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Etsy (NASDAQ: ETSY) recently announced a fee increase which for the first time will also include shipping costs. But the blow might be somewhat softened by the announcement of two new features designed to help small businesses market their products on the platform.
Etsy Raises Sellers Fees Per Transaction
The increase takes the transaction charged on sales from 3.5% to 5% — but importantly the percentage will no longer be calculated just from the amount customers pay for your product. The cost you charge customers for shipping your product will now also be part of the equation making the overall cost being paid by sellers even higher.
On the bright side, the company says it will also introduce two new Plus and Premium subscription levels with advanced tools to help shop owners grow and increase their visibility.
The vast majority of Etsy sellers are small businesses who use the platform to supplement their physical stores or other eCommerce channels. With around 2 million sellers, Etsy has become an industry in itself and the premiere go-to platform for handmade crafters and vintage buyers and sellers.
So how many small businesses are likely to jump ship with the new 1.5% transaction fee hike? The reaction so far seems to be mixed.
As to how shop owners on Etsy are taking the news, it depends who you ask. While some sellers told USA Today they were likely to seek better opportunities or need to raise prices to compensate, others say they will wait and see what happens.
The one issue which might get unanimous disagreement is why Etsy decided to add the shipping fee to the total price. Before this change, the shipping cost and the price of the item were separate, so the transaction fee would be based just on the price of the item. By adding the shipping price to the total, the transaction percentage will be higher, especially now because it stands at 5%.
In justifying the increase, Etsy first pointed out it represents the company’s first-ever fee change. But in a post on the official Etsy News blog, Kruti Patel Goyal, General Manager of Seller Services also made the case for the change, explaining:
“This new fee structure, which will now also apply to the cost of shipping, will allow us to further invest in key areas while maintaining what we believe is the best value for creative entrepreneurs. This will enable us to drive more buyers to Etsy through increased marketing, better customer support, and an enhanced the product experience. For example, we plan to significantly increase our spend in marketing this year so we can attract new buyers to our marketplace and remind past buyers of what it means to shop special.”
Goyal also highlighted the company’s plans to revamp community spaces, add new support channels, provide advanced analytics and insights for sellers and improve shipping tools.
New Subscription Levels
While Etsy announced two new subscription levels aimed at providing more tools to market your Etsy business, these will not be free. In addition to the Standard free package, a Plus and Premium subscription level have been added.
Etsy Plus launches in mid-July with marketing, advertising and branding tools at a cost of $10 per month. But this price will go up to $20 by January 2019.
Meanwhile, Etsy plans a 2019 release for its Premium tier with a full set of advanced tools and premium support. However, sellers need to wait until then to get an idea on price.
Using a Proven Platform to Grow Your Business
Etsy’s proven platform brings together buyers and sellers with unique handcrafted and vintage products. The company also provides a wide range of tools to market your products like a pro.
Whether an established business or just starting out, crafters open a shop on Etsy to potentially place their products before tens of millions of active buyers. Though this could save you considerable amounts on marketing, advertising and all of the growing pains associated with going at it alone, with the latest increase, sellers may want to look around for better options.
Image: Etsy
Kayann Short
None of the news reports focus on what buyers will do about having to pay 5% on shipping costs. Etsy sellers are by and large honest people who are not, as etsy claims, shielding themselves from transaction fees by padding shipping and lowering item prices. Buyers need to understand that they are the ones who will be paying that new 5% on shipping because sellers can’t afford to absorb that cost. I’d also like to see news reporting on how SEO will be impacted by the three tier system, something that etsy has been quiet–if not evasive–about answering. Thanks for this story. Hope it will lead to more.
Aira Bongco
This will surely push some sellers away. Some sellers are not earning that much to begin with and the extra 5% will surely take a toll on their profits. They would rather have their own website.
Kim
Etsy shares are soaring since Josh Silverman (former eBay executive) took over Etsy. Great for stock holders & the fat rats running Etsy, but not so good for the sellers working to pay the bill. More fees & all for the good of the sellers. What a joke. I was a seller on eBay since 2002 & closed my store 6 months ago. The fees surpass greedy. Etsy will slow but sure be just like eBay AKA GREEDBAY.
Leslie Hunt
After 12 years on Etsy–and as an outspoken member who has tried many other platforms–this new “shipping charge” is finally the last straw. I’m so excited about moving on! Etsy assumes we’re all hobbyists who don’t think about our bottom lines. In the end, selling on Etsy is what makes it a hobby! Profits are a thing of the past.
I hope others realize that there are many avenues for selling now that don’t tie you to a single platform. Etsy’s business model is old news–perfect for the massive overseas sellers who actually sell enough to clear a profit after covering hefty Etsy fees.
A shipping fee of 5%, even when you purchase shipping elsewhere? Etsy’s not packing our items and taking them to the post office. Where do they get the idea that they’re entitled to this nonsense? So long, suckers.
Sheila Kinsch
I’m sick of the utter lack of customer (seller) service on Etsy. When they first implemented this “shipping” fee. I was furious. Number one – they provide no service to me in the shipping department – are they coming to my door and picking that package up and shipping it for me? If yes – I will pay them a fee. I will not us their shipping labels after 2 bad experiences with them. When I complained – suddenly there was a surge in traffic to my site. Hmmmm so they or their software can bump your visability up if they think you are unhappy? Interesting. which means they can bury your little site so no one sees it yes? Last straw. i’m getting no response to my questions of what service exactly are you providing to me in return for charging me a shipping fee. Only response I got -it’s not really related to shipping. Then — what is this fee related to? If you have no sellers – you have no fees. And they are reaching that. Exactly why I stopped using Ebay. Adding “shipping” fee and providing no service for that fee is fraud. Pure and simple.
Mari
Over the years I have spent THOUSANDS upon THOUSANDS for items that are hard to find. The sellers on Ebay AND Etsy take advantage of the fact that you can’t walk into Walmart or elsewhere and find them so……….they add ridiculous prices to their products. Add to that the cost of shipping and I have finally decided to and started taking my business elsewhere. I’m sick and tired of paying MORE in shipping fees than the product cost (or is even worth). Now I have created a list of all the flea markets, antique stores, and yes, Facebook marketplace, where I will hunt for the things I want from now on. After today’s Ebay purchase (can’t find item elsewhere), I’m DONE. I’ll spend my time having fun, arranging great outings, and finding items I want that don’t INCLUDE excessive shipping costs and the fees that sellers are forced to pay that they pass on to me of course. Stop pointing the greedy fingers at Ebay and Etsy….you are ALL guilty of that. I’ll choose to support my local and state wide flea markets and antique shops.