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Etsy disregards small businesses in pursuit of maximum profit with new Fees and Ads program
The Etsy pen pushes are at it again with another revised round of fees and advertising models. This time they stick the dagger directly in the heart of small and home businesses right on the edge of making some extra cash for the family household.
Ever since Etsy went public and listed the company on the stock exchange it has moved its focus from promoting handmade, unique small batch products to a focus of maximum profit for its share holders (as all listed companies do). This move I believe will spell the end of Etsy’s rein of the online handmade market, once you move away from your initial concept base it starts to fragment and loose the shine and appeal it famously had. I believe Etsy is walking a slippery slope with its adjusted fee structure introduced in 2019 and new advertising fees introduced in March 2020. And let’s not forget this is also on top of their recent push for vendors to list all products with free shipping, and hurting search results for businesses that refuse to offer free shipping, something international sellers just can’t afford. (For the record I switched one of my listings to free shipping and have seen little to no improvement in sales).
So what are these new fees?
Lets start with the 4 (yes 4) ways that Etsy slug its customers (the businesses/vendors on Etsy are its main customers, without them you aint got nothin);
- Listing fee (US$0.20) around AU$0.30 – Fee automatically renews when your product sells. Expires after 4 months.
- Transaction fee @ 5%
- Shipping fee @ 5%
- Payment processing fee @ Australia (domestic orders) 3% + 0.25 AUD, Australia (international orders) 4% + 0.25 AUD
Total fees for Australian Etsy Stores: 8% if the sale was from a domestic customer or 9% if the customer is located internationally, plus 0.55c (0.25c payment fee, 0.30c listing fee). Keep in mind that the 8 or 9% also applies to your shipping costs. PLUS 12% or 15% additional Offsite Ads fees if your items ad was clicked within a 30 day period!
Potentially your item could have fees of 24% + 0.55c. Can you afford that level of commission?
Etsy have now reverted back the ability of paying to have your items show up near the top of Etsy specific pages and in search results, called Etsy Ads (you set a daily budget between US$1-$50). They have also re-aligned their external advertising to be separate to the Etsy site ads, called Offsite Ads (ads on Google, Facebook, Instagram, Pinterest etc) with No budget options. The ads will be displayed as Etsy sees fit, on whichever platform it chooses and for whatever CPC it chooses… basically your store will have No control over your Offsite advertising spend.
Here is the kicker with how the new ads system will work starting March 27, 2020.
If, over the past 365 days, your Etsy store earned US$10,000 or more in sales (excluding shipping and tax) you are Automatically enrolled into Etsy’s new Offsite Ads program and you can Never un-enroll! Ever! If at anytime during a 365 day cycle (re-calculated at the start of every month) your Etsy store goes over US$10,000 revenue, you will be enrolled in Etsy Offsite Ads… Permanently!
If you are under US$10,000 for all 365 days, you will still be Enrolled automatically but will have the option to opt-out of the Offline Ads program (thur some sort of check box process).
How the Offsite Ads program impacts your business
If your business is enrolled in Etsy Offline Ads, your business will be charged a fee of 12% for Every order attributed to coming from an offsite ad, cookied for a period of 30 days. This means that anyone who sees your ad somewhere on the web, clicks the ad and completes the sale, you will pay Etsy an additional 12% on this sale. The 30 day cookie is a very long capture period in my view, if a potential customer happens to see your ad, clicks on it (on purpose or by mistake) but decides to not make a purchase… then comes back to Etsy 28 days later, browsing, purchasing other items, stumbles across your item (probably because you are paying Etsy to display it in search results via Etsy Ads) and purchases your item, you will be slugged the 12% (or 15%, more info below) on this sale! Wow talk about maximising profits hey Etsy!
If your business did not meet the qualification excellence as determined by Etsy to be magically enrolled in its Offsite Ads program (actually All businesses will be enrolled, it’s up to you to un-enrol) as you did not earn over US$10,000 per 365 day qualifying period, you will be charged 15% for every sale attributed to an Offsite Ad you may have run (knowingly or not) over the past 30 days.
I find this auto enrolment program quite astounding actually. Running an online marketplace myself, I totally get the fact that there are massive demands on running the platform in regulation costs, hosting costs, engineering and maintenance costs, administration (staff) costs, fees from payment processing, and of course advertising the marketplace platform. These costs are very high and quite demanding. I get it, Etsy have spent quite a lot of money on marketing and advertising over the years to promote each seller on the platform (and have taken their cut of the sale). However, the US$10,000 threshold once reached not being able to opt out of Offsite Ads (Ever for the duration of your Etsy Store) and the 12% fee with Zero control over ad placement or spend limits is outrageous.
With ever shrinking margins in a very competitive online space, can small and home based businesses afford this extra commission taken from their revenues?
For me, I have had an Etsy store since 2014 conducting 812 sales up to today, March 2nd 2020.
I have appreciated the Etsy platform over these 6 years as it’s provided my business additional income that potentially I may have missed out on had Etsy not been available to my customers. I also sell product on my stand-alone website over the past 10 years, however I do understand the huge benefit of being part of a marketplace with other like-minded businesses on a dedicated platform such as one promoting hand-made, unique items….
Which is why TribeMarket.com.au was born.
Tribe Market is for Australian small businesses creating their own products (80% majority input) making positive impacts to an individuals health and wellbeing, or protecting the environment with eco friendly products and packaging or by positively impacting the local community via the above or other ways your business can have beneficial outcomes such as donating a portion of profits to a cause etc. If your business is doing all 3 of these (wellbeing, eco & social) then hats off to you. You’re a trailblazer that we can all look up to and a business I would personally love to be part of our Tribe.
Tribe Market is the ‘Do Good, Feel Good’ Marketplace for conscious change-makers.
Here is why we want your business on the Marketplace;
- The only dedicated Marketplace focused on Wellness, Eco-friendly & Social benefit goods and services.
- Your business and products will be surrounded by like-minded conscious businesses doing their part in creating a future we can be proud of.
- Australian based with great vendor support via email or phone unlike Etsy and the others (amazon,ebay,wish,myer-marketplace,go-catch etc and don’t even start on trying to contact google, fb or insta) you can Never contact anyone. The last couple of times trying to email Etsy over a refund fee that was charged resulted in a Zero Reply. Nothing! I guess they just decided to keep my money!)
- Store and product setup assistance. Tribe Market staff will help get your store setup ready to make sales.
- Low fees: No listing fees, No payment fees. Just 1 Sale fee starting at 7% (depending on your plan, with our free plan at 13%) plus 0.50c. The fee does not apply to shipping or tax. Yay!
- Not lost in a sea of products. We are a much smaller marketplace with a focused niche so your items will never be swamped under thousands or millions of unrelated products.
- Tribe+ memberships include the option for Google Shopping Ads managed and optimised by Tribe Market Admin with a daily budget you set for a duration you set.
- Be the Change. You are an essential part of our marketplaces ‘Doing Good, Feel Good’ philosophy.
Yes Tribe Market is a new marketplace with a need to gain wider traction in attracting vendors and customers. But Etsy, Amazon and Ebay were all new without customers and vendors when they started too. We are no different and we see the potential of Tribe Market being just as big if not bigger (considering the trajectory of society favouring wellness/eco/social beneficial products) than these other marketplaces. We have lots to do in achieving this anticipated global relevance and we are taking all steps to make this a reality. All we ask for is for you and your business to commit to joining us for 12 months so we can grow together 😊