Opinion: Etsy strays further from its roots with its first Super Bowl ad.

The ad is part of Etsy’s new user interface push featuring a gift mode that lets shoppers search for gifts for specific types of people or occasions. Combining generative AI and human curation gives futures buyers some unusual options.

But is this move a desperate and expensive effort to reach potential new buyers on the heels of Etsy’s plan to lay off 11% of its workforce? Or could you actually make more money by running TV ads during the most expensive time of the year? Are you generating sales in a once fast-growing market?

Etsy believes the move will help the company grow again, with research showing that the average American spends $1,600 on gifts per year. “There is no single market leader, and Etsy sees a real opportunity. that much Etsy CEO Josh Silverman said in a recent blog post:

Etsy is clearly under pressure, seeing total merchandise sales more than double in 2020 during the pandemic. At that time, Etsy became the go-to place for all kinds of items for the home, from handmade masks and vintage pieces to antiques and second-hand items. From my personal experience as an Etsy seller, I have seen sales at my small vintage clothing store more than double in 2020, then decline in 2021, but still remain higher than in 2019. Sales have been slowing over the past two years, and some other sellers have seen a similar pattern, based on comments on seller forums.

The number of sellers and buyers on the platform has grown to the same level as total product sales. However, competition in e-commerce has also become more intense.

“Our main concern for Etsy is increased competition from new players like Temu,” Bernstein Research analyst Nikhil Devnani said in an email. Temu and fellow Chinese online retailer Shein have raised concerns among many investors as Etsy’s total merchandise sales have declined compared to last year and are expected to fall again in its fourth-quarter earnings report due later this month.

Devnani said Super Bowl advertising could potentially help gain market visibility that has always been lacking.

“One dynamic they’ve talked about a lot is that brand awareness/recall is still low, which keeps frequency low,” he said, noting that Etsy shoppers shop on the site about three times a year on average. “They want to get a little more attention. Super Bowl commercials, of course, are notoriously expensive, but they can be impactful and get attention.”

However, the company’s heavy focus on futures mode may be a risky strategy. How many times a year do consumers look for gifts? And one of the concerns investors has is that Etsy is too niche, Devnani wrote in a note in October, before the company launched its gifting mode. “’How often does someone need something special?’ “It’s the rhetoric we hear most often,” he said. Etsy is hoping buyers will purchase other items on their own.

Etsy CEO Silverman believes shoppers will keep coming back to buy gifts. Naved Khan, an analyst at B. Riley Securities, said in a recent note to clients that Gift Mode leverages Etsy’s core strengths to offer “unique products at affordable prices” compared to the mass-produced products sold on Amazon Shein, Temu and Amazon. said. com AMZN Co., Ltd.;
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And other sites.

But consumer spending has changed. At an investor call last December, Silverman said consumers were spending money on eating out and traveling instead of buying goods.

However, while investors still view Etsy as a niche e-commerce site, some buyers and sellers believe that Etsy is filled with repetitive, irrelevant ads. Complaints about poor search functionality, reliance on email and chat for support, and constant technology changes are common on seller forums and Facebook groups. AI-generated art that new sellers are offering as a side hustle has also become a thought-provoking and controversial issue. There are also complaints that mass-produced products are being distributed on the site.

In addition to human and automated efforts, Etsy said it relies on community flags to help remove unacceptable and infringing products from the marketplace, and community members should contact the company if they come across mass-produced items for sale. On the spot.

Additionally, the search operation continues. On its last earnings call, Silverman said the company is moving beyond relevance and into the next frontier of search. One is that “we focus on leveraging human and (machine learning) technology to better identify the quality of each Etsy listing, so that in highly relevant results we align with understanding your tastes and preferences to deliver the best of Etsy at the highest level.” “It was raised to .”

If recent moves fail to generate growth, pressure could mount on the company. Etsy recently lost a board seat to a partner at activist investor Elliott Management. Elliott Management has purchased a “significant” stake in the company over the past few months. Marc Steinberg, who heads Elliott’s public and private investments, also serves on Pinterest PINS’ board of directors.
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From December 2022.

Elliott Management did not respond to questions. But in a statement last week, Steinberg said he joined the board “because we believe there is an opportunity for significant value creation.” Some sellers worry that pressure from investors and Wall Street will force Etsy to allow mass-produced products on the site. In its fall update, Etsy said there was a 112% increase in the number of listings it removed for violating its homemade policies, and that such actions are accelerating.

Before news of Elliott’s stake broke, Etsy’s stock price was down about 18% this year. The stock is down about 3.65% this year after the company recently had its best day in seven years on news that Steinberg had joined its board.

Etsy is a unique marketplace that has gained a much better reputation over the years than some of its competitors such as eBay EBAY.
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But since going public and responding to Wall Street, the need to provide growth and profits for investors has become a much bigger driver. Super Bowl ads and gift modes could create wider awareness of Etsy, but is it the right kind of awareness? Sellers like me hope that these new efforts will help stem the ongoing fight against Temu and other suppliers of mass-produced products and help Etsy maintain its unique aspects of the marketplace.