Etsy uses AI to make gift discovery more personal and boost buying frequency

Etsy is betting that the easiest gifts to buy are the ones that feel the most personal. Under new chief executive Kruti Patel Goyal, the marketplace has widened its AI-driven discovery tools while trying to preserve the human service that makes custom orders work in the first place.

Goyal took the CEO role on January 1, 2026, after Josh Silverman stepped down at the end of 2025 and stayed on as executive chair through December 31, 2026. In her first-quarter shareholder letter, Goyal said Etsy had “not consistently translated” its differentiated value proposition into the customer experience. Her fix is to make the platform easier to discover across more surfaces, then connect shoppers to items that feel relevant, personal and worth returning for.

The numbers suggest the strategy is starting to move. Etsy said first-quarter 2026 active buyers grew sequentially for the first time in two years, while active buyers, active sellers and gross merchandise sales per buyer all rose year over year. The company finished the quarter with 86.6 million active buyers and 5.6 million active sellers, the first year-over-year increase in seller count since it introduced a seller setup fee. Gross merchandise sales reached about $2.5 billion, revenue was $631 million and adjusted EBITDA margin came in at 29.3 percent. Etsy also raised its full-year 2026 gross merchandise sales growth outlook to low single digits.

For personalized gifts, that balance matters. A custom necklace, a monogrammed weekender bag or a made-to-order nursery print depends on more than an algorithm finding the right search term. It depends on the seller answering quickly, keeping inventory fresh and delivering the kind of detail that turns a transaction into something worth giving. That is why Etsy has paired its AI push with seller guidance that prizes both refresh-inventory discipline and human responsiveness.

The company’s AI strategy is no longer limited to its own site. Etsy launched Gift Mode in January 2024 as an AI-powered gift-finding feature, then followed in April 2025 with curated collections shaped by both AI and human curation. It also updated its seller policy in July 2024 to label items by level of human involvement, a response to complaints about generic and AI-generated listings. More recently, Etsy partnered with OpenAI in September 2025 so U.S. shoppers could discover, browse and buy Etsy items directly in ChatGPT, then joined Stripe and Microsoft in January 2026 to enable Copilot Checkout for eligible items in the United States.

Etsy has said those conversational-assistant purchases are limited to U.S. shoppers and priced in U.S. dollars for now. That constraint only sharpens the larger question facing the company: whether AI can scale the discovery of one-of-a-kind gifts without sanding off the individuality that makes Etsy worth choosing in the first place.