Etsy’s been quietly rolling out major upgrades to how search works on the platform—and the results are making noise. The latest Etsy AI Search Update triggered a 10X traffic increase, reshaping how buyers discover handmade goods. That’s not just a boost. It’s a marketplace transformation.

Let’s walk through what changed, why it matters for handmade sellers, and what you can do to stay ahead.

What Is the Etsy AI Search Update?

From 2019 to 2024, Etsy’s revenue surged from $818 million to $2.81 billion. This impressive growth reflects the company’s significant investments in AI, machine learning, and technological infrastructure. In 2023 alone, Etsy allocated over $470 million to research and development, underscoring its commitment to enhancing the platform’s capabilities.

The core goal? Smarter, more accurate product discovery. Etsy’s upgraded AI tools are now front and center in marketplace performance. The Etsy AI Search Update helps match buyers to listings with more precision—even when their searches are vague.

And it’s working. About 95% of purchases now come from the first page of search results, up from 85%. That means the visibility stakes for sellers just got higher.

Learn more about the State of Craft & Handmade eCommerce in 2025

How Cloud Migration Supercharged Etsy’s Search Engine

Etsy began moving its data to Google Cloud back in 2018. The shift included 5.5 petabytes of data (think: 40 billion photos) and allowed Etsy to ditch its aging on-premise servers.

Why it matters:

• 💡 15% of Etsy’s engineers were freed up to focus on new features
• ⚙️ Experimentation speed jumped 115%
• 🕒 Data processing timelines dropped from weeks to days
• 💸 Computing costs were cut by 42%
• 🌱 Energy usage dropped—helping Etsy hit its sustainability targets

This back-end shift laid the groundwork for the Etsy AI Search Update to succeed, giving machine learning tools the power to scale and evolve.

Key Changes from the Etsy AI Search Update

Etsy’s new AI search goes far beyond simple keyword matching. It now learns from:

• Browsing behavior
• Image analysis
• Shipping speed and cost
• Listing quality and responsiveness

One big innovation is Etsy’s use of “algotorial” collections—curated groups of products chosen by human experts and expanded with AI tools. These collections keep Etsy’s handmade feel while offering scalable, personalized discovery.

Shoppers now get custom homepages, curated collections like “Island Luxe” or “Literary Girl,” and smarter recommendations based on their behavior. It’s turning Etsy from a search-first platform into a discovery-first one.

How This Update Affects Your Listings

Etsy’s smarter AI tools have raised the bar—but also opened up more opportunity.

Here’s what top-performing shops are doing differently:

• Optimizing listings with high-performing keywords
• Using standout, high-quality photos with popular color trends on Etsy
• Offering free shipping
• Responding quickly to customer messages
• Maintaining excellent reviews and fulfillment metrics

Shops using AI-assisted tools (for writing, keyword research, and listing analysis) are seeing serious gains—up to:

• 47% more visibility
• 31% higher sales
• 15 hours saved per week on admin tasks

What Etsy Sellers Need to Know About New AI Policies

With Etsy’s AI rollout, transparency is more important than ever.

• If you use AI to help create your product, you need to disclose it.
• Etsy is removing listings that violate its Handmade Policy at 4x the rate compared to last year.
• Selling AI prompt bundles? That’s not allowed on the platform.

Bottom line: Stay honest, stay original, and use AI to assist—not replace—your creative process.

How to Win With Etsy’s AI Search in 2025

The Etsy search algorithm is smarter. The platform is faster. And competition is tighter. But sellers who adapt are already seeing the rewards.

Here’s your to-do list:

• Optimize titles and tags for relevant, high-traffic keywords
• Upgrade your photos—they matter more than ever
• Keep your shipping affordable and transparent
• Use AI tools to streamline listing improvements and Etsy SEO
• Stay compliant with Etsy’s updated policies

This is Etsy’s biggest tech leap in years—and it’s just the beginning. With over $470 million poured into AI development, we can expect even more personalized, predictive, and powerful tools ahead.

And for sellers who embrace the change while staying true to what makes their shop special, the future looks very bright.