Etsy started out as a platform in 2005 where people who love making handcrafted goods could sell their products to people who were looking for and love to buy exclusively handmade goods. A lot has changed since those early days.
Etsy Continues to Grow
Etsy has seen phenomenal growth since its founding in June 2005 by founders Rob Kalin, Chris Maguire, Jared Tarbell, and Haim Schoppik. Ten years after the company’s founding, in April 2015, Etsy became a publicly traded company. They traded on the NYSE at a valuation in excess of $3.5 billion while raising more than $287 million. At the time of this article, Etsy is valued at $2 billion.
According to Statista, Etsy had over 2.5 million sellers at the end of 2019. That number has continued to grow annually.
Exclusively Handmade To Manufactured Products
In 2013, Etsy changed its Terms of Service. Now, sellers can offer manufactured goods as well, not only handcrafted goods. While this expanded selling opportunities, it also commercialized a platform that had been dedicated solely to creative entrepreneurs.
At the time, many original handcraft sellers threatened to leave the platform. However, membership numbers didn’t drop significantly because Etsy was still a valuable platform for sellers to make money online.
Increased Etsy Seller Fees
In 2018, Etsy increased its transaction fee for sellers from 3.5% to 5.0%. Once a product is sold, Etsy now takes a 5.0% cut of the revenue paid. This includes 5% of any shipping cost paid by the customer.
Additionally, the company announced in February 2020 that it would advertise seller’s goods on the internet for free. Though it sounds great, there’s a catch.
Etsy collects a fee of 12% – 15% from each sale that results because of their advertisements. For instance, if Etsy’s advertising lands your product on Google search and a consumer buys through that channel, Etsy collects the additional fees.
Small sellers pay the higher fee of 15%, but they are also able to choose to opt-out of the advertisements. It results in less traffic, but also reduces the fees paid for the sales you do make. It is a business decision to weigh as you start your Etsy shop.
However, Etsy’s top sellers – those making $10,000 per year or more – do not have the option. They will be automatically enrolled in the program, and will be charged 12% on sales that result from an Etsy ad.
Read More: Fees & Payments Policy on Etsy
Prioritizing Free Shipping
Sellers are highly encouraged to offer free shipping in their shops. Shipping prices can be set per product or for the shop as a whole.
Etsy has made it clear that they want sellers to offer free shipping for orders over $35. Shops that comply get priority in searches and advertisements. Shops that do not are pushed further down the search which makes it harder to gain traffic and customers.
For many sellers this means raising prices and running the risk of losing sales and customers. Otherwise, sellers absorb the extra cost themselves. Ultimately, if you are not carefully pricing products for profitability, this could cause losses in your Etsy shop.
As a global marketplace, this policy makes it more difficult for sellers to profit from sales to overseas buyers. Unfortunately, for a seller from a place like South Africa, shipping costs overseas can be exorbitant. With many buyers ordering a single item, it’s just not viable for global traders far from the large markets to ship one item and still make money.
Mom Has The Last Word
Still curious about selling on Etsy? This is just a small piece of the information I have for you. Make sure to check out my Ultimate Guide to Selling on Etsy to learn everything about how to get started, scale and succeed as an Etsy seller!