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Etsy steps into the world of AI with Blackbird acquisition

Etsy steps into the world of AI with Blackbird acquisition

Jim Cramer was initially skeptical about Etsy, but as the company dramatically improved its fundamentals and user interface since first coming public in 2015, he changed his opinion.

"This kind of technology is so essential, especially if you have to go toe-to-toe with Amazon," the "Mad Money" host said.

Etsy took another step in its transformation when it announced the acquisition of Blackbird Technology for an undisclosed amount. Blackbird is a privately-held machine-learning company that delivers search relevance and recommendations.

Etsy is an online marketplace for handmade goods. It plans to use the artificial intelligence platform to direct customers to products they would likely buy, and enhance search functionality.

"We already have deep skills machine learning, because it's really hard to connect 40 million items to 26 million buyers around the globe," Etsy CFO Kristina Salen told Cramer on Tuesday, "But this augments our skill set and actually accelerates our progress in search, and we think it is going to drive future growth."

Etsy CFO Kristina Salen
Source: Etsy

Competition from online giants like Amazon over the years has been unsuccessful in dominating the craft space from Etsy. Salen expects Blackbird to accelerate search functionality and leverage the technology moving forward, especially on the mobile platform. Currently 60 percent of visits and nearly 50 percent of gross merchandise sales are done through mobile.

"We just think there is such a pipeline that we can innovate around with all of our products like our mobile app," Salen said. "We have been growing in mobile web, mobile app and desktop, which we are really proud of. It is quite differentiating for an e-commerce company to be growing on all of their channels."

Etsy's management expects revenue to increase at a 20 to 25 percent compound annual growth rate through 2018. This organic growth is on top of the stock's rally, up more than 63 percent this year already.

"Small business really drives the economy, and we are really passionate about the creative entrepreneurs. We have a seller-aligned business model. We succeed when they succeed," Salen said

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