An increase in Etsy seller fees is causing virtual shop owners to reevaluate their merchandise prices. Of course, it could also push sellers off the platform.
In June, Etsy announced an increase in seller fees beginning July 16. The online ecommerce site will now take 5% of each total sale, up from 3.5% previously. A large portion of the Etsy seller community had already felt that the site was taking too large of a cut. One woman said she paid nearly $1000 in fees in November of last year alone, before the rate increase. For the community of largely independent sellers, $1000 can be the difference between having enough money to make ends meet that month, or not. The raised percentage will cause sellers to rethink their prices, likely increasing the cost of items for buyers, and could even force sellers to abandon the platform to cut out the middleman.
Many sellers hold the belief that Etsy is a company that fosters growth in its online ecommerce community. The company prides itself on being a business that cares about its sellers and the customers that purchase their goods. The move to increase transaction fees has largely felt like betrayal to the otherwise loyal community. In it’s announcement to investors Etsy argues that the larger fee will actually help sellers in the long run. The new 5% fee will allow the company to, “…make more meaningful investments on behalf of our sellers while remaining what we believe is the best value for entrepreneurs looking to start, manage, and grow a creative business.”
According to Etsy, the increased fees will allow the company to spend 40% more money on direct marketing this year than it did in 2017. The increased spending will drive more traffic to the site that should trickle down to seller pages, increasing overall sales. Additional plans for the money include a “revamp” of Etsy community platforms and execution of an “exciting product roadmap.”
For investors in Etsy, so far, the change has been a good one. Following the announcement Etsy stock reached a record high after its second-largest gain in history.
While many members of the community are unhappy with the update, for most, Etsy seller fees will remain the lowest across online marketplaces.
For comparison, Canadian-based Shopify charges sellers monthly membership fees in addition to a smaller fee per purchase. Basic plans on the site begin at $29 monthly, plus 2.9% transaction fees and 30 cents per transaction. The most advanced plan costs $299 monthly. This plan includes only a small reduction in percentage taken per transaction – .5% less to be exact – and still includes the 30 cent transaction fee.
Amazon, the most well known ecommerce outlet, takes a whopping 15% per transaction across the board.
In our ecommerce-driven world, only time will tell if Etsy’s fee hike will make a make a major impact on the platform’s sellers and their customers.
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