Feb 28, 2022
Following a record-breaking fourth quarter, Etsy announced that it is raising seller transaction fees to 6.5 percent from five percent.
The incremental revenue from the 30 percent fee hike is expected to be neutral to margins as the platform reinvests in marketing, seller tools and the buyer experience. The crafts-focused online marketplace last raised sellers fees from 3.5 percent in 2018.
“We’ve demonstrated our ability to drive more sales and value for our sellers and believe that this represents a fair exchange of value between Etsy and our seller community,” said CEO Josh Silverman on its quarterly call. “We see so much opportunity to continue to raise top-of-mind awareness and consideration for Etsy.”
Etsy said its “unprompted awareness” was only 47 percent in the latest quarter.
Etsy’s growth surged over the last two years due to the wider adoption of e-commerce over the pandemic. Gross merchandise sales, or the dollar value of sales generated by merchants on its marketplaces, jumped 31 percent in 2021 and 107 percent in 2020. Growth has slowed in recent quarters against tough comparisons.
Etsy will focus its marketing investments going forward on retention. New buyers have grown 84 percent over the last two years, reaching 90 million active buyers. Around 53 percent of Etsy’s 2020 active buyers and 37 percent of new buyers returned to make a purchase in 2021. Mr. Silverman said, “The pandemic cohort has been sticky.”
At the same time, active sellers have vaulted 112 percent over the last two years to 5.3 million.
With the three-pronged focus on “inspiration, efficiency and reliability,” other planned investments include enhanced seller tools such as videos, thank you coupons and better access to resolve customer issues. Other priorities include improving search personalization, enhancing delivery transparency and better positioning Etsy as a gifting destination.
The goal is to become the starting point for more e-commerce journeys.
“We believe we have a real opportunity to win,” said Mr. Silverman. “We believe that unlike most of the rest, we offer something truly different and compelling. We aren’t trying to sell you the exact same commoditized product just $0.02 cheaper or 2 minutes faster.”
DISCUSSION QUESTIONS: Is Etsy in a good competitive position to be raising seller fees? Where should Etsy’s investments be prioritized to continue to drive buyer consideration and acquisition post-pandemic?
"Etsy moved from maker marketplace to e-commerce juggernaut during pandemic, so the new fees shouldn’t come as a surprise. "
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March 01, 2022 at 01:00AM
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Is it the right time for Etsy to raise seller fees? – RetailWire - RetailWire
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