Etsy transitioned another batch of sellers to its new billing system on November 8th, and it's still proving painful for sellers. The changes impact sellers' cash flow in a big way and many say they don't understand how Etsy is billing, withdrawing funds, and determining when balances are "past due." They're also concerned about reconciling their accounts for tax purposes under the new system.
Despite the fact many of the sellers who were moved to the system last month didn't understand the new system, as we documented
at the time, Etsy transitioned another batch of sellers to the system on Thursday resulting in the same confusion
Etsy made an announcement in the forums today announcing it would hold a session to answer seller questions - an excerpt of the announcement follows:
As you may know, we redesigned your shop finances so you can manage your finances in one place. We combined your Etsy bill and Payment account and will automatically deduct your fees from your Etsy Payment sales. This new experience will be available to all sellers soon!
You can read more about the updates here: help.etsy.com/hc/articles/360002065387
Additionally, the team who worked on this redesign will be here next week to answer some of your questions.
Post your questions here in this thread and/or vote for the questions you'd like to see answered.
Etsy will answer the questions next week (Thursday, November 15) - a long time for those suffering the consequences of the change.
In the help file Etsy pointed to in today's announcement is a FAQ that includes an example that I think will *explain* the biggest concern sellers have, though not necessarily *lessen* seller concerns:
Why do past deposits decrease my Current balance?
In the past, the sales funds you could deposit were your total funds from a sale minus payment processing fees. Other fees and taxes, such as transaction fees or listing fees, were not deducted directly from these sales.
In the new payment account, all fees, including transaction fees, listing fees, and shipping labels, are deducted directly from your sales funds. Since these fees weren't deducted from your past deposits, the fees that would have been deducted from your sales in the past month are now counted against your current balance.
For example: You made $30 in sales in October, minus payment processing fees. You also accrued $40 of fees in October.
In the old payment account, you could deposit all $30 of your Etsy Payments sales. You would also owe $40 on your Etsy bill.
In the new Payment account, the $40 in fees will appear as deducted from your $30 in sales. This results in a -$10 line item for fees and your deposit line item deducts $30 from the balance leaving a Current balance of -$40, or the previous Etsy bill balance.
(Sellers impacted today probably need to substitute "November" for "October" in that example.)
While that may sound perfectly reasonable to all the employees at Etsy who receive a steady paycheck and benefits, the change can be devastating to self-employed micro sellers who do not, and who must pay for supplies and inventory upfront before making sales. $30 cash in hand now and owing $40 next week is a lot different than Zero in hand now and owing $10 now.
(Scratch that - according to the example above, the seller would owe $40 now; we don't even understand how that's so.)
An excerpt from a post by a seller impacted by today's changes may help explain the dilemma some are facing:
"Since "Due By November 15th" still shows in my Payment account, I took that to mean, due by ... So I had time to make my payments whilst still being paid for the orders placed.
"Imagine how I felt knowing I had approx $78 in new earnings, money I needed, absorbed in one fierce snatch to pay towards my bill by Etsy without so much as a heads up so I could prepare, plan and shuffle. Every order since, fees amounting, no earnings, all going towards my balance.
"True I owe Etsy that I'm not denying - however, as said "due by" in my understanding of English, does not define as "I'm taking your money now and will continue to do so" leaving you w/o a penny. There is no other money but what I earn here. So every new order, I am w/o earnings, and fees keep adding to the bill and the wheel goes around and around and around."
Ironically, Etsy CEO Josh Silverman posted the results of a study
the company commissioned to measure the economic impact of Etsy sellers, which found that "income from creative microbusinesses can have a significant impact on individuals and families."
One would hope Etsy would start answering sellers' questions on Friday and continue straight through the weekend rather than leaving sellers hanging for an entire week.
Update: An Etsy spokesperson explained to EcommerceBytes, "When a seller transitions to the new Payment account, we combine their outstanding bill balance with the balance they had available for deposit (earned from their sales). If a seller makes a deposit to their bank account before their transition to the new Payment account, the deposit amount is also deducted from the balance." Etsy updated the article to make the example clearer.