Etsy Hikes Transaction Fee to 6.5% for Sellers | Cost of Doing Business on the Rise

Etsy Hikes Transaction Fee to 6.5% for Sellers | Cost of Doing Business on the Rise

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it's about to become more expensive to sell on  etsy will that discourage shop owners and does   this mean higher prices welcome to the Sewing  Report i'm jen we're just gonna get right into it   etsy just dropped a big announcement that  will be affecting all shop owners they put   this out also the timing of this is a little  tone deaf i'm releasing this a few days after   the announcement dropped they put this out  the same day that russia invaded ukraine   so that does seem a little ill-timed to me  a lot of people got the email you can also   find this on the etsy website with the title our  continuing investment in etsy's growth a message   from etsy ceo josh silverman they kind of go  into how sales increased 23 compared to 2019   and at first glance it kind of sounds like this is  a good message but then they dropped the bomb and   that is on april 11th etsy will be increasing  the current five percent transaction fee   to 6.5 that's a pretty significant jump especially  for a company that claims they made more money   last year than ever before so in 2021 etsy says  they showed more than 90 million active buyers   worldwide that there's an alternative to big  box automated shopping what's changing as   etsy is claiming that this increase from five  percent to six point five percent is going to   allow them to make improvements in three key  areas right bringing more buyers to etsy etsy   says they spent nearly 600 million dollars on  marketing last year really 600 million dollars   and the company apparently wants to invest  even more on tv commercials influencers taste   makers billboards podcast advertising and email  marketing okay first of all my question is uh   does anyone not know what etsy is at this point  like i'm serious unless you've been living under   a rock you probably know what etsy is 600 million  dollars is a lot of money and i'm just wondering   like if you're a consumer is seeing etsy mentioned  on a podcast or by an influencer is that going to   affect your decision as to whether or not you  shop on etsy i don't really need that type of   brand awareness the company is already very  well known and i just think that seems like   a waste of money to me sorry etsy but just my  opinion there they also now this is a big gripe   among people on reddit if you want to see kind of  the the t about etsy i would recommend you go to   r slash etsy or r slash etsy sellers that's  where a lot of people will kind of talk talk   ish about etsy and uh one common complaint i see  from a lot of shop owners is the lack of seller   support so according to this announcement etsy  is going to grow the support team by more than 20   so you can get help more quickly and easily faster  email responses expanded access to live chat and   prioritization of your most urgent requests so the  thing i've commonly seen and in full disclosure   i have not personally had to reach out to etsy  support myself so i don't have first experience   but i read a lot of threads from people who have  and there's a lot of frustration over the lack of   support for sellers apparently there's a pretty  decent system in place like email and even phone   support for people who are buying at etsy but  not for sellers i guess there used to be a phone   number and they got rid of it and there's  also been a couple email addresses floating   around that like no one ever gets back to you when  sellers try to reach out to etsy for issues they   get like a bot response no response and it seems  like it's really hard to talk to an actual person   so people were joking around when i was seen like  there's so many threads on reddit about this news   and folks were like okay so 20 on top of zero  is still zero i'm taking this announcement with   a grain of salt i don't know how much things will  get better for sellers and towards the end of this   video i'll talk more about my own experiences  and what i think the company should do now i   am a seller and a buyer on etsy i am really glad  that i started this etsy shop so at least now i   can relate to some of these issues and i know  firsthand what it's like to have an etsy shop   and i feel a little more equipped to talk about  issues like this okay so let's go back to the   wonderful announcement also they're they're gonna  apparently continue to keep etsy unique i think   people already know what etsy is uh we'll build on  last year's roughly 40 million dollar investment   in teams and technology that help make our  marketplace a safe and secure destination   for handmade vintage and special items this year  we'll expand our efforts to remove listings that   don't meet our policies and help you resolve  issues with buyers we'll also make significant   improvements in services and tools that will  make it easier and smoother to grow your business   for instance we'll be launching a new seller app  with enhanced features now there's like three   apps for etsy and i'm still confused on what the  difference is like there's one for buying stuff on   etsy and then there's at least two for sellers i  have all three of them and i feel like this should   be streamlined because it's really like confusing  af to me but they say they'll make it easier for   you to manage your orders connect with buyers  understand how your business is doing these are   some of the great things we'll invest in to keep  etsy a beloved trusted and growing marketplace we   don't take fee changes lightly and we believe that  these investments will enable etsy and our seller   community to continue to grow thank you for making  etsy a one-of-a-kind marketplace josh silverman so   they do have like an faq down below why are you  increasing the transaction fee like they haven't   said like our costs have increased i want to know  like if they're making more money and more profit   than ever why are they raising the fees for  sellers and the transaction fees so if you're   not familiar every sale you make there's a listing  fee of 20 cents there's also a transaction fee of   um currently five percent also if you got the  sale via off-site ads the fee is like 12 to 15   depending on whether you have mandatory off-site  ads or it's optional and i'll go into that a   little bit later and then there's also a payment  processing fee there is a a significant cost to   selling that etsy now here's the kicker if you  do want to share your feedback on updates there   is a survey all right that you can fill out so  if you're not super happy with this and you sell   or buy an etsy i would encourage everyone to take  the survey and i'll link all of the websites i'm   showing down below in the description box take  the survey if you have a strong opinion on this   and you know blast him on social media you know  hit him up tag him on instagram twitter wherever   and let the company know what you think because it  seems like a lot of people are not super thrilled   about this this is one way make your make your  voice known you know what i'm saying here i've   noticing this with a lot of corporations where  they will raise prices or say you know hey dudeo   inflation and the rising price of stuff we  have to raise prices for customers but then   in their shareholder reports they'll record  like record profits we made more money than ever   all that sort of jazz but then they're also trying  to tell you that they're raising prices due to   their higher cost so it's like either  one or the other the other are you making   lots of money or are you so strapped for cash  that you need to raise costs to consumers just a   question i'm asking here so let's bring this guy  up here now this is what they're sending out to   their shareholders they report a 16.5 increase  in consolidated fourth quarter year over year you   know your typical corporate mumbo jumbo whatever  they're saying they had a record 4.2 a billion  

i believe this is like a gross merchandise sale  something like that again they're saying that etsy   made loads of money so if that's the case i just  want to know why they're they decided to raise   costs uh for sellers i'll link to all of this  stuff below so you can read this first hand make   up your own mind so again it seems like compared  to uh yeah look at this compared to uh 2020 fourth   quarter lots millions of dollars more in sales  so i just want to know if they're doing so well   why do they need to raise the prices for sellers  which in turn i absolutely think this is going to   mean higher prices for you the consumer so even if  you don't sell on etsy and you just shop on etsy   this is probably going to affect you and i'm  already seeing a lot of backlash online forms like   reddit where sellers are really really upset and i  think that there's for a good reason so i do want   to talk a little bit too about some of the aspects  that etsy mentioned in the announcement that   okay i've already told you what i think about the  marketing i think it's [ __ ] i'm just gonna say   that like why can't they use that 600 plus million  dollars to actually support sellers or to not at   least not raise the costs for sellers again i just  don't understand how doing etsy ads or paying for   like paid promotion is really gonna do much like  again they already have the brand recognition   it's not like no one's ever heard of etsy i think  that's stupid as far as the seller support now if   they actually did take this marketing money and  put that towards seller support after dealing with   etsy on a as a on a seller's level i absolutely  think they need to have some form of real seller   support like not just an artificial intelligence  bot thing but real people and i would love to see   them have like an actual email support i'm seeing  a lot of stories where people will actually reach   out to etsy get no response for weeks or months  that's pretty unacceptable especially since if   you want to get the whole star seller badge you  have to respond as a seller to messages within 24   hours but yet the company does not hold itself  to their own standards i can see why there's   a lot of frustration about that and i do think  they should have some sort of live live chat a   lot of companies do do live chat i think that's a  great option so you don't call them on the phone   i'm not a big phone person myself and i do think  that might be a good thing and as far as etsy   trying to enforce their own terms of service i  think that would be a good thing if they actually   were able to do it in a way that makes sense and  and doesn't false flag a lot of uh shops that are   that are not violating the policies i'm because  i'm also seeing a lot of sellers saying their   shops were terminated or suspended for no reason  and these people now some do violate the policies   like there's intellectual property infringement or  they do sell things that are they're not supposed   to be but i'm seeing a lot of stories from sellers  where they really don't seem to be doing anything   wrong and their shop just gets shut down without  notice or suspended without notice and there's   very little recourse for the sellers and again as  i mentioned before with the really non-existent   seller support that makes it really difficult if  you do run into these issues to actually try to   fix these problems and i can relate to because  youtube also sometimes has some of these issues   where they use ai to enforce a lot of the policies  and sometimes it's not always accurate like etsy   there's really not a good way besides like trying  to spam them on twitter to get a hold of a real   person at youtube so a lot of the issues that i  think youtubers face especially if you're a small   channel and you don't have a point of contact  there are the same issues that sellers run into   on etsy there are also a lot of shops and i'm even  seeing a lot of sellers complain about this that   they'll think they're buying something handmade  but they're actually getting something that's   from like a drop shipper and they're just getting  a mass-produced item but the shops are trying to   pass this off as a handmade item when it's not  because then they're finding the same thing on   amazon or aliexpress or whatever now if etsy can  actually crack down on these shops i think that   would be a good thing but it seems like a lot of  these shops are able to to pass through the cracks   and still get through and that is watering down  the reputation of etsy because etsy is or was well   known for having legitimate handmade items made  by real people and there was some security from   a consumer standpoint that they're bought they're  supporting small local independent businesses when   sometimes the consumers now are having a hard time  sifting through what's in a legitimate business in   what is some sort of drop shipper so that is an  issue and again if they are going to raise these   transaction fees from five to six point five  percent i would really hope that that money was   going towards weeding out some of these shops that  should not be on etsy but again a lot of shops   who are following all the policies are the ones  getting hit again this is kind of an opinion based   thing this is more commentary at this point too  but i wanted to share my thoughts especially since   i do have this platform and i'm able to speak on  this i will because this is something that will   affect all of us and in fact i was going to be  doing a video about the price of fabric and sewing   supplies because i'm seeing some increases from  my end as i'm buying inventory for the etsy shop   now i sell sewing supplies in the sewing report  etsy shop and i've already gotten notices from   several different fabric manufacturers saying  that they are going they have already or will   be raising prices on the fabric yardage just due  to their increased costs and again we're seeing   this everywhere groceries are more expensive gas  is more expensive these items are shipped using   you know trucks or planes that use gasoline so it  really does make sense that costs of everything   are going up and unfortunately the sewing and  crafts niche is no exception we're seeing that   here in fact i'm even noticing uh certain items i  i stock the price for me to purchase these items   has increased so there's one item that i bought  at cost for at first i was paying like 750 and   now that same item for me to purchase is 10 i'm  feeling it too and it's interesting to see it on   the retailer side because my costs for running  this etsy shop are not small in fact i will be   doing a follow-up video because i want to share  a little bit more of the finances of my first   year and a half on etsy in a nutshell i believe  i'm about breaking even but there are a lot of   costs to running an etsy shop and it's interesting  because i was not aware of this before i started   the shop the other thing to keep in mind too is  that this has happened the past few years but   the post at least you know in in the united states  here united states postal service has raised   the shipping prices at pretty much every year the  cost of shipping is going up for sure because a   lot of shops on etsy myself included feel the  pressure to offer that free shipping over uh 35   or more we're gonna have to build in the increase  in shipping costs in the price of the item   all in all i do think uh this year in particular  we're gonna see higher prices for fabric supplies   handmade items in general just please know  it's there's a reason for the increase in costs   and i've detailed this here on the channel as well  that the the all of this coupled with the new irs   threshold for reporting for the 1099 ks on online  payment processors if you're not aware of this   issue i'll link below the videos i've done on this  with uh sarah kornack of small business sarah and   mark ii of not your dad's cpa they both had some  really interesting perspectives as accountants on   how this will affect uh people who sell anything  online but i do believe that there have been a   large number of sellers of handmade items  or even people who flip stuff on like ebay   or makari or whatever and uh they may not have  been taking into account the cost of taxes   on the pricing i don't know at this point i think  there are some sellers who will probably be like   this is not worth it i'm just gonna leave  etsy i'm already seeing a lot of people   on reddit saying you know i needed a motivation to  do my own website this is it or i'm leaving etsy i   even not i posted it on instagram stories the news  and i had one fabric website message me and saying   they're they're gone off etsy they already have  their own website now that that has challenges   in itself as well but they've decided they're just  they're just gone from etsy that was like the last   straw so that was pretty interesting i'm also  seeing a lot of people who want to account for   all of the income tax you have to pay and the cost  of maintaining your your bookkeeping like i have   to get a quickbooks account and that's like 25 a  month you know for some especially smaller sellers   i think if you're doing it on a pretty small  scale all of these factors that i just mentioned   are going to attribute to you possibly not  wanting to do this anymore because it does take   time effort and energy to run an etsy shop or do  any sort of online business and the more red tape   and the more obstacles you have like this the  less it makes sense and i i totally get that so   let's chat a little bit about about that too  because i do think that there's going to be   fewer etsy sellers because of all of these factors  just for your reference when i'm selling my sewing   supplies now i do not sell things i make i  sell supplies so typically my markup is uh i   is double the what i paid for it so if i buy  something for three dollars i'm supposed to   retail it for six dollars you might be like hey  jen you're doubling your money i'm not really so   first of all for that six dollar item  i might have at least a doll at least a   dollar to a dollar fifty in uh etsy fees plus  shipping supplies also their shipping costs   on my shop i do offer the thirty five dollar  in over order shipping so if someone orders   forty dollars i eat the cost of the shipping now  there's also the cost i again i have to also the   six dollar item so let's knock a dollar fifty off  for etsy fees payment processing fees listing fee   and uh then income tax on the profit also  knock off the amount for again my my taxes   uh also all of the uh bookkeeping i have  to do also the time i have to take to   to pack and ship the item and you can see how  it that number well at first sounds really great   once you attribute for all of the costs the actual  profit margin is pretty small especially for   smaller orders and and that sort of thing the  money i have to pay an accountant to keep track   of the books the quickbooks subscription all  of the other stuff i mean there's a lot to   also i have to get uh business licenses all of  that sort of thing i can really see how quickly   once you attribute to all these factors and plus  you attribute you factor in the rising costs of   all these things uh you're either gonna have to  either stop doing what you're doing or you're   gonna have to raise prices across the board myself  or my own shop i'm gonna have to probably raise   especially for the fabric prices i'm going to have  to increase those because i'm going to be paying   more for fabric now i was lucky um sometimes my  fabric manufacturers that i buy from offer some   deals on the fabric like it'll be on sale so i  did just purchase um some more fabric from that   peppermint line the christmas line that i offered  this past year i got a great deal on the fabric so   i'm going to be offering some bundles at a good  price just because i was able to get the fabric   at a good price so i'm really trying to do what i  can to make sure my prices are competitive at this   point again the shop is just about breaking even  i can't eat a lot of like refunds cancellations   that sort of thing really the free shipping on my  on my shop is like the sale so i can't really do   a lot of sales on the items because i'm already  not making really any money on the shop as it is   and i'm gonna be doing a more detailed breakdown  once my tax stuff is done i just submitted   everything to my cpa so i should be finding out in  about a month or so what's going on all of these   costs man i mean they're tough oh and also i did  get a really interesting comment i posted this in   the community tab on the channel one very nice uh  lady wrote that she always when she's on etsy she   looks to see if the shop has their own standalone  standalone website and she tries to support them   there as well just knowing about all of the fees  and stuff so if you are consumer and you do want   to help that shop out that is something you  could do i want to share my thoughts too on   what i think etsy should do i have some opinions  if i could wave a magic wand and i was in charge   i would not spend 600 on marketing i've said  that a little earlier i think that's for the   most part a waste of money i would put that money  instead towards actual real seller support like   having real people i also really think their ai  needs to improve they have a lot of false flags   and it seems like it makes a lot of mistakes when  it's sweeping these stores for violations it's   also not clearly not catching a lot of the stores  that are actually violating the etsy policies   like all of the drop shippers or people selling  stuff that really should be like an amazon store   another point of contention for sellers is the  controversial etsy off-site ads so let me bring   this up what this is is you can turn these on if  you are a smaller seller or you can turn these off   they are optional so etsy advertises various  listings throughout the internet and uh here   is kind of everywhere they advertise like google  other sites stuff like that and if you make a sale   from one of these off-site ads you have to pay i  believe it's between uh 12 and 15 uh fees total   for the wholesale that's quite a lot of money if  you make a sale via these off-site ads now if you   make less than ten thousand dollars on etsy in the  past years 365 days the off-site ads are optional   however if you make more than ten thousand dollars  usd on etsy in the last year you are required   required to participate for the lifetime of your  shop now they do claim that you get a discount   advertising vi but i think a lot of these sellers  would rather not be required to participate in   off-site ads so that kind of sucks and that is  something that a lot of sellers really hate about   etsy and let me see if i can find the rate i think  it was i want to say it's 15 oh yeah 15 if you are   putting them on and it's optional but you get a  rate of 12 if the off-site ads are required for   your shop but again a lot of people would rather  not get that traffic than have to pay 12 to 15   for the off-site ad sale so that is something  that if i was like in charge of etsy i would just   make this completely optional i think it's a  little unfair to sellers that you're requiring   higher volume shops and honestly ten thousand  dollars isn't even that high volume of a shop   if i double my sales i will be at that point and  i guess i have to pay off-site ad fees forever so   that's not something i would be looking forward  to so i would make these permanently optional i   think a lot of sellers just don't like this  and in fact i've turned this off for my own   shop so i do not have this on now they do say  your off-site ad fee will never exceed 100   usd isn't that isn't that comforting i like  how they're trying to make this sound like it's   a positive but man 12 to 15 of your total sale  not even off of your profit that's quite a   chunk of change for you getting in a sale and  again a lot of sellers don't even really want   the sale because they re like for some people  that just cuts off any profit they have for some   items that might even be a loss and also what if  your shop one year does ten thousand dollars so   you have to have it forever but then the next  year you only do four thousand dollars i think   it's pretty crappy that they require you to do it  for a life but hey that's just me and of course i   think raising the transaction fee from five to six  point five percent is a mistake i don't understand   why they need to raise that fee especially since  according to them they made more money than ever   are there any other areas where they can cut  costs i know a lot of corporations are going   to a more work from home model wouldn't  they mean you need like less office space   there's less overhead obviously due to kova  there's been a lot less business travel and i   used to work for some companies that honestly did  some business trips that were pretty unnecessary   it's like the person just wanted to say they could  go to you know wherever the company would spend   way too much money on nice hotels and food and i  do think a lot of this business travel one thing   i think covet has shown us is that there's a lot  of a lot of pork in those areas and a lot of these   business meetings you do in person over a fancy  steak dinner could easily be done just on a zoom   call or whatever i do really hope that companies  would instead of raising the prices for consumers   first look to see if there's any areas with excess  spending that maybe they can reduce like what is   wrong with trying to do that instead of trying to  raise prices towards the sellers on your platform   that are already having their own struggles with  the rising postage rising costs of supplies and   things like the irs 600 threshold so that's  just my take i just wanted to do a quick video   and explain where i'm coming from uh let me  know down below in the comments do you have any   thoughts on this 6.5 for the transaction fees and  also if you were in charge at etsy what kind of   changes would you put into place or what would you  do to try to make the platform better for everyone   i want to know down below and also if there's  any other follow-up videos you're interested in   i welcome some suggestions and i just wanted to  do something talking about this because it's a   really big deal because so many of us either buy  or sell on etsy anyways i'm jen with the Sewing   Report i'll see you guys again in the next video  and remember whatever you're doing make it fun

2022-03-01 10:17

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