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Etsy sellers are furious over new mandatory ad fees

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Re: Etsy sellers are furious over new mandatory ad fees

#71

Post by coding123 »

Looking at this from a numbers game, as Etsy is probably doing, this is a guaranteed money source for them. All they have to do is claim they are running internet ads for your product. Whether that ad worked or the sale just happened based on normal Etsy traffic, is probably not disclosed. Hence Etsy has 100% control of the information and therefore can bet, let's say $1M per day towards this, but on the flip side, can guarantee that a 12% fee increase (for the stores that will be required to pay it) will already be $2M per day.

My numbers are fake but you get the gist.

Re: Etsy sellers are furious over new mandatory ad fees

#72

Post by dawnerd »

adrr wrote: post #57
mreome wrote: post #18

Earlier quoted context omitted.

Especially given that Etsy is supposed to be primarily for hand-made goods. Their top sellers are very likely already selling items at the speed they can make them, why would someone want Etsy to take a cut of their sales for advertising when they can't actually sell more?

That was the original model but that doesn’t really scale. It’s primarily another channel for mass manufactured stuff that your can find on aliexpress.

I got into it with their support over this. They still claim they don't allow those items but when you report it to them they shrug it off.

I've written them off completely now. All of these aliexpress, etc dropshippers are ruining all of the retail sites.

Re: Etsy sellers are furious over new mandatory ad fees

#73

Post by tomnipotent »

stordoff wrote: post #63
tomnipotent wrote: post #24

Earlier quoted context omitted.

Only on orders where the traffic is from this advertising service. Dishonest to make it sound like all orders are being dinged.

On any sales within 30 days of an ad click. Genuine scenario from a few months ago: I'm looking at some shelving on Etsy, I mention it to my mother (using a specific seller's name) to double check it's right for what we need. She clicks the first Google result (which in this scenario could very easily be an Esty ad), and now Etsy are taking £12 extra from a £100 order without the seller being able to opt-out. For wha…

It's unlikely the Etsy ads will be targeting stores names, but generic terms they can match to their market place in real time.

It's far more likely in this scenario, there will be little confusion between the generic text ad and the first organic link that clearly has the seller's name in it.

Re: Etsy sellers are furious over new mandatory ad fees

#74

Post by stickfigure »

wjossey wrote: post #10

On the one hand, this would be great if it was all opt-in. On the other hand, this is nutty for any business running on low margins or with limited supply (and a sufficient customer base that they don’t need advertising to sell out). A lot of small business owners aren’t great at marketing, and having a push button solution is great. Forcing your larger sellers into something that might not even need is borderline pr…

If you make 10% on each Etsy sale, you need to find a new business. 10% works for large volume retailers or very expensive products, neither of which are really Etsy's forte. Even people selling print-on-demand tshirts have much higher margins than that.

TL;DR: The 10%-margin shop doesn't exist; they already went out of business.

Re: Etsy sellers are furious over new mandatory ad fees

#75

Post by stuartc842 »

adrr wrote: post #57
mreome wrote: post #18

Earlier quoted context omitted.

Especially given that Etsy is supposed to be primarily for hand-made goods. Their top sellers are very likely already selling items at the speed they can make them, why would someone want Etsy to take a cut of their sales for advertising when they can't actually sell more?

That was the original model but that doesn’t really scale. It’s primarily another channel for mass manufactured stuff that your can find on aliexpress.

example of an item that smells like aliexpress to me:

2'x4' painting for $160, ships from china, comes in 6 different sizes

https://www.etsy.com/listing/637298037/original-sea-waves-oi...

Re: Etsy sellers are furious over new mandatory ad fees

#76

Post by stordoff »

tomnipotent wrote: post #61
eropple wrote: post #36

Earlier quoted context omitted.

> This sounds like business the stores wouldn't be getting otherwise (so it's incremental) Have you ever run a business where the margins don't even reach fifteen percent? Because that is a lot of small businesses. More sales at unsustainable margins are not better than fewer sales. Software people forgetting that COGS exists is common enough in the VC space but most of the world has an acute understanding of the cos…

> Have you ever run a business where the margins don't even reach fifteen percent? I'm willing to wager the average margin for an Etsy seller is much better than that, but it makes for a dramatic example to try and prove a point. > More sales at unsustainable margins are not better than fewer sales. That's not how margins work. Scenario 1 - No Participation - Orders: 1,000 - AOV: $30 - Gross Sales: $30,000 - Cost: $1…

That's one scenario. I can very easily gin up some numbers where it doesn't make sense:

- Organic Orders: 500

- AOV: 20

- Gross: 10000

- Margin: 15%

- Net: 1500

A nice little side business. Nothing amazing, but a little extra income.

- Extra Orders: 100

- Gross: 12000

- Net: 1560 ([Orders * AOV * Margin] + [Extra * AOV * (Margin - Esty Ad Cut)])

Hang on - why am I doing 20% extra work for 60 quid?

If Etsy takes some of my organic traffic, I make a _loss_:

- Organic Orders: 450

- Value (AOV): 20

- Margin: 15%

- "Extra" Orders: 150 (100 from above, plus 50 that _would_ have been organic but are now attributed to ads)

- Gross: 12000

- Net: 1440

I'm doing 20% more work, and making _less_ money.

Even if you increase the margin to 25%, you can still be looking at very marginal gains for the additional work if there is a shift from organic to ads (500 sales - net 2500; 450 sales + 150 ad sales - net 2640). As a seller, it's driving my workload up without giving a corresponding return, which might not be wanted. That's why not being able to opt-out is a problem - for some sellers, it could make a lot of sense and drive profits; for others, it could be an unwanted drain.

Re: Etsy sellers are furious over new mandatory ad fees

#77

Post by tomnipotent »

i_am_nomad wrote: post #62
tomnipotent wrote: post #24

Earlier quoted context omitted.

Only on orders where the traffic is from this advertising service. Dishonest to make it sound like all orders are being dinged.

But how much current, organic traffic would this be hijacking?

How much traffic are seller's getting from Etsy itself? Should Etsy charge more for the traffic that they send to sellers that they wouldn't otherwise have?

Everyone wants to pretend that seller's are victims, but let's not pretend that any of them are any more loyal to Etsy than Etsy is to them. How many seller's are in multiple marketplaces? All of which charge much more than what Etsy has been charging for the amount of free traffic they're providing.

The marketplace market has evolved. You can sell your products on Amazon, Etsy, Walmart, NewEgg, Rakuten, and eBay at the same time. An entire industry of SaaS tools has evolved to manage this. Etsy has been way behind the in what they're charging sellers, and none of the seller's benefit if Etsy goes under.

This is what other marketplaces charge, for ALL orders. Providing the same service as Etsy.

Amazon: 6-20% (15% average)

NewEgg: 8-15%

Walmart: 6-15%

eBay: 10%+

Re: Etsy sellers are furious over new mandatory ad fees

#78

Post by MicahKV »

benignslime wrote: post #53
MicahKV wrote: post #43

I'm one of those sellers who is being forced into Etsy's new ad program. It is frustrating and obnoxious, but I can't say it is surprising given the policy changes they've been rolling out the past few months. It seems to me that online marketplaces like Etsy find their early success by bringing buyers and sellers together and just letting them do their thing, but as the marketplace becomes more established it's rela…

Have you compared the price to say, hosting your own website, finding your own marketing platform, finding a payment provider, and managing logistical challenges, all for 12% of the gross income of your product? I can see why people would be frustrated, but you're getting a whole lot for using their service.

I do host my own website and manage all of those things, but it's not a question of the cost it's the fact that I can't opt out. It impairs my ability to predict & control my expenses, and it forces me to subsidize Etsy's ad campaigns that compete directly with my own website.

Re: Etsy sellers are furious over new mandatory ad fees

#79

Post by groby_b »

IAmEveryone wrote: post #27
mreome wrote: post #25

Earlier quoted context omitted.

Margins aside, anyone selling hand-made goods has a very limited stock and can't really scale up production. What is the value of this advertising to a seller who is already selling at the rate they can produce goods?

The value in that case might be the teaching moment when they realise they should have raised prices a long, long time ago.

Spoken like somebody who has no idea how that particular market works.

Let's take handmade jewelry for an example, because I happen to know that somewhat. Unless you want to do luxury goods, you're talking mostly beading & wire wrapping. There's a very clear ceiling on the price by mass-manufactured goods from mostly Mexico.

People still want to buy handmade in the US, because they can talk to the seller, because they can influence the design somewhat, because it has a feelgood factor. That gives you room to charge a small premium. That premium, however, is limited. Demand for jewelry is fairly price sensitive, especially given that there's a fallback good that's almost as nice at a lower price.

And so there is both an upper limit to the price you can charge, and an upper limit to what you can produce. (You could manufacture, but it's fairly easy to tell, and so you lose the "handcrafted" clientele)

Yes, in a rational market, you'd fold up and move to higher margins. We know for a while now that markets aren't rational. And the craft market especially is deeply suffused with all kinds of emotions. So, no, that's not going to happen either, because people like making stuff with their hands, and this particular market allows them to finance that.

Maybe save the glib advice next time and ask some questions first?

Re: Etsy sellers are furious over new mandatory ad fees

#80

Post by tomnipotent »

stickfigure wrote: post #74
wjossey wrote: post #10

On the one hand, this would be great if it was all opt-in. On the other hand, this is nutty for any business running on low margins or with limited supply (and a sufficient customer base that they don’t need advertising to sell out). A lot of small business owners aren’t great at marketing, and having a push button solution is great. Forcing your larger sellers into something that might not even need is borderline pr…

If you make 10% on each Etsy sale, you need to find a new business. 10% works for large volume retailers or very expensive products, neither of which are really Etsy's forte. Even people selling print-on-demand tshirts have much higher margins than that. TL;DR: The 10%-margin shop doesn't exist; they already went out of business.

> The 10%-margin shop doesn't exist; they already went out of business.

Exactly, just comes off as crocodile tears to me. This is a red herring and distracts from the real issue of not being able to opt-out of Outside Ads.

I'm willing to wager that not allowing opt-out is the only way they can reach a saturated-enough product catalog to make advertising profitable.

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