As summer is winding down and Q4 prep is about to heat up, Etsy just dropped its Q2 2025 financial report few days ago. As usual, let's unpack where the marketplace is at currently and what this means for your shop.
State of Etsy - Q2 2025 performance and Q4 plans
What’s the real story behind the numbers? Let’s take a look at where Etsy stands, what they are focusing on and what's important about the current search algorithm so you can get ahead before the holiday madness begins.
1. State of Etsy: Sales are still behind last year, but relatively stable
Etsy’s total sales (GMS) for Q2 (April-June) hit $2.4 billion in Q4, which is down ~6% year-over-year.
This has been the pattern for a few quarters now and almost everyone is mostly used to it. But still - there is a strong natural inclination to expect that this year would simply be better than the last. However, on average Etsy stores are ~6% down vs 2024 and your growth mindset needs an adjustment.
Growing in this market means your wins should be earned. If your store is growing, it is thanks to three key factors:
- Stronger search positioning;
- Better engagement through images, pricing and discounts and shipping;
- Clearer seasonal messaging to stay top of mind during peak periods.
The good news - we are here to do just this together. From SEO to Visual and Email marketing, our programs support each of the key directions for growth.
2. Etsy's focus - the Etsy Аpp and Discovery Recommendations
Etsy discovery goes way beyond the search bar and Etsy is stating renewed commitment to the Etsy App experience as the core of how they want shopping to happen.
They are pushing Etsy App downloads at every opportunity as it allows them to build more engaging experiences.
Notably the Etsy app has driven slightly less than half of the sales last quarter.
The other key discovery aspect to keep in mind are Discovery "Recommendations".
What are Recommendations? Recommendations are not so "cutting-edge" - they have been a main-stay for a couple of years already. But they largely go unnoticed by most sellers. The most visible form they take is the "You may also like" section under every listing, on your home page and across all kinds of curated experiences by Etsy.
How does this matter? The Etsy app experiences and Recommendations are built on the same search / discovery engines and they require the same approach to optimization. But it's important to keep in mind that Etsy has been shifting traffic away from the search bar per se.
And this is the reason in most stores you can see "Etsy search" traffic (coming from Etsy's browser-based search bar) dropping while "Etsy app and other Etsy pages" traffic is up to 20x higher. Basically most discovery traffic is moving from Etsy search (where it started many years ago) towards all the "other Etsy pages" and the Etsy app.
Right now the "Etsy app and other Etsy pages" traffic channel is the most important driver for revenue and most internal Etsy discovery is getting lumped together into this channel.
3. Etsy's ranking models - even more focus on quality scores
And finally, a quick update about the search algorithm. AI models are taking the world by storm - and Etsy search is part of the AI evolution. Even before “AI” became a buzz word, Etsy’s search was already a complex machine-learning system and as usual they continue tweaking the algorithms. What's important here is the highlight on the linkage between "listings, users, and their activity":
When it comes to deciding where to rank your listing for a specific keyword, Etsy are feeding the algorithm deeper insights from:
- Buyer behavior - what shoppers click, favorite, add to cart, and purchase
- Listing-level activity - how often your items are viewed, engaged with, and bought
Over the years, we’ve neatly summed this up under the umbrella term “quality score.” Every click, favorite, or review you earn helps the algorithm trust your listing more - which in turn improves your ranking.
How does this tie together with your SEO growth strategy?
- Keywords get your listings into consideration in the first place. If your titles and tags aren’t optimized for a given keyword niche, the algorithm won’t even get the chance to surface them and consider their quality scores. And this where SEO starts.
- Hero listings (your best-sellers or high-potential items) deserve extra love. Cultivating these with regular performance monitoring, timely updates, and careful targeting to stack engagement signals increases their algorithmic “weight” and helps them rank competitively - this is the heart of SEO success on Etsy.
- Your SEO strategy should be laser-focused on top seasonal listings through continuous optimization, rather than spreading your efforts too thin. Trying to “wake up” long-term non-sellers is your last priority - those resources are better invested in listings already proving they can win.
- Visual marketing is increasingly becoming a ranking ally. Scroll-stopping thumbnails and videos don’t just convert better - they improve click-through rates, while well-designed images and infographics keep buyers on your listings longer. More clicks and more time spent = stronger engagement signals, which = a healthier quality score and better search positioning.
Keep in mind that "quality scores" can have negative impact as well. Bad reviews, service standards issues, copyright cases and other sketchy situations are also factored in by the ranking models and can lower your visibility in turn.
Whenever you experience any negatives, the best strategy is to compensate through improving the upside. Offer better prices for a while, improve your visuals, try to bring in extra sales and boost conversions, so your final quality score calculation ends up in the positive.
While Etsy’s overall sales are still behind last year, we are seeing growth levels from 30% to 300% and it's all about diving in and playing smarter. The search algorithm is multi-dimensional and constantly evaluating how competitive your listings are at all times.
As we head into Q4, now’s the time to review your top seasonal picks with the team here. From shipping costs, to prices and discounts, listing images and variations - everything matters. Your Etsy marketing should be more 360° than ever if you are serious about dominating your niche.
Work with our SEO team to receive targeted recommendations and actions in your listings, or turn to the Creative team to add a twist to how your listings are presented and how they engage visitors. The shops that do their homework now will be the ones best positioned to ride the wave into Q4.
Have an amazing Holiday Season prep!
