{"id":33397,"date":"2018-11-13T16:44:47","date_gmt":"2018-11-13T21:44:47","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/keeping-commerce-human-through-machine-learning\/"},"modified":"2018-12-05T12:12:32","modified_gmt":"2018-12-05T17:12:32","slug":"etsy-keeping-commerce-human-through-machine-learning","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/etsy-keeping-commerce-human-through-machine-learning\/","title":{"rendered":"ETSY – \u201cKeeping Commerce Human\u201d through Machine Learning"},"content":{"rendered":"

A leader in the maker space, Etsy is known for bringing crafting into the 21st<\/sup> century. While the company stands by its people-oriented motto \u201cKeeping commerce human,\u201d Etsy has tied its future success to its ability to harness machine learning.<\/p>\n

Process Improvement on Etsy.com<\/strong><\/p>\n

Established in 2004, Etsy is an ecommerce site that connects 2 million makers with over 37 million active consumers looking to purchase unique, artisan goods. In the third quarter of 2018, Etsy saw gross merchandise sales grow by 20 percent. Many experts, including Mad Money\u2019s Jim Cramer, attribute Etsy\u2019s recent growth to improvements in the website and the search experience [1]<\/strong>.<\/p>\n

Etsy has been able to expand its search and discovery capabilities by utilizing machine learning. With 50 million products on the Etsy website, the company\u2019s key challenge is helping customers quickly and easily find items they are willing to purchase [2]<\/strong>. In 2016, Etsy purchased Blackbird Technologies, a firm that develops algorithms for natural language processing, image recognition\u00a0and analytics. Blackbird allows Etsy to go beyond the traditional \u201cpurchase history\u201d tool. By detecting patterns from massive data sets, Etsy can predict consumer spending based on data points like product preferences and purchasing habits [3]<\/strong>. For example, Etsy now offers a \u201cExploratory 性视界\u201d feature that utilizes data to point shoppers towards products that better suit their tastes [4]<\/strong>. By offering nuanced, curated product recommendations, Etsy is able to improve the purchasing process, generate more sales, and offer a greater value proposition to buyers and sellers alike.<\/p>\n

\"\"<\/a>
Mural at Etsy Headquarters. Photographer: Victor J. Blue\/Bloomberg via Getty Images<\/figcaption><\/figure>\n

Handmade Competition<\/strong><\/p>\n

The U.S. \u201ccreative products industry\u201d is currently valued at $43 billion. To capitalize on this growing demand for artisan goods, Amazon recently launched \u201cAmazon Handmade,\u201d a platform to sell handcrafted products. To combat this competition, Etsy will focus in its machine learning capabilities to further personalize the shopping experience. For example, Etsy will use algorithms to better rank and categorize search. The front end of the platform will feature tools like \u201cuser-generated curated collections\u201d as well as location-orientated data points that similarly help buyers find local sellers. CEO Josh Silverman says these features will give buyers \u201cmore reasons to come back [5].\u201d<\/strong><\/p>\n

To expand their capabilities within the machine learning space in the next two to ten years, Etsy will harness the power of its Machine Learning Centers of Excellence around the world. Etsy has built new facilities in New York City and San Francisco and most recently in Toronto. These centers allow Etsy to work with thought leaders at major universities and recruit engineering talent in this field [6]<\/strong>.<\/p>\n

Future Challenges <\/strong><\/p>\n

Etsy was founded as a mission driven company with a commitment to \u201cto reimagine commerce in ways that build a more fulfilling and lasting world.\u201d CEO Josh Silverman was recently quoted saying, \u201cWe\u2019re living in a sea of sameness. People are buying more and more of the same mass-produced goods from the same few logistics companies, and the world wants an antidote to that.\u201d While Silverman may see Etsy as the natural \u201cantidote,\u201d many note the site\u2019s recent influx of mass produced products. Sellers of handmade goods have noticed this trend as well and have seen their sales declining [7]<\/strong>.<\/p>\n

The challenge for the engineering team over the next couple of years will be to retain their original users who are continuing to search for artisan products amid a sea of mass produced items. Etsy should utilize language recognition to decipher customer comments left on product reviews. With this data, Etsy can determine which products best fit their brand of crafted items and prioritize them during the customer discovery and search process.<\/p>\n

Who Holds the Data?<\/strong><\/p>\n

In a world where search engine optimization and inbound marketing techniques are becoming more common place, how will individual sellers on major retail sites, such as Esty and Amazon, be able to adapt to future trends when they cannot access their own consumers\u2019 data?<\/p>\n

 <\/p>\n

References:<\/p>\n

[1] CNBC Television Mad Money, \u201cFocus on Craftmanship,\u201d [https:\/\/www.youtube.com\/watch?time_continue=50&v=H-FC2XNqNY4], accessed November 11, 2018.<\/p>\n

[2] New York Times, \u201cInside the Revolution at Etsy,\u201d [https:\/\/www.nytimes.com\/2017\/11\/25\/business\/etsy-josh-silverman.html], accessed November 12, 2018.<\/p>\n

[3] 性视界 Business Review, \u201cHow Predictive AI Will Change Shopping,\u201d [https:\/\/hbr.org\/2016\/11\/how-predictive-ai-will-change-shopping], accessed November 11, 2018.<\/p>\n

[4] Tech Crunch, \u201cEtsy Buys Blackbird AI to Bring More Machine Learning Into its 性视界 Platform,\u201d [https:\/\/techcrunch.com\/2016\/09\/19\/etsy-buys-blackbird-ai-to-bring-more-machine-learning-into-its-search-platform\/], accessed November 10, 2018.<\/p>\n

[5] Forbes, \u201cNo More of the Same,\u201d<\/p>\n

[https:\/\/www.forbes.com\/sites\/andriacheng\/2018\/08\/08\/your-rebellion-against-mass-produced-goods-promises-growth-for-etsy-amazon-handmade\/#2377f86327e2], access November 11, 2018.<\/p>\n

[6] Venture Beat, \u201cEtsy Opens Machine Learning Center in Toronto,\u201d [https:\/\/venturebeat.com\/2018\/05\/17\/etsy-opens-machine-learning-center-in-toronto\/], accessed November 10, 2018.<\/p>\n

[7] New York Times, \u201cInside the Revolution at Etsy,\u201d [https:\/\/www.nytimes.com\/2017\/11\/25\/business\/etsy-josh-silverman.html], accessed November 12, 2018.<\/p>\n

(Word Count 755)<\/p>\n","protected":false},"excerpt":{"rendered":"

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