Etsy Recommender System: Scenario Design Analysis

Question 1: Who are Etsy’s Target Users?

Etsy’s target users on the platform are buyers and sellers. Their demographics, psychographic profile and behavioral patterns are shown below.

Main Group: Buyers

Demographics & Characteristics:

Gift Shoppers - Looking for unique, personalized presents for special occasions
Home Decorators - Seeking handmade, vintage, or custom decor items
Craft Enthusiasts - Shopping for supplies, materials, and tools
Wedding/Event Planners - Finding custom invitations, decorations, favors
Fashion Shoppers - Seeking one-of-a-kind clothing, jewelry, accessories
Vintage Collectors - Hunting for antique and vintage items
Conscious Consumers - Preferring handmade/artisan goods over mass-produced items

Psychographic Profile:

Value uniqueness and authenticity
Appreciate craftsmanship and artisan work
Often willing to pay premium for quality/customization
Seek personal connection to products and makers
May have specific aesthetic preferences (boho, minimalist, vintage, etc.)

Behavioral Patterns:

Browse-heavy behavior (inspiration shopping)
May shop with specific intent OR casually discover
Often return for repeat purchases from favorite sellers
Engage with reviews and seller stories

Secondary Group: Sellers

Demographics & Characteristics:

Small Business Owners - Operating from home studios, small workshops, or craft rooms
Solo Entrepreneurs - Often one-person operations managing all aspects of their business
Side Hustlers - Maintaining Etsy shops alongside full-time jobs or other commitments
Creative Professionals - Artists, crafters, designers turning their passion into income
Vintage Curators - Collectors who resell carefully sourced vintage items
Craft Supply Sellers - Providing materials for other makers
Age Range - Diverse, from young makers (20s-30s) to retirees pursuing creative passions
Scale Varies - From hobbyists making occasional sales to full-time shops with employees

Psychographic Profile:

Passionate about their craft and creative process
Entrepreneurial mindset with varying business sophistication
Value direct customer relationships and feedback
Pride in craftsmanship and product quality
Community-oriented (see Etsy as collective of artisans, not just marketplace)
Often have strong personal brand/aesthetic identity
May struggle with work-life balance (making + marketing + fulfillment)

Technical Capabilities:

Range from tech-savvy to basic digital literacy
May not understand SEO, algorithms, or data analytics deeply
Rely on Etsy’s platform features for visibility
Often learning business/marketing skills on the go

Business Context:

Dependent on platform traffic and discoverability
Limited marketing budgets compared to large retailers
Compete with thousands of similar sellers
Success heavily influenced by Etsy’s recommendation algorithms
Need consistent sales to justify time investment
May operate on thin profit margins

Pain Points:

Getting discovered among millions of listings
Standing out in saturated categories
Understanding what drives visibility
Balancing production time with marketing efforts
Seasonal sales fluctuations

Question 2a: What are the main goals of buyers on Etsy?

Purchase-Oriented Goals:

Find a unique/personalized gift for a specific person or occasion
Discover items that perfectly match their aesthetic or style preferences
Purchase high-quality, handmade alternatives to mass-produced goods
Find customizable products (monogrammed, personalized colors/sizes)
Source specific craft supplies or materials for their own projects
Complete a purchase efficiently with confidence in quality

Discovery & Inspiration Goals:

Browse for creative inspiration (home decor ideas, gift ideas)
Discover new artisans and small businesses to support
Find unexpected items they didn’t know existed
Explore trending or seasonal items
Stumble upon items that spark joy or creativity

Emotional/Values-Based Goals: - Support independent sellers and small businesses - Connect with the story behind handmade items - Feel good about ethical/sustainable purchasing choices - Own something truly unique that reflects their personality - Experience the satisfaction of finding “the perfect thing”

Practical Goals: - Compare options across multiple sellers - Verify quality through reviews and seller reputation - Stay within budget while finding quality items - Receive items in time for specific events/deadlines - Navigate the platform easily and efficiently

Question 2b: What are the main goals of sellers on Etsy?

Visibility & Discovery Goals: - Get discovered by the right buyers (those who appreciate their style/niche) - Appear in relevant search results and recommendation feeds - Stand out among competing sellers in their category - Reach buyers actively looking for their type of products - Increase shop visits and listing views

Sales & Revenue Goals:
- Generate consistent sales to sustain their business - Convert browsers into buyers - Build a base of repeat customers - Maximize revenue during peak seasons (holidays, weddings) - Achieve financial goals (full-time income, supplemental income, hobby funding) - Maintain healthy profit margins after Etsy fees

Customer Relationship Goals:
- Attract qualified leads (serious buyers, not just window shoppers) - Build loyal customer relationships - Receive positive reviews and feedback - Create satisfied customers who return and refer others - Communicate their brand story and values to aligned buyers

Business Growth Goals: - Scale their business sustainably - Expand product lines based on customer interest - Understand what products resonate with buyers - Compete effectively without racing to the bottom on price - Build reputation and authority in their niche

Operational Goals: - Manage workload effectively (balance making + selling) - Reduce time spent on marketing/promotion - Minimize returns and customer service issues through good matching - Plan inventory based on demand patterns - Achieve work-life balance as creative entrepreneurs

Question 3: How can I help the buyers and sellers achieve their goals?

Primary Approach: Content-Based Filtering (80%)

Etsy’s marketplace thrives on uniqueness and individual aesthetic preferences, making content-based filtering the ideal primary recommendation strategy. This approach learns from what users browse, favorite, and purchase to match their personal style with items that share similar attributes—color palettes, materials, design aesthetics, and craftsmanship qualities.

Core Content-Based Features:

“More Like This” Recommendations: When a buyer engages with an item, instantly suggest 5-10 visually and stylistically similar pieces matching on color, style, materials, price range, and design aesthetic
Seasonal & Occasion-Based Suggestions: Anticipate buyer needs by surfacing holiday-appropriate items weeks in advance, detect gift-giving intent through search patterns, and track emerging trends to connect early adopters with fresh pieces
Serendipity & Discovery: Intentionally include unexpected items (15% of recommendations) that are adjacent to but slightly outside typical preferences to balance comfort with surprise and prevent recommendation monotony
Aesthetic-Based Connections: Group items into style clusters (bohemian, minimalist, vintage, industrial) and enable cross-category discovery so buyers who love minimalist jewelry also discover minimalist home decor

Secondary Approach: Collaborative Filtering (20%)

Collaborative patterns provide valuable supplementary signals through “Shoppers Like You Also Bought” recommendations, help new users without preference history, and validate which styles are resonating broadly across the marketplace.

Why This Balance Works for Etsy: Content-based filtering respects what makes Etsy special—one-of-a-kind, handmade items that can’t rely on bestseller popularity. By focusing on aesthetic attributes and style matching, the system helps buyers discover items that feel personally chosen for them while giving sellers with unique, niche products a fair chance to reach their ideal customers.

Reverse engineering Etsy.com

Visited Etsy as a new user and browsed items that caught my eye
Within 10 minutes, two personalized recommendation carousels appeared on my homepage: “Dive back into these 10 finds” and “Picks inspired by your shopping”
After favoriting several items and refreshing the page, the carousel order dynamically changed
Seasonal items (holiday-themed products) moved to the top position after the refresh
My personalized recommendations based on browsing and favorites appeared as the top two carousels below the seasonal content
Content recommendations appear more user-focused during active browsing sessions, especially when items are added to the cart
Once the screen is refreshed, seasonal recommendations are prioritized over personalized content

Etsy Item for cart

Picks inspired by your shopping

Etsy’s Goals and Strategic Effectiveness

Etsy’s primary goal with its recommendation system is to maximize Gross Merchandise Value (GMV) while maintaining a healthy two-sided marketplace ecosystem—a delicate balance that requires serving both buyer discovery needs and seller visibility goals. Unlike Amazon, which can afford to promote bestsellers and leverage winner-take-all dynamics, Etsy must ensure that thousands of small, independent sellers receive fair visibility or risk losing the artisan ecosystem that differentiates the platform. The company appears strategically smart in several key decisions: their heavy reliance on content-based filtering (approximately 80%) over collaborative filtering respects the aesthetic diversity and uniqueness that defines Etsy’s value proposition, preventing the homogenization that pure popularity-based recommendations would create.

The rapid personalization observed in my testing (meaningful recommendations within 10 minutes) demonstrates sophisticated cold-start handling that reduces buyer friction while quickly learning preferences. However, Etsy shows some strategic tensions in execution: the aggressive prioritization of seasonal content over personalized recommendations after page refresh suggests short-term GMV optimization may occasionally override long-term relationship building, and the absence of explicit “Discover New Sellers” features or transparent feedback mechanisms indicates potential gaps in supporting marketplace equity. Most critically, while Etsy’s content-based approach is theoretically sound for their unique inventory challenge, the lack of user control (no thumbs up/down, no interest customization, no gift mode) means they’re operating somewhat blindly—optimizing for clicks and conversions without deeply understanding whether recommendations truly satisfy buyer intent or fairly distribute opportunities across their seller base.

Overall, Etsy demonstrates above-average strategic thinking in matching their algorithmic approach to their marketplace constraints, but there remain significant opportunities to better balance commercial objectives with the platform health and seller fairness that sustain their competitive differentiation.

Specific recommendations for Etsy’s recommendation system

Include a section at the top where users can enter their interests and those selections should curate their home page.
Add a “Gift Mode” toggle that allows users to browse and receive recommendations for gift shopping without those interactions affecting their personal style profile and future recommendations.
Implement explicit feedback buttons (thumbs up/down or “Show me more/less like this”) on recommended items so users can actively refine their preferences rather than relying solely on implicit signals.
Create a “Discover New Sellers” option that temporarily prioritizes recommendations from small or new shops the user hasn’t purchased from before, helping both buyer discovery goals and seller visibility goals while preventing over-concentration on familiar sellers.
Do not update the algorithm so drastically when a user refreshes the page. Allow users to spend time reviewing the latest recommendations.