Etsy announced on Wednesday that it will begin testing its inaugural loyalty program in September, with the goal of boosting sales and attracting occasional shoppers to the platform.
The New York-based company will invite select buyers to participate in the program, which will include perks such as free shipping nationwide and access to exclusive discounts.
Raina Moskowitz, Etsy's chief operating and marketing officer, stated in an interview, "We want to encourage customers to start their shopping journey on Etsy rather than just visiting the platform for specific items."
The loyalty program, named Etsy Insider, is being introduced in response to a decline in the company's gross merchandise sales. The cost of the program has not been disclosed, but Moskowitz mentioned that the monthly fee will be similar to the price of a latte. A decision on a nationwide rollout will be made based on consumer feedback.
Etsy, originally known as an online marketplace for crafts, experienced a surge in business during the pandemic as consumers sought unique products like artistic face masks. However, it has faced challenges post-pandemic as consumer spending habits shift and inflationary pressures increase. Competition from companies like Temu, owned by Chinese e-commerce giant PDD Holdings, has also intensified.
In the first quarter of this year, Etsy reported a 5.3% decline in merchandise sales on its platform compared to the same period last year. Consolidated sales, including purchases from its other online sites, decreased by 3.7%, following a slight drop last year.
Since late 2021, Etsy's stock price has plummeted by nearly 78%. In December, the company announced a layoff of 225 employees, representing almost 11% of its workforce.
Neil Saunders, managing director at GlobalData Retail, noted that Etsy's business challenges can be attributed to economic factors as well as changes on the platform that have made it harder for shoppers to navigate. Saunders referred to this shift as the "junkification" of Etsy, where the site has become cluttered with random products in addition to authentic, artisanal goods. He also highlighted issues with the platform's search functions that could potentially deter customers.
As Etsy looks to stand out in a competitive e-commerce landscape, it is refocusing on its artisanal heritage and unique offerings to appeal to customers seeking authentic, handcrafted products.
