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Etsy is raising its seller fees in an effort to court new users

With a new subscription package for sellers, and a bigger marketing budget, Etsy wants to keep makers happy–which means winning over new buyers.

Etsy is raising its seller fees in an effort to court new users

A year into Josh Silverman’s tenure as CEO, Etsy is on the mend. The online marketplace finally crossed $1 billion in sales during the last quarter of 2017, bolstered by holiday sales and Silverman’s laser focus on Etsy’s core marketplace. That means Silverman has done away with Etsy Studio, a craft supplies marketplace whose launch I covered last year, along with Etsy Wholesale, which connected sellers with brick-and-mortar retailers interested in their wares.

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Today, Etsy is announcing new subscription packages for sellers who want more customization–an additional investment in its marketplace and a new revenue stream. Included in Etsy Plus, which launches in July at a monthly rate of $10, is a suite of new tools for sellers who are looking to scale their business. With the subscription, a seller could purchase a custom domain that points to their Etsy store, customize the “featured items” section of their shop, or purchase discounted custom packaging specific to their brand. Next year, Etsy will roll out its Premium subscription tier, which is aimed at more established businesses–cases where a shop owner may have multiple employees. The subscriptions are opt-in: Sellers who don’t want to upgrade can remain on Etsy free of charge (now called “Etsy Standard”) and still have access to existing services.

But Etsy is making another change that will affect all 2 million of its active sellers. Starting mid-July, the transaction fee charged to sellers when they make a sale will increase for the first time, from 3.5% to 5%. (Silverman says that even with a 5% transaction fee, Etsy is cheaper for sellers than any other marketplace; Amazon, for example, charges 15%, while eBay’s fee is 10%.) The windfall will go toward marketing spend, which will swell by 40% in 2018–an investment of more than $100 million–and is intended to bring new people to the platform. Etsy plans to do this through digital advertising, of course, though some people may also be introduced to Etsy through a new NBC reality competition show for makers called–what else?–Making It. Amy Poehler and Nick Offerman are the hosts, but Etsy trend expert Dayna Isom Johnson is one of two judges.

[Image: courtesy of Etsy]

“We’ve talked to more than 3,000 sellers in the past few months, doing intensive research on what they care about, what they value, and how they value it,” Silverman says, assuring me that sellers will understand the increased fee. “We’ve heard over and over again that they want us to be investing more to bring them more buyers.”

Etsy also isn’t worried about potentially losing subscribed sellers down the road, if the subscription features aren’t worth the added monthly costs. “The subscription packages are really a foundation for the long term for us,” Kruti Patel Goyal, the general manager of seller services, says, “and they lay the groundwork to really show our sellers a path to growth.” In fact, the subscriptions could double as a way to retain sellers who might be tempted to jump ship to, say, Shopify, once they have scaled.

Since its IPO in 2015, Etsy has struggled to reconcile its company ethos of social responsibility with its financial reality and shareholder pressure. The company’s mounting losses and falling sales growth led Etsy’s board to replace former CEO Chad Dickerson with Silverman last year. Under Silverman, Etsy is more focused, and its numbers are trending up–but Etsy also gave up its B Corp designation last year and reportedly axed the team that oversaw social and environmental initiatives.

Has any of that compromised Etsy’s mission?

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“I believe we are a more socially responsible company today than we were a year ago,” Silverman says. “We have a more diverse workforce, we have a lower environmental footprint, and we serve our sellers better . . . A narrative that I disagree with is that in order to be socially responsible, we need to be less successful. I couldn’t disagree more with that narrative, and we are bound and determined to prove that we can be a better citizen and a great business at the same time.”

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About the author

Pavithra Mohan is an assistant editor for Fast Company Digital. Her writing has previously been featured in Gizmodo and Popular Science magazine.

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