When Etsy launched in 2005, the arts and crafts marketplace quickly won a cultlike devotion from sellers and buyers alike for its “keeping commerce human” ethos and its focus on small vendors with original products.

But with time, the Brooklyn-based company’s quest for growth resulted in an influx of listings of products that were not genuinely handmade or unique—or at least didn’t appear to be. Many items listed were resold products shoppers would see on other online marketplaces like eBay or Poshmark, or mass-produced at some overseas factory.

A more modern scourge amplified Etsy’s challenges: artificial intelligence. AI-generated art and bot-created listings have eroded many buyers’ trust in Etsy and dulled the personality of the site that had been its secret sauce. Etsy’s active-buyer count peaked at around 93 million in 2023, then fell to 86.5 million by the end of 2025. 

Etsy sellers have had enough too. They’ve complained about AI-supported listings, saying such listings often outrank their original offerings in search results and undercut them on price. Many sellers have left the site.

Etsy named Kruti Patel Goyal as CEO at the start of 2026 to try to stop the bleeding, and she’s making some early progress. 

The company on Wednesday announced that quarterly active buyers on the site had increased for the first time in two years and the number of active sellers had grown the most since 2024. Revenue rose 11% to $692.5 million, beating Wall Street expectations, while gross merchandise sales, or the value of what was sold on its site, rose 9% to $2.65 billion. Etsy shares jumped 4% Wednesday.

“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. 

Goyal knows the Etsy business intimately, having worked at the company since 2011, most recently as its president and chief growth officer. In that role, she was in charge of engineering, marketing, strategy, supporting sellers, and cultivating the trust of buyers. 

Etsy last week announced changes to its AI policy to rein in some of the technology’s harmful effects. The company now requires most listings to have at least one unedited photo of the product against a real background and have more disclosures on the use of AI even when that use meets its standards.

The influx of low-quality listings has also hampered search on the site, a problem Goyal is trying to fix with the help of AI. She says AI and machine learning can infer customers’ tastes and help buyers sift through the mounds of listings to zero in on the items best suited to them. Etsy is also using an AI shopping assistant to help with more complex, specific searches. Etsy sees a role for AI in helping detect inappropriate use of AI and removing listings that violate its rules. 

Etsy says AI is also helping sellers draft listings, manage inventory, search for images, optimize for search, and promote products to influencers. 

“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.”