
Etsy sellers are furious over new mandatory ad fees - mreome
https://mashable.com/article/etsy-offsite-ads-program-sellers-backlash/
======
stordoff
> If you’ve made more than 10,000 USD (approximately 7,800 GBP) in sales on
> Etsy in a 12-month period [...] you’ll be required to participate for the
> lifetime of your shop

That's not exactly what I think when I read "biggest sellers". That seems like
a remarkably low cutoff.

Also, if you don't need/want to grow and/or you have low margins, this could
wipe you out. 12% revenue of _any_ orders within a 30 day period of an ad
click[1], effectively at Etsy's discretion (how can you challenge that someone
clicked, or disagree with how hard they are pushing your products - especially
noting that they have a binding arbitration clause[2]), could be a huge
percentage[3] of your total sales.

[1] "If such advertising includes your listing, a buyer clicks on it, and then
places any orders from your shop within 30 days of that click, you will be
charged an advertising fee on these orders"
[https://www.etsy.com/uk/legal/fees/](https://www.etsy.com/uk/legal/fees/)

[2] s.11 [https://www.etsy.com/uk/legal/terms-of-
use#etsydisputes](https://www.etsy.com/uk/legal/terms-of-use#etsydisputes)

[3] Up to $100/order - "There is no limit to the number of Offsite Ads fees
you may be charged on Attributed Orders, but the total Offsite Ads fee you’ll
pay on a single Attributed Order will not exceed $100 USD."
[https://www.etsy.com/uk/legal/fees/](https://www.etsy.com/uk/legal/fees/)

~~~
masonic
It's reminiscent of what StubHub did last year when, just a few weeks before
baseball season began, they increased their commission on MLB tickets by
_50%_.

Yes, _fifty percent_.

~~~
skinnymuch
Interesting. Wonder if that was during eBay or new ownership.

~~~
masonic
Ebay.

------
wjossey
On the one hand, this would be great if it was all opt-in.

On the other hand, this is nutty for any business running on low margins or
with limited supply (and a sufficient customer base that they don’t need
advertising to sell out).

A lot of small business owners aren’t great at marketing, and having a push
button solution is great. Forcing your larger sellers into something that
might not even need is borderline predatory.

When I clicked through to read their announcement I assumed they’d address
some of these concerns, but nope. So, if I run a low margin shop and make 10%
on each sale, I’m now underwater by being Etsy.

~~~
mreome
Especially given that Etsy is supposed to be primarily for hand-made goods.
Their top sellers are very likely already selling items at the speed they can
make them, why would someone want Etsy to take a cut of their sales for
advertising when they can't actually sell more?

~~~
adrr
That was the original model but that doesn’t really scale. It’s primarily
another channel for mass manufactured stuff that your can find on aliexpress.

~~~
stuartc842
example of an item that smells like aliexpress to me:

2'x4' painting for $160, ships from china, comes in 6 different sizes

[https://www.etsy.com/listing/637298037/original-sea-waves-
oi...](https://www.etsy.com/listing/637298037/original-sea-waves-oil-
paintings-on)

~~~
itronitron
I'd put that right in the middle of the 'hotel art' category. They should also
advertise it as being stain resistant.

------
AlexandrB
> If a shopper clicks on an Etsy-funded ad featuring one of your listings on
> Google, Facebook, Instagram, Pinterest, and Bing and makes one or more
> purchases from your shop within 30 days, those sales will be attributed to
> Etsy’s advertising and you’ll be charged an advertising fee on the total
> value of that order.

This kind of stuff is why tracking is so pervasive. Etsy is relying on being
able to uniquely track a shopper for at least 30 days to make this work.

~~~
gentleman11
I used to think etsy was cute and fun, but if their tracking is that intense,
and they treat their sellers like that... the warm and fuzzy feeling doesn't
really stick around

~~~
leeoniya
> I used to think etsy was cute and fun

to the tune of ~$100M?

[https://www.crunchbase.com/organization/etsy](https://www.crunchbase.com/organization/etsy)

~~~
skinnymuch
Etsy is a $6B public company now

~~~
leeoniya
my point is, they were _never_ "cute", except maybe when it was just an idea
in someone's garage and had near 0 brand recognition.

~~~
skinnymuch
Ah okay. I didn’t understand the point initially. Etsy raised high funds
quickly, but until you raise many millions, I’d think you can still be
considered cute. Etsy though raised $20M+ in a Series D 2.5 years after the
initial seed round.

------
reaperducer
"If you’ve made more than 10,000 USD (approximately 7,800 GBP) in sales on
Etsy in a 12-month period you’ll benefit most from offsite advertising. So,
you’ll be required to participate for the lifetime of your shop and you’ll get
a discounted advertising fee."

It sounds like the sort of thing a 1930's Chicago gangster would think up.

It's like when Mikey No Thumbs shows up once a month to pick up a fat wad of
cash in a plain brown envelope. And you'd better not be light this month. We
know how much you sell.

------
sk5t
I've got no horse in this race, but this really seems like an egregious abuse
of etsy's monopsonist position and is, like, just incredibly slimy. ("How can
we raise our fees dramatically? Hmm, how about forcing everyone into paying
for 'marketing,' without any connection to our cost of providing that
marketing?") Or is the team at etsy so delusional as to believe customers will
welcome this mandatory charge for etsy's autonomous advertising service?

~~~
mreome
The really bizarre thing to me is the idea of forcing it on the biggest
sellers. First because those sellers are obviously doing fine without this
"feature" and second because if they are making hand-made items then they may
already be selling at or near their capacity.

------
josephjrobison
Well the easy, non-controversial way to do this is to just introduce it as an
easy and awesome new product, that stands on its own and let people opt-in at
their own discretion.

By auto-enrolling everybody and requiring them to opt-out, that’s creating a
huge controversy just asking for backlash. And then forcing anyone who makes
over $10k to now be required - that’s a strong hand they’re playing.

Can only point to some desperate times? Seems to be a sure way to alienate
your most successful sellers.

~~~
nordsieck
> By auto-enrolling everybody and requiring them to opt-out, that’s creating a
> huge controversy just asking for backlash. And then forcing anyone who makes
> over $10k to now be required - that’s a strong hand they’re playing.

I assume the logistical reason they're doing it is because they need ad volume
for negotiations.

That doesn't make it "right" or even good corporate strategy (although I
suppose it might be), but I can see why they'd do such a thing.

~~~
mreome
I can't image they're going to negotiate on a per-seller basis though. They're
going to negotiate as Etsy, and simply rotate their advertisements through
items sold by their sellers. The only realistic reason to force the largest
sellers into the program is that those are the sellers _already_ moving a lot
of volume, thus they must present the most popular goods which would lead to
the greatest profits for Etsy.

------
MicahKV
I'm one of those sellers who is being forced into Etsy's new ad program. It is
frustrating and obnoxious, but I can't say it is surprising given the policy
changes they've been rolling out the past few months.

It seems to me that online marketplaces like Etsy find their early success by
bringing buyers and sellers together and just letting them do their thing, but
as the marketplace becomes more established it's relationship with sellers
inevitably turns adversarial.

I feel like we need some form of regulation to limit how marketplaces like
Etsy can dictate how their sellers conduct business. Amazon has a program that
allows "business" customers to place an order and pay the invoice 30 days
later. Since Amazon only pays out every 2 weeks, this means I can be made to
wait up to 6 weeks to be paid for an order. There is no way to opt out of this
and I would be penalized if I refused to ship these orders.

~~~
csomar
> I feel like we need some form of regulation

That's crazy. Etsy is not _the_ market, it is _a_ market. If you don't like
it, you move somewhere else.

We already have too much regulation that for some fields it's impossible to
start a business without jumping through many hoops. Last thing we need is to
start regulating on a per-business basis.

This is really a case of giving up your store brand/independence for
convenience. Starting an online store is not hard these days, everybody should
host their own if they are serious about their business.

~~~
Fnoord
> That's crazy. Etsy is not the market, it is a market. If you don't like it,
> you move somewhere else.

Easier said than done due to network effect. That's what they went for. Its
also how Amazon and Facebook got so big. Heck, its even why Microsoft Windows
got big. Become the cheapest, get volume, then abuse your market domination.

~~~
mcv
And we keep subjecting ourselves to that.

It seems to me that the most logical response is for merchants on Etsy to get
together and launch their own platform, collectively owned by the merchants.
It puts them in control and not at the mercy of some company wielding power
over them, while they keep the advantage of having a single platform with a
lot of merchants.

In fact, I've also been thinking taxi drivers should do something like that to
fight back against Uber. Cut out these artificial middlemen and deal directly
with your customer through collective tools that give you the same advantage
as the big companies.

~~~
Fnoord
Cutting out middlemen is what the Internet has allowed in multiple ways. Its
one of the reasons brick and mortar stores are in decline. Yet we also see an
increase in middlemen, in the form of dropshipping.

We're also subjecting ourselves to scammers on market platforms and
"crowdfunding". I fell for one on Kickstarter, which is also available on
IndieGoGo. IndieGoGo acted (by disabling it), Kickstarter has not. In fact,
Kickstarter remove any personal information shared by backers about the
scammers. Who's side are they on, I wonder? Not the backer's side, it seems.

I assumed these middlemen platforms (Etsy, Kickstarter, etc) are there to
please both parties equally. I suppose the keyword in both these stories is
service. If they don't provide good enough service, people will eventually
work against the network effect to create something better.

------
nonsince
Great idea to drive away the sellers who need you the least, who most have an
established consumer base and the means to set up their own storefronts.

~~~
IAmEveryone
OTOH, maybe they feel larger sellers undermine the "handmade" spirit, and
don't particularly mind some of them leaving?

------
mreome
The users who can't opt out are subject to a 12% fee, but this is on top of
the the existing 3%-4% transaction and payment processing fees.

~~~
tomnipotent
Only on orders where the traffic is from this advertising service. Dishonest
to make it sound like all orders are being dinged.

~~~
stordoff
On any sales within 30 days of an ad click. Genuine scenario from a few months
ago: I'm looking at some shelving on Etsy, I mention it to my mother (using a
specific seller's name) to double check it's right for what we need. She
clicks the first Google result (which in this scenario could very easily be an
Esty ad), and now Etsy are taking £12 extra from a £100 order without the
seller being able to opt-out. For what? They haven't driven any traffic.

~~~
tomnipotent
It's unlikely the Etsy ads will be targeting stores names, but generic terms
they can match to their market place in real time.

It's far more likely in this scenario, there will be little confusion between
the generic text ad and the first organic link that clearly has the seller's
name in it.

~~~
stordoff
I don't see why they _couldn't_ - they specifically say "All of your listings
or shops may be promoted".

Even if they don't, it still falls into a similar trap. A few weeks prior
(when I was still looking for cheaper alternatives), I mentioned off-hand that
I've found one option, and it's on Etsy. Did she Google "[generic term] +
Etsy" (I only found one seller, so it's tantamount to searching the seller's
name)? I've no idea, but if she did, they're probably taking 12%.

~~~
tomnipotent
> I don't see why they _couldn't_

It's not easy to automate, or to build a model that demonstrates that
targeting this low-level will have a positive ROI. Advertising is a fickle
game, and I don't see this being successful without building it on a broad
program that allocates spend by some segmentation of their sales (e.g. product
category).

~~~
shostack
Dynamic creative from a product feed setup to serve to a retargeting audience
of people who visited those pages is not a terribly difficult ad task and
certainly something Etsy is capable of doing from an engineering standpoint.

I'm not quite sure why you feel it isn't but I'd like to better understand
your perspective.

~~~
tomnipotent
And how do they get the traffic to retarget in the first place?

------
neya
I know this sounds crazy, but for E-Commerce, you never go with all these
third party "platforms" as your sole business strategy.

1\. First of all, you can't differentiate much in terms of offering and most
of the time, you're put in a position of having to compete by price if there
are similar offerings in the same platform.

2\. Believe it or not, it's only a matter of time when other sellers
(particularly from CN) will replicate your offering if they ever find it to
gain traction and will force you to compete by price.

3\. Because you're pushed into a red ocean, you barely get to build your brand
and curate your own email list.

4\. Finally, you can avoid all these random fees by having your own shop.
These fees can make or break your business especially if they force you to
increase the price of your products.

I've been in the E-Commerce (mostly drop-shipping) business for many years now
and I will never recommend anyone to solely rely on Amazon or Etsy or Ebay or
even Shopify. Get a domain name, roll out something quick. Use WooCommerce or
Magento or whatever it takes. Start off with a simple shared hosting account
if you can't afford to pay a lot, use the rest of the money to advertise on
Facebook/Instagram and start building your own list. When you grow, move to
something like AppEngine on GCP or some managed dockerized hosting on AWS so
that you don't need to worry about devOps.

You'd be surprised, how effective this strategy is over the long term, than
having to sell your data to all these platforms which you're helping to grow
by paying your money to them and as well as data. I know atleast Shopify
effectively sucks your analytics from your shop and resells it to you back as
a premium offering called "Shopify Analytics"
([https://help.shopify.com/en/manual/reports-and-
analytics/sho...](https://help.shopify.com/en/manual/reports-and-
analytics/shopify-reports)).

Install Google Analytics and Tag Manager, read some tutorials and setup event
tracking. Feel free to ping me if you need help. You'll then start to see how
much valuable data you've been giving away to these leeches for free
(sometimes even paying a fee to them to steal your data).

With all of the above and the right combination of products, UX, ads, you can
easily make much more than relying on these third party platforms.

~~~
vbs_redlof
Curious, what do you think of Sellfy? It gives you email lists, and analytics.

I'm currently building an e-commerce platform like Etsy, and tossing up some
ideas of what kind of features to provide for sellers with respect to their
brand, email list, and analytics, paywalled content etc.

------
100-xyz
I think Etsy is advertising itself and passing the buck to the sellers on its
platform.

The ad will mention the seller's products but also say Etsy. So free
advertisement for Etsy.

Very underhanded!

~~~
jacknews
Exactly, these product-spotlight ads are always designed to pull people into
the site, not just sell individual products.

Quite cheeky, considering Etsy itself is really made by it's sellers - what is
it otherwise, than just an e-commerce enabler like shopify etc.

------
chx
Huh!

> If you’ve made more than 10,000 USD (approximately 7,800 GBP) in sales on
> Etsy in a 12-month period you’ll benefit most from offsite advertising. So,
> you’ll be required to participate for the lifetime of your shop and you’ll
> get a discounted advertising fee.

If you make a living off your Etsy shop then surely you will have more than
10K sales a year. Even if not in the USA, I am originally from Hungary and the
minimum yearly wage is 6K USD.

Let's run another calculation. If you are selling at an average price of 20
USD (which can be just a t-shirt) then you only need to sell four things every
three days. That's... not a lot.

~~~
sithlord
I would hazard a guess that 90%+ etsy sellers are hobbiest getting nowhere
close to 10k/year

------
coding123
Looking at this from a numbers game, as Etsy is probably doing, this is a
guaranteed money source for them. All they have to do is claim they are
running internet ads for your product. Whether that ad worked or the sale just
happened based on normal Etsy traffic, is probably not disclosed. Hence Etsy
has 100% control of the information and therefore can bet, let's say $1M per
day towards this, but on the flip side, can guarantee that a 12% fee increase
(for the stores that will be required to pay it) will already be $2M per day.

My numbers are fake but you get the gist.

------
QuinnyPig
"We've decided to help ourselves to 15% of sales. If you don't like it, get
the hell off of our platform."

Are there any platforms / marketplaces that don't treat their vendors like
garbage?

~~~
kyle_v
shameless plug but my marketplace farmsbeforepharmacies.com takes 0% but
that's because it's in the hemp industry and we cant take payments yet ;-)

------
JMTQp8lwXL
Does anybody know what happened to the small businesses that used to use Etsy?
Did another service open up for them? I suppose they may have gone to Shopify,
but that fragmentation of storefronts reduces discoverability. The ability to
search a vast set of niche widgets was probably Etsy's best selling point.

Every small business having its own storefront, and may or may not be doing
SEO properly, is likely to mean less aggregate sales for all those businesses.

~~~
mreome
Sounds like an opportunity for some of the larger sellers to band together to
create larger combined storefronts. Or for someone to open something like a
selective/curated version of Etsy for larger sellers and small business.

------
rs23296008n1
I should read my Etsy email more often. Now I need to move my little sideline
to a different market. Etsy is getting all greedy. Time to make my own website
and cut out a middle-bot.

Since most of my sales are from my own word-of-mouth - a google ad is a
worthless investment. All that will happen is someone who has a gmail account
will purchase from me, google will notice this, present an ad then I'll get
charged for the ad on next purchase. Nice little earner for Google and Etsy
but useless to me.

Opt out? Sure, but I'm sure there's a stinger somewhere in the terms that will
cost me in some obscure way. No thanks. Its actually worth me spending 40
hours figuring out an alternative. Then be done with them completely. More
likely I'll replace Etsy with a simple investment of 5 - 8 hours.

For those curious, I sometimes make wooden furniture as a hobby. These are
one-offs. Sometimes on commission/custom order but otherwise I usually sell
one piece a week. So no, I don't use google ads etc. I'm not a mass-produce
kind of operation and my customers know it. Its part of the appeal.

------
jSully24
This strikes me as the day Etsy becomes the MySpace of their world.

They do need to make money. But the marketing hype around this change just
seems so dishonest.

------
dang
We changed the URL from [https://www.etsy.com/seller-
handbook/article/introducing-ets...](https://www.etsy.com/seller-
handbook/article/introducing-etsys-risk-free-advertising/729663416588) to a
third-party article, which hopefully provides a clearer picture than a press
release.

~~~
mreome
Thanks. I actually came across the issue in a (different) third-party article,
but I submitted the Etsy link based on "If a post reports on something found
on another site, submit the latter." from the Hacker News Guidelines. I agree
the third-party articles provide more context; I was just trying to stick to
the Guidelines. =)

------
farhanpatel
It seems like they're trying to replicate the Wish advertising strategy.

Show you ads with relevant products on Instagram/Facebook that all link to
different products on Etsy. They probably need more sellers in order to fill
the ads with relevant enough products.

------
bitxbit
Etsy is really not a good platform. There’s gotta be a better way to set up
these markets. It is now a little more than trivial to roll out your own web
store at zero cost. Why pay these exorbitant fees?

~~~
joking
because some people goes directly to etsy and if you are not there you are
losing a sales. However, what etsy is doing, is what booking has done to the
hospitality sector, it reinvests many of the money it gets from selling your
products in getting more people and more sales done, to the point that they
are working almost as your digital marketing agency. Probably you would be
better investing the dollars that you pay to the marketplace in your own
online ads campaign, but if you are small maybe it's not worth the work.

Also, once someone has made his first purchase on the platform (call it etsy,
airbnb, amazon, booking, whatever). It's easier to make a second purchase than
register in another new site.

------
epa
Its win win for store fronts.. prices will just go up to compensate.

~~~
reaperducer
It's not a win for the stores if they sell less because they had to increase
prices.

For some reason you assume that the stores don't already know their customers
and haven't already maximized their prices.

~~~
epa
Clearly they were getting free advertising subsidy, so maybe they don't fully
know their costs.

------
tomnipotent
Etsy is buying advertising on other sites, to the benefit of their customers.
In the event that traffic converts, they take another 12/15% on top of the
existing 3-4%.

This sounds like business the stores wouldn't be getting otherwise (so it's
incremental), and all at the cost of what you'd be to an affiliate network
anyway. Forced participation if you do more than $10,000 is ridiculous, but I
otherwise fail to see what the uproar is about.

~~~
eropple
_> This sounds like business the stores wouldn't be getting otherwise (so it's
incremental)_

Have you ever run a business where the margins don't even reach fifteen
percent? Because that is _a lot_ of small businesses. More sales at
unsustainable margins are not better than fewer sales.

Software people forgetting that COGS exists is common enough in the VC space
but most of the world has an acute understanding of the costs of their supply
chain. "Suddenly, we decide when your margin drops by twelve percent and there
is no recourse except to fuck off" is _bad_.

~~~
tomnipotent
> Have you ever run a business where the margins don't even reach fifteen
> percent?

I'm willing to wager the average margin for an Etsy seller is much better than
that, but it makes for a dramatic example to try and prove a point.

> More sales at unsustainable margins are not better than fewer sales.

That's not how margins work.

Scenario 1 - No Participation

\- Orders: 1,000

\- AOV: $30

\- Gross Sales: $30,000

\- Cost: $15,000 COGs

\- GM $: $15,000

\- GM %: 50%

Scenario 2 - Participation

\- Orders: 1,000 + 100 Outside Ad Orders

\- AOV: $30

\- Gross Sales: $33,000

\- Cost: $16,500 COGs + $450 = $16,950

\- GM $: $16,050

\- GM % 48.6%

This is before you factor in other costs, or your time.

~~~
stordoff
That's one scenario. I can very easily gin up some numbers where it doesn't
make sense:

\- Organic Orders: 500

\- AOV: 20

\- Gross: 10000

\- Margin: 15%

\- Net: 1500

A nice little side business. Nothing amazing, but a little extra income.

\- Extra Orders: 100

\- Gross: 12000

\- Net: 1560 ([Orders * AOV * Margin] + [Extra * AOV * (Margin - Esty Ad
Cut)])

Hang on - why am I doing 20% extra work for 60 quid?

If Etsy takes some of my organic traffic, I make a _loss_:

\- Organic Orders: 450

\- Value (AOV): 20

\- Margin: 15%

\- "Extra" Orders: 150 (100 from above, plus 50 that _would_ have been organic
but are now attributed to ads)

\- Gross: 12000

\- Net: 1440

I'm doing 20% more work, and making _less_ money.

Even if you increase the margin to 25%, you can still be looking at very
marginal gains for the additional work if there is a shift from organic to ads
(500 sales - net 2500; 450 sales + 150 ad sales - net 2640). As a seller, it's
driving my workload up without giving a corresponding return, which might not
be wanted. That's why not being able to opt-out is a problem - for some
sellers, it could make a lot of sense and drive profits; for others, it could
be an unwanted drain.

~~~
tomnipotent
> I'm doing 20% more work, and making _less_ money.

That's not how it works. Overall you're making less per hour, but making more
overall money. Maybe you were at $20/hr, and now you're at $19.50. This is not
a bad trade-off, as otherwise you wouldn't have made that money but you still
would have had those hours of productivity available.

Where do these exaggerated 10-15% gross margin numbers come from? These stores
do not exist, or do not exist long. And I can't imagine any product at 10-15%
that isn't being sold everywhere else because it's mass-produced.

How much of every seller's business comes from free Etsy traffic? Should Etsy
charge more for orders they can validate came from them, which the seller
otherwise wouldn't see?

