By Katherine Hamilton

To claw back their relevancy, online marketplaces are dropping the Amazon or Temu playbook and, instead, looking to copy social media.

Companies including eBay and Etsy are starting to emulate some of the tactics popularized by Instagram, TikTok and Pinterest to help boost sales. One key area of focus: algorithm-based personalization that keeps users scrolling through feeds and finding more relevant products to buy.

"We have a lot to learn from folks like TikTok and Instagram and Pinterest," Etsy Chief Executive Josh Silverman said last month. "We can take Etsy and turn it into a really personalized experience."

The online platforms have reason to change tack. Shopping on social media platforms has boomed lately, as platforms have added retail features like TikTok's shop tab. Discretionary and impulse shopping is especially popular on social media, where the average social-media shopper spends $820 a year, e-Marketer analyst Sky Canaves said.

Etsy and eBay, which specialize in gifts and collectibles, see social media's blueprint as an opportunity to stay relevant, after struggling with weak growth over the past three years as inflation-weary customers generally cut back on discretionary purchases. The companies also have faced customer complaints that their inventory is overrun by mass-produced products, despite advertising vintage and artisanal items.

One issue with the sites is simply finding the right item. "It's easier for customers to get lost on those sites because they can't find what they're looking for," Wedbush analyst Scott Devitt said of eBay and Etsy.

Etsy and eBay hope personalization can provide an answer. They are tapping into artificial intelligence and collecting data to help recommend products based on shoppers' individual interests, much like TikTok uses its algorithm to keep users glued to its app. Other retailers including furniture seller Wayfair and second-hand clothing platform ThredUp have discussed integrating social media-like experiences into their browsing.

Personalization in retail isn't new and the industry has long been able to suggest items based on what users are looking at or adding to their cart. AI's advances over the past two years, however, have helped companies learn more.

Etsy is developing capabilities to see what items users linger on or scroll past quickly, helping to gather enough information on users to know whether they are parents or pet owners, for example. It is using advanced machine learning and large-language models to analyze the items in its marketplace and show them to buyers based on their individual preferences.

eBay is aiming to create a "more feed-like" shopping experience, according to Chief Product Officer Eddie Garcia. The company nearly a year ago added a feature which provides AI-generated images of, say, pants and shoes that might match the shirt a user is buying. Those images are then linked to similar items on eBay's marketplace.

About five years before eBay launched the feature, Pinterest debuted a similar capability, which connects photos of clothing or furniture with links to similar products that are for sale. Since the company doubled down in 2022 on shopping, the image discovery and curation app has seen clicks to advertisers roughly quadruple over the past two years.

"One of our top requests from our users is to shop what they see," Pinterest Chief Strategy Officer Martha Welsh said, adding that more than half of the platform's 553 million monthly active users come to the app to shop.

eBay and Etsy, which have inventories of around 2.3 billion and 100 million respectively, are now using AI to categorize their products and make them more easily browsable by styles or occasions. Eventually, the companies want to combine that with their data collection efforts so they can connect users with exactly what they're looking for.

"Our products don't map back to a catalog or SKUs," Etsy Chief Product Officer Nick Daniel said. "We're using advanced machine learning and LLMs to analyze the items in our marketplace, and show them to buyers based on their individual preferences."

eBay's Garcia said adapting quickly is necessary as retail is transforming at a lightning-fast pace.

"The game changes so quickly with AI," Garcia said. "I think in five or 10 years, every person has their own personal eBay."

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

March 13, 2025 12:31 ET (16:31 GMT)

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