Etsy is Increasing Its Fees

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The creative maketplace Etsy will increase its transaction fee for the first time on July 16 from 3.5% to 5%, which will now be applied to shipping, leading many sellers to consider leaving the platform.

Saving on Transactions Keeps Prices Down

Leading costume and corset brand Redthreaded said even a small increase is damaging when combined with the increasing costs of materials which cannot be avoided. “We have been considering leaving Etsy for a long time,” said Redthreaded. “They just announced their first ever price increase for transaction fees which means that a small business selling on Etsy now loses about 8% of their sale to transaction and processing fees. We saved several hundred dollars in avoided Etsy fees via website sales last year. Savings like that help us to avoid raising prices as costs of materials increase (our coutil just went up this quarter, for instance). An increase of 1.5% in Etsy fees translates to about an additional $4 lost on a corset sale.”

We Have Great Traffic and Buyers on Etsy

Of course Etsy is a fantastic source of traffic thanks to its handmade niche, making it an incredible source for costumers looking to buy and sell with or without their own website. However, selling on multiple platforms means seamless e-commerce requires human eyes and time. “We are also finding it increasingly difficult to manage a large inventory across two non-integrated websites. If something sells on the website, one of us has to manually deactivate it on Etsy, for instance. However, we have great traffic and buyers on Etsy, so it’s tough to leave! We started there, after all.” said Redthreaded.

Etsy says that sellers will benefit from investment in marketing and customer service. “This new fee structure will allow us to further invest in key areas while maintaining what we believe is the best value for creative entrepreneurs,” it said. “This will enable us to drive more buyers to Etsy through increased marketing, better customer support, and an enhanced the product experience. For example, we plan to significantly increase our spend in marketing this year so we can attract new buyers to our marketplace and remind past buyers of what it means to shop special.

Better Value for Entrepreneurs

A spokeswoman for Etsy said the increase will be reinvested in better tools for sellers. “Etsy is only successful when our sellers are successful, and we are constantly listening to how we can better help them reach their goals,” she said. “Sellers have been vocal about their desire for us to bring them more buyers and tools to run their businesses effectively. Additionally, our revised fee structure will enable us to make meaningful investments in key areas while remaining the best overall value for creative entrepreneurs,” she added.

Nevertheless the small increase still leaves it cheaper than many alternatives. Some 500,000 Shopify sellers have to pay a monthly subscription in addition to a small fee per purchase. The basic Shopify plan costs $29 per month, plus 2.9% and 30 cents per transaction.

What is your view on the Etsy price increase? Is it still the best-value platform for costume makers? Don’t forget (gentle plug) that The Costume Rag offers a low-cost advertising system to promote your products wherever you choose to sell them.