’t have scope for customisation, or it just adds too much time to the process to be feasible for many sellers, especially as in the quote from Josh earlier in the article, we are being encouraged to price competitively.
Scope for Fee Increases
There have been rumours of fee increases or some sort of fee restructuring on Etsy for a while now. However, even the investors were questioning whether sellers are getting the best deal, with GMS being down and Etsy posting record revenue figures for themselves. I am hoping this means that Etsy will have no justification for fee increases in the short term, as it would not be a fair exchange of value for sellers.
It was mentioned that Etsy will be switching their marketing focus to ‘paid social’ though, which means more offsite ads fees, so keep an eye on them in your shop if you are opted in. Etsy doesn’t make them very visible to sellers and a big increase in the percentage of your sales that come through offsite ads may impact your profitability.
Tariffs and International Sellers
Etsy changed the way they represent international markets in this report – previously they categorised international GMS as sales where either the buyer, seller, or both are located outside the US. They have now changed it so that it is split between US buyer GMS and non-US buyer GMS. In this report US buyers account for 75% of the GMS. In previous reports, the non-US GMS under the previous categorisation was approaching 50%. From where these two figures overlap, we can very roughly ascertain that at present, perhaps 20-25% of GMS is from US buyers purchasing from overseas. This gives us an idea of the potential impact of tariffs on Etsy and on its non-US sellers.
If you are a non-US seller who sells to the US, this is very depressing to look at and worst-case scenario, we could end up restricted to just 25% of the marketplace (or less if there are other countries you don’t sell to – e.g. in my case, the EU due to the new GPSR requirements).
There is very little we can do to prepare for this as it could be any scenario at this point. I advise if you are dependent on selling internationally to America, to do what you can to diversify your income streams geographically. Find new ways of selling domestically or other income streams for your business to shield yourself from any potential loss of business.
Conclusion
Those are my thoughts on the Etsy Q4 2024 earnings presentation. A lot of it is speculative but I hope you found it useful and it can help you strategise going forward. I’d like to feel more positive but after seeing the stat from the seller survey that half of sellers only sell on Etsy, I think the most important point to make is diversify!