Why Etsy’s New Ad Policy & Increased Fees Has Angered Merchants
Etsy is an e-commerce site known for its handmade and vintage items. For close to 15 years Etsy has served as an online marketplace, connecting sellers of handcrafted and unique accessories, art, home décor, craft supplies, and plenty of other products to customers. Recently, the company has gone under fire for a series of changes it has made to its platform.
Last year, Etsy encouraged sellers to offer customers free shipping by including shipping costs into the price of items. It then announced in an email sent to sellers by the company’s CEO, that it would be prioritizing items and shops that offered free shipping for the first page of its search results.1 This change put pressure on Etsy’s merchants to either raise prices, absorb costs, or both.
This year, Etsy’s new ad policy was announced. The new policy, which will be implemented in April, has proven to be an even more controversial initiative, with numerous merchants taking to community forums and social media to voice their displeasure.
#etsy shoppers: the company is screwing over their sellers again. If you see an Etsy ad with a cool item, DON’T CLICK IT. Instead, go on the site and search for it. Etsy is taking a 12-15% fee from the creators for any sales made WITHIN 30 DAYS of that click.
— Caroline Sassyhulk (@sassyhulk) February 27, 2020
A Mandatory 15% Fee For Paid Advertising
In late February, Etsy introduced its new “risk-free” offsite advertising service, which functions similarly to a PPC service. Through this Offsite Ads program, Etsy will advertise sellers’ products on Google, Facebook, Instagram, Pinterest, and Bing. Sellers pay an advertising fee when they make a sale.
“When a shopper clicks on one of those online ads for your products and purchases from your shop within 30 days, you’ll pay an advertising fee.” – Etsy Staff2
The new service itself seems harmless and even useful, so why are merchants so riled up? For some Esty sellers, paying the advertising fees is mandatory and they cannot opt out of the Offsite Ads program.3 Here’s how Etsy’s new ad policy works:
- Offsite Ads are optional for shops that make less than $10,000 annually in sales. Those that opt in will be charged a 15% advertising fee for an order attributed to an Offsite Ad.
- Offsite Ads are not optional for shops that make at least $10,000 annually in sales. Sellers will be charged a 12% advertising fee for an order attributed to an Offsite Ad.
The lack of an opt-out option has received much of the pushback. Sellers risk losing a significant portion of their income with this new policy and its high fees. Etsy merchants will have to pay these high advertising fees on top of a 5 percent shipping and transaction fee, a 3 to 4 percent Etsy Payments fee (enrollment to Etsy Payments is mandatory for U.S. sellers), advertising for onsite Etsy Ads (if they are running a campaign), and listing fees.4
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Small Sellers May Leave as Etsy Tries to Compete
With these changes to its platform and policies, Etsy is trying to grow and compete with larger online marketplaces like eBay and Amazon. However, these new initiatives could be pushing away the small businesses and artisans the e-commerce company has historically relied on.
In the wake of the Offsite Ads announcement, many sellers took to social media to announce moving away from Etsy. Some discussed the advantages of competing online marketplaces like Shopify and Big Cartel. Others talked about creating their own website.
I’m so disappointed by @Etsy‘s new ads policies. Automatically enrolling shop owners into paying for ads is a predatory tactic. I’ll be working on building my standalone ecommerce site after C2E2. pic.twitter.com/hpkAV1etkw
— livelygold (@livelygold) February 26, 2020
At Tandem Interactive, we are a digital marketing agency in Fort Lauderdale specializing in paid and organic SEM marketing. Our team of digital marketing ninjas has experience providing digital solutions for E-commerce marketing. For more digital marketing news and tips, go to our blog. To find out how we can help you create your retail digital marketing strategy, give us a call or contact us!