Etsy increases fees, leaves sellers disappointed

Caryl Anne Francia, Business Editor

Etsy Inc. shocked its independent sellers after sending them an email that announced a hike in transaction fees will take effect on April 11.

The e-commerce platform advertises itself as a global market where consumers can buy unique products from sellers who have made small businesses out of their hobbies.

During the COVID-19 pandemic, Etsy saw an increase in buyers and sellers, some of the latter even using hobbies acquired — including making face masks —to start their business.

Transaction fees for each sale are taken from the seller’s profit and given to the company. When in effect, transaction fees will go up by 30%, from 5% to 6.5%.

“Last year, active sellers increased their sales by 23% on average compared to 2019, and in 2021 alone, we showed more than 90 million active buyers worldwide that there’s an alternative to big-box shopping, Etsy wrote in its email to sellers, in which it also promised,“significant investments in marketing, seller tools, and creating a world-class customer experience so we can continue this tremendous growth.

In 2018, Etsy increased transaction fees by 42% with similar promises. Tired of increasing fees and the same excuses, sellers took to social media to express their disappointment.

“I’m debating closing my Etsy shop entirely, given their soon-to-be-increased fees, artist and seller Carrie Alyson tweeted. “Full transparency, in 2021 I made $352 in sales and paid $110 in fees to Etsy. That doesn’t feel right?

In addition to the transaction fee, Etsy charges its sellers other fees, including a 3% payment processing fee. Every product posted has a 20 cents listing fee.

Etsy also charges fees for advertising in and off its website, the latter taking 15%. Offsite ads on third-party websites are made without the discretion of the seller, who is automatically enrolled in this service when opening their shop.

If a consumer buys a product within 30 days of clicking the ad for it, even after the seller opts out of this service or the ad is taken down, the fee will be taken from the seller’s payment.

Sellers may increase the price of their products to combat these fees, but that may drive wallet conscious customers away.

Some sellers are considering switching to different e-commerce platforms such as Shopify Inc. and Big Cartel. For those who can afford their own website, sellers are urging customers to purchase from there.

“Etsy raising its fees sucks because I do not have the liberty of switching to a different store front, I don’t have the kind of shop base to support that, artist and small business owner Stevie Wilson tweeted.

In its fourth-quarter report, Etsy boasted a record revenue of $717.1 million for the entirety of 2021, which is making sellers question how the fee hike is fair.

Some sellers are organizing a strike in which they will put their shops on “vacation mode when the fee hike happens for at least a day.

In addition to striking over the fee, some of their demands include better administrative support, a better exposure program that will benefit work-intensive handmade sellers and an option to opt-out of Etsy’s offsite ads program.

The goal for these sellers is not to bring Etsy down, but rather bring changes that will effectively help them instead of hurting their businesses. They can only hope that Etsy listens to them, whose goods helped it find its current success.

“We are not striking in an attempt to hurt Etsy,” the sellers wrote in their mission statement. “In fact, we believe this is the only way to save it. Simply looking at the review rating Etsy had in the past versus the review rating they have today makes it plain that they have lost their way. A marketplace built on the reputation of offering unique and handmade items cannot survive these blatant attempts to put profit over the needs of its sellers.”