Etsy told Wall Street analysts on Wednesday that the recent seller strike did not have a material impact on sales. Etsy's Chief Financial Officer (CFO) Rachel Glaser said that when the fee change went into effect last month, fewer than 1% of sellers went into "temporary vacation mode," which was sellers' way of protesting not only the fee hike from 5% to 6.5%, but other policies as well, including the mandatory provision of the Offsite Ad Program.
Glaser said active listings dipped less than 1% during the week of the "strike" - a term she studiously avoided - and returned to the prior level when the week was over.
"Based on past experience and significant research leading up to the change, this was all within our expectations," she said.
"The overall impact to our GMS for the week was not material, and seller churn remains at normal levels."
Many sellers reacted
by signing a petition calling on Etsy to take the following five actions:
1) Cancel the fee increase
2) Crack down on Resellers
3) "Golden" Support Tickets
4) End the Star Seller program
5) Let All sellers opt out of Offsite Ads
Glaser framed the issue as a fee protest, despite the other actions sellers were calling for.
In her remarks, Glaser said Etsy needed to grow the number of buyers - "with more sellers on the platform than ever, we need to continue to grow the size of the pie."
But she made it clear the increase in marketing costs was coming from sellers' pocketbook.
In March, Etsy increased its marketing activities in anticipation of the fee increase going into effect on April 11, according to the CFO. "And now that the price increase has been effectuated, we're able to spend more on the performance marketing," she said.
Glaser also revealed that sellers subsidize 40% of everything Etsy spends on marketing directly through its controversial Offsite Ad program. She characterized the program not as a higher "take rate," but as a "success-based model."
"So the sellers only pay that additional fee if they've had a successful sale. That subsidy we get is not seen in the marketing expense line, it's seen obviously in the revenue line. So that is another factor that sort of offsets our marketing spend and allows us to spend robustly where we go."
Sellers explained their objections to Offsite Ads in their petition:
"Offsite Ads pushes Etsy's advertising costs onto their sellers, by charging us an additional 12-15% fee for each item sold through the Offsite Ads program. A 15% fee is charged to sellers who have never earned more than $10,000 in a year, and these sellers are allowed to opt out of the program. Other sellers pay 12%, and are never allowed to opt out.
"Thanks to Offsite Ads, Etsy fees are an unpredictable expense that can take more than 20% of each transaction. We have no control over how these ads are administered, or how much of our money is spent."
It's worth noting that sellers pay higher fees to Etsy every time shipping costs rise, since it calculates transaction and ad fees on the total sale price including shipping.
You can watch the presentation by Etsy CEO Josh Silverman and CFO Rachel Glaser by visiting the Etsy Investor Relations page
and clicking on Webcast for latest quarterly results.
The April "strike" by Etsy sellers was remarkable in how much media attention it garnered and in getting executives to address the protest, even if Etsy framed it as a protest of higher fees alone and not addressing sellers' protests of structural issues as well.