It wasn't long ago that Etsy merchants were striking against transaction fee hikes, shutting down their shop fronts temporarily to showcase their frustrations with the 'downright hostile place' that they claimed Etsy was becoming. But it seems that the strike didn't do much to deter shoppers from purchasing on the platform, as its recent quarterly results show.
For background, Etsy’s transaction fees increased on April 1st, lifting from five percent to 6.5 percent. This came as the business recorded a 23 percent increase in sales from Active Sellers compared to 2019. Moreover, its Active Buyer base increased from 81.9 million in 2020 to 90 million in 2021. To support this growth, the online marketplace shared that the fee hike would continue to bolster its expansion for technology and marketing, among other areas.
“We plan to make significant investments in marketing, seller tools, and creating a world-class customer experience so we can continue this tremendous growth,” said Josh Silverman, CEO of Etsy. “Last year, we spent nearly $600 million on marketing. This year we’ll be investing even more, including the TV commercials, influencers and tastemakers, billboards, podcast advertising, and email marketing that bring new buyers to Etsy. We’ll grow our support team by more than 20 percent this year so you can get help more quickly and easily, including faster email responses, expanded access to live chat, and prioritization of your most urgent requests,” he said.
But with this hike in transaction fees came a barrage of displeasure from its sellers. Thousands of Etsy merchants set up a campaign to boycott eh online marketplace, striking for a week. This strike included temporarily closing their shopfronts for seven days, preventing users from buying their items. In an accompanying letter, strikers expressed that the changes to the Etsy fees made the platform a ‘downright hostile place for authentic small businesses to operate’. Furthermore, they said that the changes brought many to the ‘brink of financial ruin’.
“We realize that Etsy has to generate a profit, and that Etsy provides a service to sellers for which it is entitled to seek a payment. But, without sellers, Etsy couldn’t even exist! After giving Etsy two years of record profits under the most difficult circumstances imaginable, we’re tired, frustrated and ready to fight for our seat at the table,” read the letter. It’s important to remember that only one percent of Etsy sellers took part in this strike, but it was still a large enough wave to make news pretty much everywhere.
Now we’ve caught up with the background, let’s take a look at Etsy’s most recent financial results, and see if the strike affected the business in any way. Spoiler alert: the strike did pretty much nothing at all.
Note: all financial results are in USD. In a financial update shared by the online marketplace recently, the business presented a 5.2 percent increase in consolidated revenue, to $579.3 million. Gross Merchandise Sales (GMS) is up 3.5 percent to $3.25 billion. However, the business reported a 40.1 percent YoY decrease in its net income ($86.1 million), which is attributed primarily to the increasing employee compensation-related expenses. Etsy increased its employee hires by 71 percent – the business acquired Depop and the Brazillian arts marketplace, Elo7, in 2021.
There were also seven million new buyers added to its database for Q1 2022, the report found, now at 89 million in total. Thre are now 5.5 million sellers on the platform. Looking forward, the business plans to expand its offering to reach a wider male audience, as 70 percent of its shopper base is female.
Etsy’s shares are currently at $79.24 a share, shedding 26.23 percent in the last month. On the day of the announcement, it shed 16.83 percent and hasn’t been able to climb back to its share price of $109.33, which it hit in early May. While these aren’t likely due to the strike in early April, it makes for interesting reading.
So, did the strike have any effect on its’ results? Nope. In all honesty, it didn’t even make a dent. However, it did open up a can of worms about the way that sellers are treated on the platform, which can start a new discussion for the business moving forward.
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