Etsy's New CEO Uses AI to Fight AI-Made Listings
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Etsy's quarterly active buyers grew for the first time in two years, the company said on Wednesday. The number of active sellers rose by the most since 2024. Revenue climbed 11 percent to $692.5 million, ahead of Wall Street expectations, and gross merchandise sales gained 9 percent to $2.65 billion. Etsy shares rose 4 percent that day.
The results are an early sign for Kruti Patel Goyal, who became CEO at the start of 2026. She has worked at the Brooklyn company since 2011. Most recently she was president and chief growth officer, in charge of engineering, marketing, strategy, seller support and buyer trust.
Why buyers had drifted away
Etsy launched in 2005 and quickly won devoted sellers and buyers with its "keeping commerce human" ethos and its focus on small vendors with original products. Over time, the push for growth brought in listings of items that were not genuinely handmade or unique, or at least did not look that way. Many were resold products shoppers could see on other marketplaces such as eBay or Poshmark, or items mass-produced at overseas factories. AI-generated art and bot-created listings made it worse and wore down buyers' trust.
The active-buyer count peaked at about 93 million in 2023 and fell to 86.5 million by the end of 2025. Sellers complained that AI-supported listings often outranked their original work in search and undercut their prices. Many left.
AI rules and AI tools
Last week Etsy changed its AI policy. Most listings now need at least one unedited photo of the product against a real background. Sellers must also give more disclosures about AI use, even when it meets the company's standards.
Goyal is also turning to AI to repair search, which the flood of low-quality listings had damaged. She says AI and machine learning can infer shoppers' tastes and help them find fitting items. An AI shopping assistant handles more complex, specific searches. Etsy sees a role for AI in detecting improper use of AI and removing listings that break its rules. Etsy says AI also helps sellers draft listings, manage inventory, search for images, optimize for search and reach influencers.
"We've become clearer about what truly differentiates Etsy, the creativity of our sellers, the care and craftsmanship behind what they make, and the human connection that gives those items meaning," Goyal told analysts on the earnings call.
"There's an interesting paradox here," Goyal told investors. "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."
Source: Fortune