3 Ways Etsy Is Investing in AI, According to Its CEO
Discover how Etsy's CEO Kruti Goyal is investing in AI through product discovery and personalization, while avoiding the pitfalls of over-automation.
Carlos Martínez 7 min read
Executive summary
- The big reveal: Etsy’s CEO Kruti Goyal just outlined a three-pillar AI strategy prioritizing hyper-personalization and algorithmic discovery over pure automation.
- The reality check: Despite massive industry hype around autonomous shopping bots, agentic AI still accounts for less than 1% of Etsy’s total traffic.
- The takeaway for leaders: While competitors blindly fire staff to fund “AI-first” overhauls, the real revenue driver remains using AI to connect buyers with relevant inventory—boosting average order value (AOV) without sacrificing human connection.
Table of contents
Imagine the scene. Your board is demanding a massive pivot to artificial intelligence. You feel the pressure to replace half your sales funnel with autonomous bots because everyone else seems to be doing it.
Then, an $8 billion e-commerce giant steps up to the mic and says: Hold on a minute.
Etsy CEO Kruti Goyal recently laid out exactly how the marketplace is investing in AI for Q2 2026 and beyond. What surprises most isn’t what they are building, but what they are actively choosing to minimize. They are focusing on three main areas: improving product discovery, delivering highly personalized shopping experiences, and taking a very cautious, experimental approach to agentic commerce.
Here is where most retail executives get it wrong. They assume AI is a replacement tool. Etsy proves it’s an enhancement tool.
The 1% reality check that changes everything
Right now, tech Twitter and LinkedIn are flooded with claims that autonomous shopping agents are taking over. We hear endless stories about bots negotiating with other bots to buy your groceries.
The actual data tells a completely different story.
Less than 1% — The total share of Etsy’s overall traffic driven by agentic AI experiences as of the end of fiscal Q2 2026, according to CEO Kruti Goyal. Source: Digital Commerce 360
Read that twice. Less than one percent.
Even though Etsy has direct partnerships with OpenAI, Google, and Microsoft to test agentic commerce, they aren’t forcing the tech onto their 87 million active buyers. They are testing the waters. The bulk of their AI investment goes quietly into the background—powering search algorithms and matching buyers with the exact handmade items they want.
This mirrors what we saw when Walmart’s Digital CEO discussed the future of AI retail. The smartest players build infrastructure first. They don’t just bolt a chatbot onto a messy product catalog.
Discovery is the quiet engine of revenue
If agentic AI isn’t driving the numbers, what is?
Algorithmic discovery. Goyal noted that Etsy sees significantly higher intent and average order value (AOV) from AI-referral traffic. They use AI to understand the buyer and surface the most relevant inventory from their massive catalog.
Think about your own brand. Are you optimizing your product feeds for AI-driven search, or are you distracted by shiny new generative tools?
If your basic listings are a mess, no advanced AI will save you. You have to master the best ways to optimize Amazon product listing and apply those same strict data hygiene principles across every marketplace you sell on.
Consumers actually want AI to help them find things faster.
61% — The percentage of European consumers who already use AI for product discovery and evaluation, signaling a massive shift in how demand is generated. Source: McKinsey & EuroCommerce 2026
You don’t need a bot to talk to your customer. You need your products to show up exactly when the customer’s intent is highest.
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Restructuring for speed, not replacement
Recently, Etsy announced a 12% workforce reduction. The immediate industry reflex was to blame AI.
Goyal explicitly pushed back on this narrative. She stated the cuts were not driven by cost-cutting initiatives or artificial intelligence, but by a need to move faster and lean into momentum. The goal is agile execution.
This is a stark contrast to other tech giants. When Cloudflare cuts 20% of its workforce to go AI-first, it sends a very specific signal about automating internal operations. Etsy’s move is about staying close to the core marketplace dynamic: human sellers connecting with human buyers, facilitated by fast, invisible AI.
Epinium data: 68% of brands that rush into “AI-first” automation without fixing their basic product discovery data actually see a drop in average order value within the first three months.
What this means for your brand right now
Stop chasing the hype.
If you run operations or marketing for a manufacturer, your immediate AI roadmap shouldn’t be focused on fully autonomous purchasing agents. The tech is promising, but adoption is crawling.
Instead, invest your resources exactly where Etsy is investing theirs.
| Strategic Focus | Actionable Step for Brands | Expected Outcome |
|---|---|---|
| Catalog Data | Clean up your unstructured data attributes. | AI models surface your products more accurately. |
| Personalization | Use predictive algorithms for recommendations. | Higher conversion rates from returning customers. |
| Authenticity | Keep the human element in your brand voice. | Stronger market moat against pure AI-generated competitors. |
Etsy’s Q2 results—GMS is up, active buyers are up—prove that a measured, discovery-first AI strategy works. You don’t have to reinvent the wheel. You just have to make it spin faster.
FAQ
What are the 3 ways Etsy is investing in AI?
Etsy is focusing on improving product discovery, delivering highly personalized shopping experiences, and cautiously experimenting with agentic and conversational commerce alongside partners like OpenAI and Google.
How much of Etsy’s traffic comes from agentic AI?
As of Q2 2026, CEO Kruti Goyal confirmed that agentic AI experiences account for less than 1% of Etsy’s overall traffic, showing that traditional algorithmic discovery still dominates consumer behavior.
Did Etsy lay off workers because of AI?
No. While Etsy recently cut roughly 12% of its workforce, CEO Kruti Goyal explicitly stated the reduction was not driven by AI or cost-cutting, but to create a faster, more agile organizational structure.
How does AI improve average order value for brands?
AI improves average order value (AOV) by analyzing buyer intent in real-time and surfacing highly relevant, personalized product recommendations that the shopper is mathematically more likely to purchase.
Where should brand managers focus their AI efforts today?
Brand managers should prioritize using AI for product discovery and catalog optimization. Ensuring your inventory data is clean allows AI search algorithms on marketplaces to find and recommend your products more effectively.
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