Etsy transaction fee spikes and vendors strike
Apr 15, 2022

Etsy transaction fee spikes and vendors strike

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Sellers involved in the strike say that the company's fees hurt the artisans essential to its brand.

Thousands of vendors on Etsy are staging a strike this week after the company announced it would hike transaction fees for sellers by 30%.

It’s the latest in a series of changes that Etsy says will help it compete with e-commerce giants like Amazon by improving customer service, attracting more buyers and strengthening the brand by policing listings for mass-produced items, something sellers have been asking for.

It’s a topic for Quality Assurance, where we take a second look at a big tech story.

Samantha Close is a professor of communication at DePaul University who produced a short documentary on Etsy’s workforce. She told host Meghan McCarty Carino the marketplace is unique because its sellers are mainly small businesses run by women. The following is an edited transcript of their conversation.

Samantha Close: I think that the fee hike is such a big deal in part because it’s coming at the end of unprecedented growth and kind of good fortune for Etsy, the platform, and relatively unprecedented strain and exhaustion for Etsy sellers, especially women, especially mothers. And so this is kind of a breaking point of the moral contract is not being upheld. We’re not all working together anymore.

Meghan McCarty Carino: What are some of the other changes that the platform has made that are also upsetting sellers?

Close: I’ve been following Etsy, in particular, for about a decade now. And there’s been this long shift of changes that sellers see as moving the platform away from favoring the people who are most essential to its brand — these kinds of real handmade, artisanal sellers — and doing things that favor larger operations and that are pushing the sellers to need to act a lot more like Amazon. So one of them would be the move to say you need to do free shipping. And if you don’t do free shipping, then we’ll downgrade you in the platform, right? In the algorithm, the search results, you won’t show up as high if you don’t offer free shipping. But sellers have to eat the cost of free shipping, right?

And these are the kinds of decisions that I think makes sense if you’re thinking about larger businesses working with each other, and so maybe Amazon, this works for them, or Google, this works for them. But Etsy with these kind of small one-person, two-person shops are just saying, “You’re not favoring us anymore. We’re essential to your brand, we’re essential to what makes you distinct from Amazon, from Walmart, but you’re not helping us.”

McCarty Carino: What are the ways that Etsy sellers need the platform?

Close: So Etsy has the brand image of the handmade. And then it has the audience of buyers who are looking for that kind of handmade, artisanal stuff. And that kind of brand image and that large audience is something that’s really difficult for an individual or even a small group of sellers to come up with themselves. There was an attempt nine years ago, when Etsy made one of these first changes and redefined how they were understanding handmade on the site. It used to be that you had to touch something with your hands in order to sell it in the handmade category. And they changed to allow Etsy sellers to work with outside manufacturers. There was a lot of upheaval over this, and a lot of sellers tried to move. Enough sellers actually moved to a competitor Zibbet that they crashed Zibbet servers with a few thousand of them making accounts essentially overnight. And what they found largely is that it was really difficult to bring their buyer network with them, really difficult to bring that audience with them.

McCarty Carino: Etsy has said that some of the fee would actually go toward some of the requests that strikers have, such as artificial intelligence to identify and take down sellers that don’t meet that threshold of handmade goods and dilute the brand. Why is this not enough of a solution for those involved in the strike?

Close: These are not new requests. These are requests that I remember back when I started studying the platform, you know, and this is a decade ago. It seems kind of suspicious to say, “Oh, we’ll fix these demands that you’ve had for many, many years with this increase that’s coming now, even though we’ve done really well and taken in record profits over the last two years.” Why couldn’t some of those profits go to fixing some of these demands that have been had for many, many years before this?

McCarty Carino: There are tens of thousands of sellers who have signed on to this petition so far, but there are more than 5 million listed businesses on the platform. So how representative do you think that strike is of sort of the greater community of Etsy sellers?

Close: There’s just no way to know. It’d be hard to know in a statistical way if the people who signed on to the petition or are participating in the strike are representative of the community. But who they are representative of is the kind of seller that’s core to Etsy’s image as handmade, as artisanal.

McCarty Carino: Does it feel like this is an inflection point for kind of what the future of Etsy is going to look like?

Close: I think it really is. There have been a few different inflection points in the past. But this is the biggest moment of sellers coming together and saying, “Hey, look, we need to renegotiate the way that this is working, this partnership that we’re in.” So if things don’t change, I really do see Etsy as in danger of going the way of MySpace and watching its community that was really vital just kind of give up and say, “All right, well I guess this isn’t worth it.”

Related links: More insight from Meghan McCarty Carino

Samantha Close has a short documentary about Etsy sellers: “I am Handmade: Crafting in the Age of Computers.” It’s posted on Vice with an interview about the graduate research she based it on. Close said she chose to study crafters because they are a unique world of small business and creative production that is dominated by women.

And in an interview with “Marketplace Tech” back in 2020, Etsy CEO Josh Silverman confirmed that is the case on the platform. He told Molly Wood around 80% of sellers are women and more than 90% run their businesses from home.

If you’re having a bit of deja vu over this whole “the platform taking too big of a cut” argument, maybe you heard our show earlier this week about app developers and the hefty commissions Google and Apple take.

Shira Ovide wrote in the New York Times that this conflict is getting repeated over and over all through the tech economy: between drivers and Uber and Lyft, restaurants and delivery apps, property owners and Airbnb. Because, she writes, small businesses and entrepreneurs today pretty much depend on some sort of digital middleman.

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The team

Michael Lipkin Senior Producer
Stephanie Hughes Producer
Jesus Alvarado Assistant Producer