Handcrafted marketplace Etsy (ETSY -0.19%) reported a nearly 5% drop in gross sales on its platform when it released financial results for the second quarter of 2025. But OpenAI -- the world's most recognizable artificial intelligence (AI) start-up -- could finally give the flailing marketplace the boost that it needs.
On Sept. 29, Etsy stock soared 16% after OpenAI announced that it was partnering with the e-commerce platform for a brand new AI product. It's called Instant Checkout. And it will allow users of OpenAI's ChatGPT to order Etsy products directly in the chat.
Etsy won't be ChatGPT's only partner. OpenAI also announced that Shopify (SHOP 6.52%) integration is coming soon. Shopify is an e-commerce software company used by millions of online stores. And OpenAI says that around 1 million of them will be using Instant Checkout.
What's happening at OpenAI could represent the practical application of a long-awaited trend in AI: agentic AI. And I believe it could be a material development for Etsy.
Why this could be big for Etsy
Personal computing pioneer Bill Gates has been talking about this subject for 30 years. He was famously instrumental in making software more accessible for the general public. But he's long believed that agents would be a big computing wave once they were good enough. And it seems that with AI, their time has finally come.
There are some who envision a future where AI agents can interact with multiple products and platforms, do a range of tasks on your behalf, and become personalized over time as they learn your behavior. And that's the idea here with ChatGPT's Instant Checkout. Users can simply describe what they're looking for as well as provide a price point and the AI agent can find and buy the item for you.
ChatGPT developed this new feature in partnership with privately held fintech company Stripe. To me, the key quote from the press release was, "For sellers, it's a new way to reach hundreds of millions of people." This must be music to Etsy's ears.
According to OpenAI, around 700 million people use ChatGPT every week. For comparison, Etsy only had 93 million active buyers as of Q2, which was a drop. Let's imagine that just 1% of ChatGPT users take advantage of Instant Checkout in the next year and buy something from Etsy. That would represent 7 million buyers, which is nearly 8% of Etsy's current user base.
Etsy's revenue is at an all-time high and it still has great profit margins. But Etsy stock has dropped more than 70% from its all-time high because revenue growth has slowed dramatically and user growth has completely stalled. An integration with one of the hottest companies on the planet could be just the spark that Etsy needs.
I believe that this development might be less impactful for Shopify stock. The company believes the best way to grow its business is to provide its customers with as many software options as possible. So integrating with OpenAI's ChatGPT is a good strategic move for this reason. But it would probably be more impactful for Shopify's customers rather than for Shopify itself.
What about OpenAI?
OpenAI will reportedly generate around $13 billion in 2025 revenue. But according to some counts, the company has plans to spend $850 billion in coming years -- it's clearly planning to spend way beyond its capabilities, which calls its plans into question for some.
Regardless, OpenAI will need to exponentially grow its revenue to justify this level of spending and the level of investment it's looking to attract. There are limits to how big its revenue base can grow with current products, making the launch of new products crucial.
OpenAI will generate revenue from Instant Checkout by taking a small cut of each transaction -- a take rate. I don't know how meaningful this revenue stream will be for OpenAI. But I do know that it needs something so any movement in this direction is helpful.
For Etsy shareholders, I wouldn't be worried about OpenAI's cut of the transaction. If AI agents can bring incremental business to Etsy's platform through ChatGPT's Instant Checkout, I believe it's a net positive.
As a shareholder myself, I'll be looking for signs of life in Etsy's business fairly soon as a result of this news from OpenAI. In the early days of a new AI product launch, there's a novelty factor that can quickly drive activity. So if there's anything promising here I would expect to find signs of its promise early on.
