Etsy hikes transaction fees from 5 to 6.5 per cent despite strong earnings last quarter
When Tricia Robinson first got on Etsy in 2013, it was to help save her cat's life.
"My cat got really ill and I was getting vet bills through the roof and I couldn't afford to pay them," Robinson said. "So I created an illustration that was inspired by him and I sold it."
That's when Robinson realized she could use the platform to sell more of her work and actually make a living off of it.
But after receiving her first payment from Etsy, the Montreal artist says she was struck by the difference between her sales and the amount that was being deposited into her account. That's when she paid attention to all the fees Etsy charges sellers on the platform.
At first, she was okay with it.
"It kind of became this thing of like, okay, well, I'm making money as an artist. I have access to this online marketplace. It's pretty cool for the most part," she said.
Etsy was founded in 2005, offering an online marketplace for artists and craftspeople to sell handmade and vintage items as well as craft supplies. The website has attracted millions of buyers and sellers and provided a platform for artists to become entrepreneurs.
But over the years, Robinson says she started to see her margins shrink as Etsy's grew. A policy introduced in 2019 incentivized sellers to offer free shipping for purchases over $35 US by promising to optimize those shops to U.S. buyers. Robinson first refused to opt in, but eventually caved as she saw her US sales disappear.
Offering free shipping was taking off at least half her profit margin, she said. That's when things started to go downhill on the platform for Robinson.
"[Etsy] was this really great marketplace that did celebrate handmade and local small business," said Robinson. "But they're not like that anymore."
Now, Robinson is one of thousands of sellers who have said they plan to boycott the site from April 11 to 18 after the site announced it would be hiking its transaction fees from five to 6.5 per cent.
Fee hike sparks petition
This comes after Etsy's strong fourth quarter earnings, which beat expectations.
The announcement led Kristi Cassidy, a seamstress from Westerly, Rhode Island, to start a petition after posting on Reddit calling for an Etsy sellers' union. Cassidy told CBC News more than 11,000 sellers plan to join the boycott.
"The post was basically asking when does this end because it's just getting worse and worse and I don't think it's going to end unless we do something," she said.
The petition also lists other demands, including letting sellers opt out of off-site advertising, which generates sales that Etsy charges sellers more for.
In Cassidy's case, she says she was charged $100 by Etsy for a dress sale that came from an off-site ad.
In a statement, an Etsy spokesperson said the increase in fee will help boost their investments in marketing, customer support, and removing listings that don't meet company policies.
"Our revised fee structure will enable us to increase our investments in each of these key areas so that we can better serve our community," the statement reads.
Company faces shareholder pressure to boost profits, says expert
Etsy has historically had an open and honest relationship with its sellers, says University of British Columbia professor David Clough.
However, Clough says it has become strained over the years.
"Since 2018, they've raised their fees twice, which suggests they're trying to perhaps profit at the expense of their marketplace sellers," he said.
Etsy became a publicly traded company in 2015, making it susceptible to shareholder pressure.
With over five million sellers on the site and 90 million customers, Clough says raising transaction fees is a new way for the company to boost its bottom line.
"As they've expanded their user base, it becomes harder to grow revenue by adding more users. So this makes them look for other sources of revenue."
Etsy's fees are still lower than e-commerce competitors like Amazon, which charges eight to 15 per cent in addition to other fees.
Still, continuing to raise fees could risk Etsy's reputation as they deviate further from the initial values of the company that allowed small businesses to make money, he says.
As for the boycott's potential effect on Etsy, Clough says it could create momentum for more dialogue between the company and sellers as a collective entity.
"If they face pushback from sellers for this raise, then it makes them think twice about raising the fees down the line," he said.
Cassidy says she hasn't been in communication with Etsy about the petition and the boycott.
And while she's not counting on Etsy rolling back its fee hike, she says she's excited about building a community of sellers that want to advocate for better pay and company policies.
"The things that we could do together, it feels limitless," she said.
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