Etsy, a global marketplace known for its unique handmade and vintage items, recently rolled out an update to its search algorithm in August 2024. This update aims to improve the overall shopping experience for buyers and increase visibility for sellers, aligning with the platform’s goals of promoting high-quality products and strengthening the connection between consumers and small businesses.

Enhancing the Buyer Experience

With over 100 million items available on the platform, Etsy’s new search algorithm is designed to help buyers discover high-quality products with greater ease. The algorithm now places increased emphasis on listing quality, including detailed descriptions, high-quality images, and a seller’s customer service history. This approach ensures that buyers can quickly find trusted sellers offering the best products without wading through countless irrelevant listings (Small Business Trends).

For instance, a buyer searching for a specific item like a “purple backpack” will not only see a variety of options but will also be presented with the highest quality listings from reputable sellers. By surfacing these top-tier listings earlier, Etsy reduces buyer frustration and enhances the likelihood of successful transactions.

The early results of the algorithm update have been promising. A 30-day experiment showed a noticeable increase in four- and five-star reviews, alongside a drop in refund requests. These trends indicate that buyers are more satisfied with their purchases, thanks to the improved search experience (Digital Commerce 360).

Broader Search Results for Better Exploration

One of the most significant changes in the Etsy search system is the broadening of search results to include a wider array of products. This benefits buyers who are browsing without a specific item in mind. For example, a search for “Halloween accessories” now yields a diverse range of products, from ghost-themed earrings to spooky home decor and personalized trick-or-treat bags. This broadening encourages exploration and helps buyers discover unique items they may not have initially considered (Small Business Trends).

This expansion of search results also benefits sellers by increasing their visibility. According to Etsy, about 70% of shops on the platform have experienced increased exposure in search results since the algorithm update. More sellers are receiving impressions, which leads to higher chances of engagement and sales (Small Business Trends).

Empowering Sellers with Greater Control

Recognizing that sellers want more control over their visibility on the platform, Etsy introduced a new tool called the Search Visibility Page. This feature provides actionable insights and transparency into how Etsy’s search algorithm works, offering tips on how sellers can improve their listings. These insights include advice on photo quality, shipping policies, response times, and even return policies.

Through the Search Visibility Page, sellers can track the impact of their changes in real time, enabling them to fine-tune their listings and optimize their search rankings. This new tool empowers sellers to take more proactive control over their success on the platform, making Etsy’s marketplace even more dynamic and competitive (Small Business Trends) (eFulfillment Service, Inc.).

Adapting to Market Challenges

These updates come at a critical time for Etsy, as the company faces increased competition from emerging online marketplaces like Temu and Shein, which have challenged the dominance of established platforms. Etsy’s Gross Merchandise Sales (GMS) saw a slight decline in 2024, down by 2.1% in the second quarter compared to the same period last year. The search algorithm update is part of Etsy’s broader strategy to address these market challenges and reignite growth by improving both buyer satisfaction and seller visibility (Digital Commerce 360).

Etsy’s recent algorithm update marks a significant shift in how buyers and sellers interact on the platform. By prioritizing high-quality listings and offering broader search results, Etsy has improved the shopping experience for its users. Simultaneously, the new Search Visibility Page gives sellers more tools to succeed, creating a win-win situation for both sides of the marketplace.

As Etsy continues to refine its search capabilities, these changes are likely to have long-term positive effects, helping the platform maintain its unique position in an increasingly crowded e-commerce landscape.