You may have heard about small businesses with Etsy shops going on “strike.” I have a lot of thoughts on this issue, and the more I dig into it, the more new thoughts occur to me. It’s far more complex than the narrative of big, corporate Etsy taking advantage of small businesses (though that’s part of it, too).
The reason that I’m currently feeling worked up about this issue is because there are a lot of misunderstandings and misinformation going around. So, as a small business and sometimes Etsy seller, I wanted to clear things up. This is long (tl;dr).
Let’s break it down into these things:
- Why Etsy is sleazy and greedy
- Misunderstanding business numbers (and why a fee hike is not a huge deal)
- The Real Problem (Spoiler: It’s not fees. It’s lies.)
- What you should do as a shopper
- What you should do as a seller
I started my millinery business with my Etsy shop. I want to be able to leave Etsy behind forever. (Help me achieve that by buying hats here, sharing links to listings you like, and interacting with my social media.)
In the 10 years since I opened my Etsy shop, I have had a perpetual love-hate relationship with the site. And almost none of my hate is due to fees. (Spoiler: It’s the proliferation of resellers.)
The “Strike” and What’s Happening
The short recap is this: After three years of record profits, Etsy announced a fee increase from 5% to 6.5% Sellers were upset by this, and reactions have ranged from eye-rolling, to loud complaints on social media and blogs … to organizing sellers in a “strike,” starting on April 11 (when the new fees went into effect) and ending on April 18. They are shutting their shops during this week — and encouraging shoppers not to buy from open Etsy shops during this time.
There’s a lot of news coverage about the Etsy “strike.” Yes, the word is in quotation marks for a reason. It’s not a strike. It’s a boycott. And I do believe the word choice matters. Etsy sellers/shops are not employees of Etsy; they are customers. Etsy sells a service (its marketplace), and people either buy that service or not. Since they aren’t employees, their leaving couldn’t hurt Etsy’s ability to operate, only its profits.
Whooo! I have some big issues with this.
First of all, effective boycotting is hard. You need to organize a critical mass of people — and you have to get them to commit to the cause for as long as it takes to get your demands. This week’s protest has neither high participation nor long-term commitment.
Etsy has millions of sellers. The number of sellers participating in the “strike” is in the thousands. I’ve heard reports of 11,000, and 18,000 and even 22,000. Either way, it’s a small amount. And if Etsy doesn’t give in to the demands, which we already know it won’t, a lot of the sellers are planning to just plain come back after the week is over.
It’s doomed to fail. Sorry, folks.
I made an Instagram reel about this, and wow, some people are really mad at me for raining on their parade!
If it makes you feel good to make a statement against Etsy, by all means, go for it. Understand, though, that it’s not really “doing something” and that it will hurt small sellers, while Etsy suffers not one bit. I, for one, will never encourage people to NOT shop from small sellers in order to try to hurt the middleman.
Some sellers are asking buyers to boycott, but other sellers are desperately saying, “Please keep shopping!” Because I care about small sellers, I don’t think an Etsy boycott is the way to go.
Yes, Etsy is picking on the little folks and deserves pushback. But it’s not Big Activism. (I’ve seen it compared to the Civil Rights and women’s suffrage movements. Yikes. Just no.)
The amount of news coverage and attention to this week’s protest is great. Sadly, part of the problem with the organization of this “strike” is that there’s a list of five demands — and four of them are largely ignored in the “Etsy sellers strike to protest higher fees” narrative.
I’ve seen a number of sellers express concern that demands are being presented on behalf of sellers, when all sellers didn’t get a voice in crafting the demands.
Here are their demands (and my thoughts):
- Cancel the fee increase – (I don’t like the fee increase, of course, but an extra 1.5% isn’t as big a deal as it’s being made out to be.)
- Crack down on resellers – (This is the most important issue with Etsy, in my book.)
- Give ‘Golden’ support tickets to sellers affected by extreme AI actions – (I’ve had an Etsy shop for almost 10 years, and I’ve never heard of a golden support ticket! Is a ‘Golden’ support ticket a thing that exists that they want specially assigned? Or do they want such a thing to exist? This is a need for only a small number of sellers.)
- End the Star Seller Program – (This is a bit of marketing fluff, and I have no idea how much actual customers care about it.)
- Give all sellers the ability to opt out of off-site ads – (I support this demand, but its impact is being misrepresented. Etsy sellers pay an extra 12% or 15% for purchases that come through Etsy ads on Facebook/Google/etc.. It is only mandatory for sellers who make $10,000/year or more, and those pay the 12% rate. The 15% rate is for <$10,000/year shops. Those shops can opt out — and they represent the vast bulk of Etsy shops.)
Etsy’s official response to the petition is “…the new fee structure will enable us to increase our investments in areas outlined in the petition, including marketing, customer support, and removing listings that don’t meet our policies.”
That makes Etsy sound kind of reasonable! (If you take them at their word, which I don’t.) Regardless, the petition gave Etsy a convenient excuse for the fees with demands 2 and 3. Theoretically (again, if you trust Etsy), the demands conflict with each other.
Why Etsy is Sleazy and Greedy
Is Etsy price-gouging? Yep. Probably so.
They are sitting on three years of record profits. Not revenue, profit. And this isn’t just like an extra $5 million or $10 million a year.
Etsy’s profits soared in 2020 to more than 3.5 times what they had been the year before! Of course, this is the effect of the pandemic. Etsy has been accused of pandemic profiteering, but they didn’t raise prices in 2020, so that year’s jump is just organic. The next year did see the introduction of the off-site ads fee, so that could possibly rightly be called cashing in on the pandemic.
Sellers say, “Etsy, if you’re making these bonkers record profits, why do you need to increase the fees?” And Etsy replies that the fee increase isn’t to make more profit — it’s to reinvest in the business through marketing, customer service, etc. And that sounds reasonable … until you look at the numbers and realize it doesn’t make sense. Why is $500M profit the threshold for not needing more profit? Why is it now the excess they’ll reinvest in business? Why couldn’t Etsy have done these promised marketing and customer service improvements at, say, $300M profit? Or $400M?
Etsy’s reasoning rings hollow.
Misunderstanding business numbers (and why a fee hike is not a huge deal)
I’m bothered by the fee hike not so much because of paying more money, but because Etsy is disingenuous. They don’t need that extra 1.5% to make Etsy better. Please. They’ve promised improvements before and failed to deliver. They’d be better off saying, “Yeah, we want to make more money.”
Because almost everybody is trying to make more money. Everything has gone up in price. Everything is more expensive. I’m not going down the road of debating the evils of capitalism. Like it or not, this is the world we live in.
And a fee increase like Etsy’s — where you’re only being charged if you’re making money — is better than oil companies price-gouging on gas. Nobody is randomly getting stuck with a bill they can’t pay. They’re only charged extra money if they make money. It would be pretty great if rent or groceries or gas prices worked that way!
The costs of business inevitably increase. Web hosting, ad prices, materials, shipping, all are going up. And businesses have to adapt somehow, whether that’s increasing their prices or finding less expensive materials/services.
The above chart shows the roughly proportional costs of making a hat (assuming that I kept my price the same, for Etsy fees). Etsy fees in 2014 were 3.5%. In 2018, they increased to 5% and in 2022 they increased to 6.5%
The rising costs of postage and of millinery felt hit me much harder than Etsy fees!
The “strike” talks about how Etsy is raising its fees by 30%, which sounds really scary. But I find it interesting that the “strike” organizers don’t mention that the previous increase was almost 43%. That might make Etsy seem nicer this time around. While technically fees did increase by 30%, the actual impact to shops is a rise of 1.5%.
So that’s another $0.60 on the average Etsy item price of $40. It’s up to the sellers whether they want to absorb that cost or raise their price to $41. With healthy pricing, either option should be possible.
Are fee increases annoying? Absolutely. Are they taking advantage? Sure, when you consider Etsy’s mammoth profits.
Are they unreasonable or unprecedented? No. Is Etsy “the oppressor” as one person called them to me? No. It’s a profit-making business scooping up more profits because they can. That’s it.
Businesses that claim they are being driven out of business by this extra 1.5% are either lying or very bad at understanding business math.
I saw one seller who claimed to be selling a $5 item that costs $1.25 to make and $3 to package and ship. That’s only $0.75 before a single fee! Even if Etsy rolled back to 3.5% she’d be losing money between the listing fees and credit card processing fees!
I’ve seen a lot of sellers complain that Etsy takes too many fees: listing fees, transaction fees, credit card processing, shipping labels. But they’re comparing “evil” Etsy to a fantasy marketplace where there are no credit card processing fees and no cost to ship items.
Listing fees ($0.20/item for four months) are specific to Etsy. Transaction fees (now 6.5% of each sale price including shipping) exist on some sites and can be higher. [Side note: Etsy used to charge transaction fees only on an item price, not on its shipping price. But some sellers ruined that for everybody by having a $55 shipping fee on a $10 item to get around the transaction fee.]
Credit card processing is paid everywhere, whether you’re selling in person at a fair or online on your own site. And shipping labels have to be purchased somewhere. You’re not required to purchase shipping through Etsy. But it’s cheaper than buying the postage retail!
Recently I was served up an ad for an upcoming in-person handcrafted marketplace. The booth fee is $200, which is pretty normal. I’d have to sell more than $3,000 on Etsy for Etsy to charge me as much in fees as the event organizers.
Simply put, Etsy is much easier to identify as a central target for frustrated artists than the thousands of different vendors we buy our materials from or the hundreds of different art-fair organizers.
The Real Problem (Spoiler: It’s not fees. It’s lies.)
I continue to keep a shop Etsy because Etsy continues to find customers to send my way. Anybody I find on my own (in person, social media, etc.), I will send to this site, not Etsy. And my prices will be cheaper here. But some people don’t find me through my own efforts. They find me through the big corporation.
Those days may be waning, though. Real handmade items are absolutely buried by mass-manufactured items falsely being called “handmade.” It’s harder for folks to notice me.
Etsy theoretically doesn’t allow factory-made items or resellers (e.g. buy items from AliExpress for $1.50 a pop and sell for $20 each). Theoretically. In practice, the rule is a lie. They do allow resellers. They don’t officially condone mass-produced as handmade. But they allow it by conveniently looking the other way.
Lots of people won’t shop on Etsy because of being unable to find actual handmade items amongst all the mass-produced junk.
But Etsy is making big money from those sellers. They don’t have any incentive to shut those shops down, even if they violate the Etsy terms.
So resellers lie by calling their items “handmade.” And Etsy lies by saying they don’t allow resellers when they actually do.
Back in the treasury days — when users could create collections around any theme they wanted (such as a variety of accessories all in emerald green) — I saw someone create a treasury of all different listings of the identical “handmade” ring. Guess who got kicked off of Etsy? Not the different shops that were falsely selling a mass-produced ring as “handmade.” No, the guy who created the treasury was kicked off for bullying and shaming fellow sellers.
Etsy wants to keep profitable shops around, which is why they look the other way at mass-produced items. Guess who’s not striking or trying to leave? Those resellers. If small, handmade businesses leave for good — and maybe they should — Etsy will still thrive financially. And the proliferation of mass-produced stuff will only get worse.
What you should do as a shopper
You don’t need to boycott Etsy specifically. But if you care about supporting small businesses — specifically handmade artists — here’s what you should do:
1. Ask to buy from makers/artists directly
If you find a product you like on Etsy, that seller can’t ask you to buy from their website or through PayPal instead. That breaks an Etsy rule against fee avoidance and makes perfect sense. Sellers risk getting kicked off the platform if they try to direct Etsy shoppers away from it.
But you as a shopper are free to seek them out off of Etsy. Someone said Etsy can be used as a “catalog.” A way to find something you like.
Then you can see if they have their own standalone website (as I do). Or find them on social media and ask if they can send you a PayPal invoice.
Some sellers might choose to have the transaction on Etsy anyway, but you can give them the option to go off Etsy.
PayPal has excellent buyer protection, so you don’t need to worry about risking your money as long as you’re paying via goods & services, not friends & family. (Unless you know them personally, never trust a seller who asks you to send money via friends & family so they can avoid fees! Any reputable seller will be fine with standard processing fees.)
2. Be discerning and shop actual handmade
This one is a bit trickier. As a milliner, I can recognize a mass-produced hat at 50 paces. I know not everyone can. [“The High Bar to Handmade Hats” is my blog post outlining my rage at seeing a seller of mass-produced hats at a “handmade” fair — and some tips on how to recognize the difference.]
For general tips that apply to all handmade:
- Is the price too low to be reasonable for making that thing from scratch? (A $25 felt hat is not handmade.)
- Does the seller share their process on social media? (Seeing people work on Instagram or TikTok is a good way to know that the handmade is legitimate.)
- Does the seller disclose what they actually made or designed? (A Hanes t-shirt with an order fulfilled by a big company like Printful can still be the work of a small artist who designed the artwork. On the flip side, I’ve seen “Etsy tips” that recommend setting up through a jewelry website where you can custom design … the backing card for a mass-produced necklace. It’s being sold as a “handmade necklace” but the seller’s contribution isn’t the necklace design at all; it’s the packaging that’s not the thing anybody is buying.)
- Scroll down to see what other listings look like. Just now I searched “fascinator hat” on Etsy and saw two listings from different sellers with the same “handmade” hat using the exact same photo! (One had reversed the photo.)
As an aside, as bad as Etsy is, “Amazon Handmade” (which was going to dethrone Etsy but didn’t) still exists — and is way worse! Etsy does still have a lot of handmade stuff. AH has none that I saw.
3. Report Etsy listings that are falsely called “handmade.”
Etsy also allows sales of vintage items and craft supplies, which obviously can be mass-manufactured. Under “item details” on each listing, it will say “Handmade Item” if it purports to be that. All the way at the bottom of the page (bottom left, and just above the footer) will be a link that says “Report this item.” Then you can select “I don’t think it meets Etsy’s policies” and for the why select “not handmade.” Yeah, it probably won’t do any good. But it might have more impact coming from buyers than from a competing seller.
What you should do as a seller
These suggestions apply whether you love Etsy or hate it.
1. Have your own site. And make Etsy earn its commission from your Etsy sales.
Sales on Etsy should be when Etsy brings the customers to you. If people are finding you on Instagram or TikTok or in person, Etsy shouldn’t get to collect a fee for doing nothing!
But do the math first! What you win back in no more Etsy fees, you’ll have to pay out in a subscription and/or web hosting fees.
Point your social media links to your own website. If you don’t want to create a website, let people know how they can buy directly from you (PayPal, in person, etc.). Direct traffic that you generate to buy from you, not through Etsy.
Make sure the people who are buying from you on Etsy are the people who wouldn’t have found you without Etsy. Then Etsy has earned its commission. If they earn it, then you don’t have to feel so bitter. They deserved it.
I think of Etsy fees like an advertising expense. In marketing terms, $6.50 in advertising to make $100 in sales is an excellent conversion rate.
If you’re in the $10,000+ a year that gets you stuck into Etsy’s off-site ads requirement, you’re definitely successful enough to have your own site! (Assuming you want it, that is. I know of one seller who thinks Etsy fees are a small price to pay for them handling sales tax and VAT on international transactions, plus handling tech support, etc.)
If you’re intimidated by setting up Shopify or WooCommerce (WordPress) or Wix or Squarespace, you can even use Etsy’s Pattern option to have your own site.
2. Charge what you’re worth.
This is a huge problem with artists. And it’s a problem that plagues me, too.
Yes, it’s hard to get people to pay real handmade prices for things they can buy mass-produced for much cheaper.
But we will never compete with factories in China. Never. So why try?
So maybe we can make it easier for people to see worth by our pricing. A $25 felt fedora was assuredly mass-produced. A $250 felt fedora is handmade.
If you have a healthy profit margin, Etsy fees — even the onerous commissions from ads-influenced purchases — will be less hurtful.
3. Share your process and educate buyers.
Most people aren’t going to care much about how much Etsy takes in fees. When I visit a craft fair, I don’t ask the artists how much their booth fee was and feel obligated to help them recoup costs.
Even the best-hearted people are often selfish. They’re looking at: Do I want this? Can I afford it? And do I understand the pricing?
Sure, let people know what Etsy takes in fees. But they aren’t likely to feel sympathy or outrage because you’re left with only $93.50 after they give you $100.
But the other costs are much more informative! That $100 item costs $X in materials and takes Y number of hours to make and $Z to ship!
It seems obvious, but a lot of shoppers don’t understand that small sellers have to pay for shipping and that it’s a cost that needs to be covered by item price (“free” shipping) or an actual shipping fee. Spread the word! You’ll be supporting other makers, too, not just yourself.
Show your work being made on Instagram and TikTok and Facebook. It can encourage appreciation for what goes into handmade businesses.
That’s the powerful action I support.
Spread the word about fellow makers!
Interact with their social media. Share on Pinterest or Twitter or Facebook when you see something cool.
Etsy isn’t going anywhere. And it isn’t going to change its policies or plans based on a low-participation “strike” of only a single week.
Fees are a tiny problem. Fake “handmade” is a huge problem.
Find small makers on social media and buy directly from them.
Point people to buy directly from your small handmade business (and other small makers). Help them understand the difference between handmade and mass-produced items. Help get the word out that just because something is being sold on Etsy, that doesn’t mean it is handmade or from a small business.
Whether you’re a seller or a customer, understand that having a business costs money, and product prices need to reflect those costs.