Thousands of Etsy sellers went on a weeklong strike on April 11 to protest an increase in the transactional fees the marketplace charges for sales through its platform. While the sellers strike rides a wave of union organizing at companies like Amazon and Starbucks, it’s actually quite different.
Brand marketing is actually the main reason why Etsy increased its transactional fees from 5% to 6.5%. Etsy spent over $500 million on advertising last year and plans to increase that spend this year, according to CEO Josh Silverman.
Silverman said it’s very difficult for individual makers to compete online against the likes of Amazon, and that’s where the value of the marketing comes in.
“The business model of Etsy is to create a brand called ‘Etsy’ that means something to buyers, that establishes trust with our buyers and then lends that brand to our sellers,” Silverman explained to the Wall Street Journal in an interview last week. “Each of our sellers is a blade of grass in a tornado. They’re someone you haven’t heard of.”
Etsy saw unprecedented growth amid the pandemic, as people took to the marketplace to sell everything from handcrafted jewelry to bread. It grew from a marketplace of 2 million vendors to 7.5 million.
Etsy sellers are not employees of the platform. They are actually the customers, but Etsy’s business model is built around their sellers’ success. The strikers’ grievances include concerns about off-site product ads Etsy creates on behalf of sellers. Sellers foot the bill if an ad results in a sale, and they can’t opt out.
“An advertising program with no control over CPC or which items get advertised should be an option, not a requirement,” the strikers said in a statement.
Most Etsy sellers are using the platform in addition to other channels, and they stick with Etsy because the platform delivers sales, according to Silverman. He predicts that there will be fewer e-commerce channels in 5 to 10 years, and he wants to make the investments now to ensure Etsy is one of them.
Some sellers welcomed the fee increase and encouraged their peers to look for ways to cut costs rather than protest Etsy.
“If this fee increase is making you nervous, your prices are not correct,” Nicole Lewis told NPR.
Now that it’s over, the strikers are considering their next steps.
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