Ailing Etsy rolls out first loyalty program in move to spark growth

3 months ago 44

7/31: CBS Morning News

Etsy said Wednesday it will begin testing its first-ever loyalty program in September, a move designed to boost the online retailer's sluggish sales.

The company said it will send invitations to a select number of Etsy buyers who will beta test the program. Etsy Insider members will receive free shipping on purchases and discounts on certain products, among other perks, the New York-based company said.

Etsy did not disclose how much customers must pay for the new loyalty program, but Raina Moskowitz, the company's chief operating and marketing officer said the monthly fee will cost roughly as much as a latte

"While Etsy Insider's benefits deliver great value for buyers, the program comes at no cost to the Etsy seller community," Simona Shakin, Etsy's vice president of product and retention marketing, said in a statement. "Benefits, including the free shipping, will be funded by Etsy and through the membership fee."

Etsy, which started as as an online crafts marketplace, grew quickly during the pandemic, when homebound consumers turned to the website for items such as artistic face masks.

Since then, however, the company has faced more challenges since the worst of the pandemic eased. Online shoppers, who typically go to Etsy to purchase discretionary items, are now feeling the pressure from inflation and have decided to reign in spending.

Etsy Insider is launching as the company is trying to reverse its decline in gross merchandise sales, a measure of the amount of goods sold over a certain period. Etsy reported merchandise sales were down 5.3% during the first three months of 2024 when compared to the same period last year. Competition from Amazon, Temu and Shein have also contributed to Etsy's slump.

"Etsy used to be a very focused site that really was about makers, crafting, authentic and unique products," said Neil Saunders, managing director at GlobalData Retail. "That's still true to some extent, but there's a lot more junk on the site and a lot of random things being sold."

Etsy shares have lost nearly 78% of their value since late 2021. Etsy said in December it would lay off 225 employees, which represented nearly 11% of its workforce.