Etsy Sales Decline for Some Sellers as AI Listings Rise, While Platform Revenue Grows

Emily Olson, a stay-at-home mom in Boulder, Colorado, began selling prints and custom puppy portraits on Etsy in 2017. Her watercolors sold for $75 to $300 each, and she reported more than $40,000 in sales in 2021 while building a YouTube audience of 180,000 followers.

Sales then fell 30 percent in 2022 and another 50 percent in 2023 after competitors appeared and copies of her work surfaced on Alibaba.

Olson said AI-generated pet portraits began supplanting her listings in search results and sold for lower prices, yet still received positive reviews. In 2024 Etsy announced it would continue to allow AI-generated art on its platform if sellers disclosed its use. The company also barred users from selling their own customized AI prompts and required disclosure in listings.

She stated that the platform no longer aligned with her values. Viktor, a UK-based illustrator who has sold on Etsy for ten years, reported a 98 percent sales decrease over the past year. Etsy’s gross merchandise sales have declined since 2021.

The company laid off 11 percent of its workforce in late 2023. It still reported approximately 5.6 million sellers and $2.8 billion in revenue for 2025, a 2.7 percent increase from the prior year. ” Fybe, a new online crafts marketplace, will open to vendors on August 1 and will prohibit AI-generated content and drop-shipping.

Rachel Powell, the founder of Fybe, said the platform will use volunteer moderators and direct conversations with sellers to ensure products are human-made.