Etsy's shares have shed 11.88 percent in the last five days. Here is a breakdown of the reasons behind this downfall, and why Etsy merchants are boycotting the business.
Users on Etsy are angry, and they’re showing their displeasure with the online marketplace by boycotting it entirely. Why are they striking against the platform, and what is it doing for the business’ shares?
Josh Silverman, the CEO of Etsy, announced in February that the retailer’s transactions fee would be increasing. This came into effect on April 1st, increasing the fee 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. There was also a recorded 90 million Active Buyers on the platform, up from 46.5 million in 2019 and 81.9 million in 2020.
As a result of this ongoing growth, the business announced it would be increasing its transaction fee by 1.5 percent to support its growth. Furthermore, Silverman explained that it would be heavily investing in three key areas, including marketing, staff and technology. “We plan to make significant investments in marketing, seller tools, and creating a world-class customer experience so we can continue this tremendous growth,” he said in a statement.
“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.
“We’ll build on last year’s roughly $40 million investment in the teams and technology that help make our marketplace a safe and secure destination for handmade, vintage, and special items. This year we’ll expand our efforts to remove listings that don’t meet our policies and help you resolve issues with buyers,” he said in a statement.
But sellers aren’t buying it. Thousands of sellers on Etsy have set up campaigns to boycott the business, fed up with the ongoing and increasing fees for the merchants. Unlike a traditional strike, the sellers won’t be protesting at the HQ or holding signs – instead, they will avoid using the platform for a week, and encourage shoppers to do the same. More than 20,000 Etsy sellers have joined the strike, putting their shops in ‘Vacation Mode’ which stops buyers from making a purchase.
“We are striking to protest Etsy’s treatment of sellers,” reads the Etsy Strike website, set up by sellers on the platform. The strike, which is set to take place between April 11 and 18, is in response to the fee increase, as well as other issues that sellers have with the platform., including the ability to opt-out of off-site ads, ending the Star Seller program nd giving ‘Golden’ support tickets to sellers affected by ‘extreme AI actions’ (account termination, 45/90 day holds, etc).
“We are Etsy sellers, both large and small, from around the world,” reads a letter to the Etsy HQ. In this letter, the organisers of the strike explained that the platform has deviated from its original ‘handmade, vintage and small business roots’. Dropshipping, resellers, price hikes and policy changes have made the platform a “downright hostile place for authentic small businesses to operate,” the letter read. “For both full-time and part-time sellers alike, the changes on Etsy have brought many of us 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,” the letter continued.
While Etsy didn’t immediately respond to the letter or the strike, a statement was shared to CNN Business, sharing that ‘sellers’ success is top priority for Etsy’.
“We are always receptive to seller feedback and, in fact, 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,” said Raina Moskowitz, COO for Etsy. “We are committed to providing great value for our 5.3 million sellers so they are able to grow their businesses while keeping Etsy a beloved, trusted, and thriving marketplace.”
Since opening this morning, Etsy’s shares have shed 3.64 percent, now at USD112.95 per share; this is down 46.2 percent YoY.
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