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How Etsy Is Growing More Expensive without Fee Hikes

Sellers now give Etsy more money than they did 4 years ago but without the marketplace raising transaction fees. That’s because Etsy has created a new revenue stream through a line item called Seller Services that didn’t exist 4 years ago. Remarkably it now generates half of Etsy’s revenue, according to CEO Chad Dickerson.

Expect that percentage to grow as Etsy works on new fee-based inventory management tools and an expansion of its seller advertising program.

Speaking to Wall Street analysts last week, Dickerson said Etsy will continue to expand Seller Services both by expanding existing services internationally and by launching new tools for sellers – including inventory management tools. See update below.

Etsy Seller Services currently consist of three optional services: the Direct Checkout payments platform, Shipping Labels (available in the US and Canada), and Promoted Listings, which allows sellers to advertise within the Etsy marketplace and search.

Dickerson said his approach with Seller Services “is to solve a pain point for sellers and also create the opportunity for us to build really strong services that help our margins and our take rate.”

It doesn’t appear that Etsy has any plans to change its listing and transaction fees. Etsy Marketplace Revenue consists of a 3.5% transaction fee plus a 20-cent listing fee, the CEO explained, and he said, “we expect that to remain relatively stable.”

“The opportunity is to build these seller services to increase our take rate and to continue to build services that are really healthy for the margin.” “Seller Services is going to continue to be where we grow the most,” he said. He described Etsy’s opportunity in Seller Services as “really significant.”

Inventory management is next on the list (see update below), and Dickerson said Etsy would also expand its Promoted Listings program to help Etsy sellers advertise in other places.

“Our sellers are creating budgets to advertise on Etsy. We’re seeing demand for more of that, and we think that over time we can deploy that demand to advertising in other places and really aggregate demand.”

He said Etsy’s “creative entrepreneurs” are focused on the making and creative aspects of running their businesses, and they really look to Etsy to make it easier for them to do all of the other things.

Update 2/16/16: Etsy spokesperson Sara Cohen reached out to note that Chad Dickerson was speaking about potential opportunities and did not announce any new services. It was definitely not a product announcement, she said. “He was simply talking about potential opportunities that we are thinking about based on what we hear from sellers.”

“We haven’t announced anything new at this point,” she said.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.