No, the number of listings does not impact how a shop sells. When competition was smaller on Etsy having an abundance of listings could give better exposure and could assist. Now, there are so many sellers and listings this is no longer the case. But having a full page of listings does make a shop look better if they get visits in addition to views.
SEO is always changing. It's been suggested that titles be written in a type of sentence form with the strongest keywords used first. AI can now read like a human which helps both shoppers and sellers with titles. Repeating wording is no longer necessary and it takes away valuable space from other keywords. The listing description should also contain keywords as Etsy's search now picks wording in this area up. Etsy is also focusing on photo quality. These should be clear, attractive and descriptive.
Checking out competition can help. Sometimes this can inspire new ideas to set a shop apart from them and make improvements.
Consumer spending on none essentials is slowing down while competition is increasing. This doesn't mean a seller won't do well. They can and many do. But it is going to be more difficult to sell. Knowledge always helps with knowing how to improve a business. As suggested above, read relevant Etsy articles. Etsy seems to post announcements in the forums weekly. Read these because they give clues on what's important to Etsy and what the current focus may be. Learn about a targeted audience. All listing information and any marketing will be written to this group.
