Etsy Focused on Search and Machine Learning

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Image: Etsy | Product Feed on Laptop
Image: Etsy | Product Feed on Laptop

Despite a lot of shaky news around Etsy this year, the beleaguered marketplace has continued to focus on improving user experiences and search.

To recap, earlier in the year the company booted many top executives and reduced operational staffing by over 22%. Most of the changes came from a behind the scenes push by activist investment firm Black-and-White Capital LP to streamline the company to “Wall Street” norms.

Historically, Etsy has been a bit quirky and embraced social conscious business ideas that often are not well received on Wall Street. If a company is making money and provides a good return on investment for shareholders, very few people on Wall Street take a second look at corporate social responsibility.

But when the company ignores key aspects of the business (product search) and barely shows a profit, then shareholders take notice. Essentially this is what happened with Etsy earlier in 2017.

VISIBLE CHANGES ARE HAPPENING IN KEY PLATFORM AREAS

One of the main issues highlighted in the executive shake up was the lack of progress by Etsy to keep up its search functions. In comparison to other marketplaces, it was dubbed “horrendous”.

Search for a marketplace includes technology for better categorization, presentation, and machine learning. In other words, make the user experience easy and friendly.

Yesterday, the company hired Mike Fisher as its new CTO (Chief Technology Office). Fisher starts immediately and his mission is to work out a forward thinking technology strategy and bring more machine learning innovation to the platform.

Fisher is familiar with Etsy from his previous position as a managing partner of consulting firm AKF Partners, where he advised Etsy on several projects.

REAL WORLD TESTING ALREADY ON THE PLATFORM

In a separate blog post, Etsy announced on their blog that they are testing visible changes on the platform to highlight products to shoppers.

Primarily this includes a popularity rank on products. Best selling items will receive boosts in search results and also receive a new Best Seller Badge.

Scarcity is another feature that Etsy will finally incorporate into their platform. Now shoppers will see if an item is about to sell out with multi-quantity listings receiving “3 left in stock,” “2 left in stock,” or “1 left in stock” treatment.

Etsy states these are tests and not permanent changes (yet). And the company will update sellers on the progress of the trials.

But it is hard to believe they would not include those permanently, unless there is a major technical issue. In reality, these are standard features on eBay and Amazon.

The features are hardly innovative and only bring the platform closer to modern shopping. Compare these “improvements” to the announcement by eBay last week to add image search and one can see how much catch-up they need to do.

STEPS IN RIGHT DIRECTION

The hiring of a new CTO and making improvements are all steps in the right direction. These developments still do not rule out that Etsy may be up for sale.

In the long run, the company may be a better fit with another platform. But in the meantime, it is investing in the core shortfalls of its technology.

Regardless, this should be good news for Etsy sellers that have been on edge about the company’s future. And it may keep some from jumping ship to eBay and Amazon.

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2 COMMENTS

  1. With the exception to ‘fixing’ search, the new feature that you talk about that Etsy is implementing is not in line with its core seller base and only benefit mass product sellers from other e-commerce platforms – the platforms that you suggest the new features are supposed to be stopping seller migrating away from Etsy to this platforms.

    • It isn’t so much what I think they should do as what I believe the company is going to do. Etsy is at the same point that eBay found itself years ago. The company is at a cross-roads now and needs to figure out how to maneuver out of this problem. It either has to scale upward or go private again with a dedicated focused believer in the company. I don’t see such a person on the horizon…

      Probably the biggest mistake Etsy made was to go public because it put the company under scrutiny from shareholders. When an company appears to be underperforming, someone will swoop in and demand changes, and that is exactly what happened here.

      In my opinion there are only two realistic outcomes right now. Both involve changing the company to a new direction. The fact that current management is putting emphasis on technology upgrades shows me they are working to catch up the platform to industry standards and ready it for sale. They have gutted most operational infrastructure, except to turn on the lights and pay the bills. So in my mind this screams sale as they believe those functions will not be necessary in the future as a buyer will have a full operational infrastructure already in place.

      So here is what I believe will happen:

      Outcome 1 is that an investment firm will buy the company and take it private. This will mean the company becomes a bean counter driven operation.
      Outcome 2 is that someone will buy it to merge it with its current operations. In our weekly live show on YouTube on Mondays, we have speculated that Walmart has the most to gain by buying Etsy. But there could be others and eBay as well as Amazon have been rumored.

      Regardless of what the core Etsy sellers wish to happen, the company direction is changing. I agree that sellers that make hand crafted individual pieces will feel the pain the most.

      I personally hope I am wrong, but I have seen this movie too many times in other industries.

      Richard

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