It is a very marketing-heavy operation, as the platform itself doesn’t offer that great of a deal to sellers - they charge a 10% commission plus payment processing fees (PayPal takes 2%, though now I believe there’s an option to use a different processor), so high-volume sellers are unlikely to use it. I wouldn’t be surprised if up until this day they were spending more on marketing that they would’ve made back from most customers.
The business itself is quite low-margin (support & fraud/scams cuts into that), has decent competition (Mercari, StockX) and can be trivially replicated by the likes of Facebook (Depop is basically an Instagram but where you can buy & sell - something FB can trivially replicate if they wanted to).
It makes sense for Etsy to buy it for access to the userbase and to integrate it into their existing business, but as a stand-alone business it's not that great IMO because of the aforementioned points.