Should You Boycott Etsy?
If you have been keeping up to date with the news lately then you may have seen Etsy making headlines for its reserve system and potential UK boycotts, but what does this mean for any sellers out there relying on their platform?
Well, first off let’s make sure you understand what the reserve system is. Essentially Etsy has the right to place a reserve hold on your seller account, this means rather than your funds being released immediately, a percentage will be kept for an allotted amount of time. The time frame and percentage held is decided by Etsy and seems to range depending on your account, however some users have complained that up to 75% of their funds are being withheld. Etsy themselves say this system has been brought in to “ensure refunds and chargebacks can be easily managed if any issues arise”, however this has only served to further infuriate UK sellers who were already struggling with buyer protection and its bias towards the customer.
Although we find our clients benefit greatly from getting their own website with an online store, we recognise that Etsy can divert traffic your way through paid ads and algorithms. For some, their Etsy store is their main selling platform and method of turning a profit, therefore funds being withheld can have dire repercussions.
Some small businesses rely on their income from Etsy to pay suppliers and buy materials, 45 day holds have meant they cannot afford to pay for materials and/or create more products. This has led to large scale complaints by Etsy Sellers and calls for a worldwide boycott.
Etsy, however, state that these holds are only affecting around 7% of its sellers and that people can avoid these holds by sending parcels on time and with tracking numbers. Once confirmation of transit is received via tracking, the funds will be cleared, however this has affected UK customers adversely as cheaper postage methods do not include tracking as standard. A lot of sellers rely on Royal Mail 1st and 2nd class postage and therefore are unable to provide Etsy with evidence they need to release their funds.
After a slew of social media and news outlets covering the story, Etsy have released a large amount of money held in reserve, however it does seem as though some rather concerning reports are emerging from sellers first hand.
“I had to take a personal loan to pay people for the first few weeks, because I had just restocked and it was a complete surprise to suddenly be getting zero dollars from my payment account,”
The biggest problem with Etsy’s new reserve system is that their side of the story does NOT seem to be matching first hand reports. Etsy has released a statement explaining that, as well as improving the processing time of refunds, the reserve system also prevents buyers being scammed by new shops taking customers money and then removing their shop. However many complaints have come from business owners who have been selling on Etsy for years with good customer ratings.
Potentially most disturbing of all, is the fact that most reports in newspapers and online news outlets are anonymous due to buyers ‘fearing retaliation’, with some even claiming their sales have decreased after making official complaints. Etsy strongly deny this allegation, however what is certain, is that those who complain or try to find out more information regarding being placed on reserve are given little to no answers.
Realistically even if you haven’t been affected by the recent increase in reserves, you might still be concerned about this happening to you in the future. A lot of Etsy sellers were already feeling discouraged after finding they have little protection and pay exorbitant fees each time they sell an item.
Below you will find a comprehensive list of our clients most reported issues with the selling platform Etsy
Issues with etsy
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Since Etsy’s inception, they have become one of the leading seller marketplaces for handmade goods. However, what was once a haven for small business owners and individual makers, is fast becoming a minefield of fees. Etsy hit the news in 2022 for the 30% fee increases, again this led to calls for strikes and boycotts. Below is a full list of the current fees charged on each sale!
Listing Fees: $0.20 per listing (listings count as one item or multiple quantities of one item).
Transaction Fees: 6.5% transaction fee on the amount you charge for an item.
Shipping & Gift Wrapping Fees: This is 6.5% of the amount you charge for shipping and gift wrapping.
Etsy Payment Processing Fees: This is 3% of the transaction price plus $0.25 per transaction (US transactions only; other countries may have different processing fees).
Currency Conversion Fees: Totals 2.5% of the sale amount.
Etsy Platform Ad Fees: You choose your budget.
Etsy Offsite Ad Fees: 12-15% of the sale price of items bought because a user clicked on an offsite ad, depending on your sales volumes.
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Etsy gained its popularity on the basis that everything sold on the platform was handmade. This meant both the buyer and seller knew their items were crafted by hand and usually quite unique.
However because Etsy felt they were in direct competition with platforms like Amazon and Ebay, they have relaxed the rules on who can sell.
This has led to a HUGE influx in factory made products and those made in china. The production conditions aren’t known and of course these products are sold for a fraction of the price genuine makers must charge to support themselves financially.
Etsy sellers with genuine talent now find themselves pitted against companies mass producing similar products in factories. The market is saturated and this not only makes it harder for people to find your products, but also makes it less likely that they choose yours over a cheaper competitor.
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Buyer protection is just what it says, protective policies in place to protect the buyer. Yes, there is ‘purchase protection’ for sellers, but this doesn’t seem to offer as much protection as you would think.
Some sellers have had Etsy enforce refunds on orders of £1000 or more, despite having proof of delivery from their chosen courier. Don’t use Etsy’s expensive international service for orders over £250? Etsy’s buyer protection provides an immediate refund. Some have had the money given back to the client within 1 hr of the claim being received, with no opportunity for evidence submission from the seller.
That’s just for big orders, if you send without tracking then you can forget ever winning a case where a customer claims the item wasn’t received. Furthermore even WITH tracking and delivery confirmation buyers have been awarded refunds.
These cases have left sellers feeling more than a little vulnerable to Etsy’s rules.
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Etsy has the right to place a reserve hold on your funds at any time and without any explanation. Up to 75% of your funds can be withheld for up to 45 days, with all fees being deducted from the remaining 25%.
The important thing to remember is that there ARE other ways you can sell your products, whether you have a successful Etsy shop now or not, you can sell using your own site with 0% listing and transaction fees, complete control over policies, and a far more expressive shop!
Squarespace is a brilliant hosting platform offering a number of packages, companies like Opal Sky Digital Designs can then design you the perfect E-commerce site so you can start keeping 100% of your earnings.
Get in touch today to find out how you can avoid the Etsy pitfalls and reclaim your business and your power.
