Etsy CEO backs AI shopping tools while arguing human craft will matter more

Etsy wants AI to help shoppers find the right item, while betting that human craftsmanship will become more valuable as synthetic products multiply. CEO Kruti Patel Goyal laid out that approach on the company’s October 28 earnings call, as Etsy reported its first year-over-year increase in active buyers in two years.

Goyal described AI as both a shopping tool and a reason to emphasize what people make. “As AI makes it easier to create and replicate products at scale, we believe the human creativity, craftsmanship, and connection that have always made Etsy special will matter even more,” she told analysts. Her argument is not that Etsy should avoid AI, but that it should use the technology to connect buyers with sellers.

Turning a broad gift request into a narrower search

The clearest example is gifting. Etsy said it is extending its gifting experience using lessons from its Gifting Assistant test. The test gives the company a way to explore conversational shopping: understanding what someone wants through an exchange, then helping narrow the search. Goyal said that approach has been particularly effective for broader, more complex requests.

“It has really been an opportunity for us to learn and experiment with a more conversational interface to understand how that enables people to shop more effectively,” Goyal said. She characterized it as a learning tool, rather than presenting the test as a finished answer to how people should shop on Etsy.

Elsewhere, Goyal said AI and machine learning help Etsy understand shoppers’ interests and improve discovery. The company also cited a seller assistant in beta. Those efforts address both sides of the marketplace: helping buyers discover suitable products and helping sellers reach customers. The update described ongoing tests and development, not a separately announced AI product launch.

The boundary is meaningful human involvement

That strategy follows listing rules announced October 22, aimed at keeping AI-generated creations from overwhelming the marketplace. Etsy’s approach distinguishes between tools that support a seller’s work and uses that hide whether a person contributed meaningfully or misrepresent the item. It is not treating every use of AI as equivalent.

• The changes prohibit AI-generated functional guides, including patterns, recipes and instructions.
• They also introduce a requirement for listings to include at least one real product image.

James Ossman, Etsy’s vice president of customer operations, explained the distinction in an October 22 blog post quoted by PYMNTS. Some tools help sellers realize creative ideas or reduce tedious business work, he wrote; others obscure human involvement or misrepresent products. “A blanket ban on AI tools would treat those uses as if they were the same.”

$2.6 billionGross merchandise sales

The value of merchandise sold rose 8.8% year over year.

$692.5 millionRevenue

Revenue increased nearly 11% from a year earlier.

Buyer growth returns, without an isolated AI payoff

Etsy counted about 88 million active buyers over the trailing 12 months, up 1% from a year earlier. Spending also improved: gross merchandise sales per active buyer rose 3.9%. The company cited strong demand for home decor, jewelry and vintage items, giving the earnings update a broader commercial backdrop than its AI experiments alone.

Etsy also linked a 6.2% increase in gross buyer additions partly to targeted TikTok marketing reaching Gen Z audiences. These company-wide figures do not isolate how much growth came from AI-assisted discovery. They sit alongside marketing, category demand and other activity, rather than providing a standalone measure of the gifting test’s sales impact.

Following the quarter, Etsy raised its full-year expectation for gross merchandise sales growth to about 7%, from its previous mid-single-digit outlook. It projects fourth-quarter growth of 5% to 7%. Those are company forecasts, extending the earnings update’s growth outlook beyond the quarter already reported.