It's not completely clear to me whether About pages and filled-out policies will help established shops with feedback, or if they are just a proxy for positive reviews for newer shops. My SEO shop did not have an About page, but adding one did nothing for my search rankings, nor did marking a few old orders as shipped.
Etsy staff did clarify that these changes only took effect on November 4th, and that negative factors such as an opened case would be considered in ratio to the shop's number of recent sales. For reviews, they consider review average instead of just the number of bad or good reviews, which helps protect larger shops who, almost inevitably, will end up with a few disgruntled customers or low reviews even if they do everything right, simply based on volume. Etsy staffer Jaime DeLanghe also provided a few more details here.
Although most of these factors are difficult to test, it appears that you need more than just a few cases or bad reviews to see your search ranking affected; I have not seen many reports of sellers dropping dramatically after having problems. Low reviews seem to be considered on a shop-wide basis as opposed to a by-item basis, although admittedly we don't have enough examples yet to be sure of anything; very few sellers seem to have experienced a loss in ranking because of this change.
Most of these new search factors are probably welcome to a majority of sellers in abstract, since shops with lousy customer service are a perennial concern on a shared marketplace. The review average factor is a concern for newer shops, however, and it may end up leading to more new sellers abandoning shops after they receive just one bad review. We can only hope that Etsy will not make any major changes to the case system that will lead to a huge rash of mistaken cases being filed as they did a few years back, or the effects may be devastating.
What can sellers do to adapt? The glib answer would be, make sure you have great customer service, and don't use other people's intellectual property. But what happens if you have a run of bad luck, and your search results take a hit? There are really no good answers, other than doing your best to fix the problems for your customers, and working to diversify your revenue streams so you are less dependent on sales from Etsy search, both of which are actions I also recommended before this algorithm update.
Where is Etsy Search Headed Next?
These are the first two significant changes to the Etsy search algorithm in a long time, in that they actually affect ranking as opposed to elements such as the number of items per shop per page. It seems highly unlikely that Etsy will stop here with location-based ranking, and I have been expecting more personalized results in searches for a while now. I will be quite surprised if we do not see more changes in 2016. Don't assume that everything will stay the same.
On the other hand, this new openness about the factors used to decide ranking is quite refreshing, and may help sellers who have been confused with how search works. It should certainly stem the tide of inaccurate rumours that seem to plague the Etsy forum. I hope that all of the sellers who claim they "gave up" on SEO because it was too confusing will give it another shot, now that Etsy has confirmed more of the factors governing placement.
Etsy Success will be releasing one of their "fireside chats" on their You Tube Channel on Friday November 20th, answering questions about the search algorithm, including the recent changes. I will update this post with more information if it is warranted.