Etsy relies on technology to ignite growth

Amid an economically uncertain situation, Etsy, the online platform for handmade products, is seeking new ways to motivate its more than 95 million active users to increase their spending. Rachel Glaser, Etsy's Chief Financial Officer, sees the solution in leveraging artificial intelligence and cloud technologies. Glaser, who will be retiring after an impressive career spanning nearly 40 years, including over seven years at Etsy, is passing on a strategy aimed at driving growth through technological investments. These investments come at a time when the Federal Reserve is keen on gently responding to inflationary pressures. However, the challenge is significant, as the platform's transaction numbers declined in the second quarter. Since the end of the rapid growth during the pandemic, Etsy's company value has largely shrunk. Yet Glaser is counting on the use of AI to enhance user experience and make the platform's search function more efficient. Additionally, Etsy has ventured into the cloud, which, although initially shrinking profit margins, significantly increased data processing speed. This technological shift is intended to improve traffic on the platform and thereby enhance the user experience. Under Glaser, Etsy made corporate acquisitions worth over $2 billion and achieved substantial cost savings through an efficiency drive. A key initiative was the introduction of the "Gift Mode," which suggests gifts to users based on interests and occasions, aiming to boost sales. Analysts from Bloomberg Intelligence are optimistic that Etsy's sales will grow in the medium term, even though a short-term decline is expected. Glaser, who will remain an advisor to the company until June 2024, sees great potential in the company's flexible capital structure, which will offer numerous investment opportunities to the next CFO. The company places special emphasis on ensuring that sellers keep their "handmade" promises. Through the use of machine learning, Etsy identifies items that violate company policies, thus demonstrating its core competency.