Etsy is going to start automatically advertising its sellers’ products and taking a fee — at least 12 percent — for every sale it refers. The ads will appear on “high-traffic sites” like Google, Facebook, and Pinterest, and they’ll be a requirement for shops doing more than $10,000 in sales each year. The change means a potentially big disruption for sellers that could lead to higher prices.
Sellers are complaining in Etsy’s online forum. One seller called it a “BS money grab.” Others called it “absolutely unfair” and “the most ridiculous thing I have seen.”
“This is just greed!” one seller wrote. “While us who work hard suffer.”
All sellers will be opted into the advertising program when it goes live next month. Sellers making less than $10,000 per year — most people on the site — will be able to opt out, but they will still be automatically included in the program to start. Those stores will be charged a higher 15 percent fee.
The fee will be taken off of the full order total, meaning Etsy will also take a cut from shipping costs (it will respect coupons and sales). Etsy normally takes a 5 percent fee from sellers for using its platform, which will continue to be charged in addition to the advertising fee.
Etsy pitches the service as an upgrade for sellers. It comes at “no risk” to them, since they don’t have to pay for any of the advertising unless it directly leads to a sale. “Advertising is essential to growing an online business, but doing it on your own can get expensive,” the company writes. It says sellers should expect 1 in 10 sales to come through this new advertising program.
The fee gives Etsy a steady new revenue stream. The company already benefits when its sellers do well, and now it can expand the money it makes off of advertising. Etsy reported its holiday quarter earnings today, saying it grew revenue by 35 percent year over year. In part, it credited that growth to “investment in marketing channels,” as well as nagging buyers to add more items to their cart to qualify for free shipping.
Etsy sellers, similarly, were upset when the platform began pushing them to include free shipping last year. Sellers said they would have to raise prices and that buyers would likely end up spending more — exactly what seems to have happened.
The new advertising program is supposed to kick off in April. It partially replaces Etsy’s current advertising program, which is optional. Sellers can currently opt in to have their products advertised on Etsy or on other sites, such as Google Shopping, and they can set a budget for how much they’re willing to spend. Sellers will still be able to pay to advertise their products within Etsy itself.