Etsy, an online marketplace specializing in handicraft items, announced a range of initiatives aimed at helping small business owners thrive during the year-end holiday season. 

Etsy is expanding Purchase Protection for sellers during the holidays, now covering refunds on eligible orders up to $500, Chief Operating Officer Raina Moskowitz said in a letter to sellers. The company is also increasing help center assistance for sellers, aiming to trim response times, simplify the process for those facing account suspensions and remove more listings violating its handmade policy.

The holiday season holds immense importance for Etsy and its sellers, serving as a pivotal period for their business as buyers flock to the site for gifts. Etsy is trying to prove that it can recapture some of the demand it lost last year after seeing a huge surge in activity during the coronavirus pandemic. 

There are some signs that this year, demand has picked up for sellers. 

“Most of my annual revenues come from September through March, which is basically the retail shopping season,” said David Bruce, who has been selling ceramic arts on Etsy for five years in South Alabama. “This year, September was super busy and just these two days of October have started out great.”

Etsy shares traded $63.81 the day that the expanded services for sellers was announced. The company is down 48% in 2023. 

Analysts believe investor sentiment is closely tied to Etsy’s growth story. The company’s recent growth has been primarily fueled by increasing fees, meaning it earns more money from each sale on its platform. 

But there’s concern among investors that Etsy may struggle to reach the same levels of growth it enjoyed before the pandemic. This apprehension stems from a combination of factors, including flat sales growth and margin pressures.

“Right now, it seems to me like Etsy is in “prove it” mode ,” said Sean Dunlop, Equity Analyst at Morningstar. “Investors are awaiting an inflection point in growth before subscribing to the firm’s otherwise attractive long-term narrative.”