Etsy has carved out an impressive niche for itself since its introduction in 2005. What’s more is that the e-commerce platform now boasts an enviable record, with more than seven million sellers on its platform. But why does Etsy rank on the higher side in terms of cost for most sellers?
It’s so expensive to sell on Etsy because of high transaction, shipping, payment processing, and advertising fees. These fees are at a premium due to the access to a large number of buyers, support, and business growth tools.
In this article, I’ll discuss six of the main reasons why it’s so expensive to sell on Etsy. If you’re considering or on the fence about hopping on board, I recommend reading on.
1. Etsy Has Access to a Large Number of Buyers
A quick Google search on the number of sellers on Etsy will show you that the site has more than four million registered sellers. Naturally, you would be forgiven for feeling a tad apprehensive about coming on board. After all, this means that you’ll be competing with a large number of sellers, right?
Wrong. One of the main strengths of Etsy is that it provides its sellers with near-instantaneous access to a vast number of buyers. As outlined by Statistica, there are more than 96 million active Etsy buyers. As a registered Etsy seller, you don’t have to worry about access to a ready customer base.
Selling on Etsy is an excellent reminder that the online space presents one of the best avenues for generating money. But before diving in, you may need to review some of the challenges of selling on Etsy.
2. Etsy Provides the Tools for Business Growth
One of Etsy’s key selling points to differentiate itself from the competition is providing its sellers with access to a wide range of tools for their business growth.
According to the Etsy website, the tools include the Etsy app, which makes it easy to manage your business from the comfort of your smartphone or tablet. Some of the functionalities that you can expect include the ability to manage orders while on the go, and update the items on the site.
The Etsy app also lets you easily respond to customer queries while on the road. However, these tools are not simply limited to added convenience. Etsy also offers various promotional tools that extend your products’ reach to potential buyers.
Etsy refers to free tools that allow you to share your listed items on the site and on social media. Whether these tools are entirely free or not is debatable, especially considering the high seller fees.
It’s also worth noting that Etsy also provides online convenience, keeping your operational expenses such as renting office space to a minimum. However, keep in mind that this may also affect your unemployment payments.
3. Etsy Has Payment Processing Fees
By selling on Etsy, you will take advantage of easy and reliable payment processing. This way, you can quickly manage the payment processing process so that your buyers can pay conveniently for whatever tickles their fancy.
Consequently, as a seller, you’ll have to foot the payment processing fee. Etsy charges US sellers 3 percent of the product sales price as payment processing fees. Additionally, you will incur an additional flat fee of $0.25. These fees will therefore have a significant impact on your proceeds.
In addition to the payment processing fees, Etsy also charges its sellers’ currency conversion fees. Because Etsy provides quick access to a large number of buyers from all across the world, you will incur an additional 2.5% of the final sale amount for automatic currency conversion.
4. Etsy Has Transaction Fees
If you experience the often unsettling queasiness having looked at your Etsy account and noticing that it looks a little light, the high transaction fees are the likely culprit. Etsy charges its sellers a transaction fee of 6.5% of the product price after a sale.
Save for the transaction fees, Etsy will also charge you shipping fees and gift-wrapping fees (in some instances). The former bears greater relevance since the e-retailer deducts an additional 5% of the total cost of goods for shipping.
If you’re unsure whether Etsy is the best path for you, there are numerous other ways of making money to consider.
5. Etsy Provides Reliable and Accessible Support
Etsy also seeks to set itself apart as an e-commerce site that provides its sellers with access to ready support for struggling sellers. Accordingly, Etsy has a team of support staff ready to tackle any of the customers’ requests.
While there is no explicitly stated cost associated with this support, Etsy may claim that this comes at no extra fee, hiring additional staff adds to Etsy’s operational expenses. With more than 7 million registered sellers, we can only assume that Etsy keeps a sizable team to respond to support requests or inquiries.
6. Etsy Has Advertising and Promotional Fees
As a seller on Etsy, you’ll also be charged advertising and promotion fees. The most popular of these advertising and promotional fees are Etsy Ads and Offsite Ads.
Etsy has come under fire in the recent past over its Offsite Ads. The rationale behind Offsite Ads is quite simple; Etsy simply partners with other sites to increase product visibility for its sellers. Etsy charges up to 15% of the total cost of goods sold for sellers with less than $10,000 worth of sales under their belts.
For seasoned sellers with more than $10,000 worth of total sales, Etsy charges 12% Offsite Ad fees. Etsy faced massive backlash over the fact that the offsite fees were mandatory without an option to opt out, although this issue has since been resolved.
Etsy also allows its sellers to set a monthly budget for their Etsy Ads program, which attracts an average fee of $0.20 to $0.50 per click.
Final Thoughts
Etsy is an excellent platform to link sellers to a large buyer base. In addition, the company has gone to great extents to provide value addition services, including automatic currency conversion, advertising, ready support, and others.
While Etsy clearly stipulates the percentage charged for each fee, like any business, it’s understandable that Etsy has to meet its operational costs and its bottom line, which will be reflected in the fee structure.
With the reasons discussed above, you can better understand why the platform ranks on the higher side in terms of seller fees.
