Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Fri July 29 2022 22:13:22

Will Etsy Embolden Bad Buyers as It Promotes New Policy?

By: Ina Steiner

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Etsy executives told Wall Street analysts on Wednesday it would begin promoting the new purchase protection policy that's rolling out to the site on Monday, August 1st.

"You'll see us get louder on these polices as we go through the rest of the year building up to the all-important holiday season," Etsy CEO Josh Silverman said in his presentation during the company's 2nd-quarter earnings call on Wednesday.

But will that embolden bad buyers to make claims knowing Etsy will issue full refunds for claims of non-delivery or not as described? 

The June 6th press release announcing the new policy explained: "Starting August 1, buyers will receive a full refund for purchases on Etsy.com in the rare cases that they don't match the item description, arrive damaged, or never arrive."

Etsy told sellers it would not hold them responsible for refunds for orders that meet its requirements and earmarked $25 million/year toward covering the cost of refunds to buyers under the program. 

Etsy acknowledged possible abuse of the program in a FAQ on this June 6th Seller Handbook article: "Q. Is Etsy managing buyer fraud? A. Yes, we'll monitor for buyer abuse of Etsy's Purchase Protection program to protect the seller community. Buyers who abuse the program could lose access to Etsy Purchase Protection."

But how? How will Etsy know whether to believe the buyer or the seller?

For example, with the new policy, Etsy tells buyers it will provide a full refund when an item doesn't match the item description - but it tells sellers it will protect them for orders that match the listing description and photos, where a buyer claims it does not. 

So how does Etsy know if the seller actually sent an item that matches the description and if the buyer didn't receive an item that matches the description? If it can't make that determination, it may need more than $25 million/year (which is being funded by the April fee increase, according to Josh Silverman's response to a question from Piper Sandler analyst Edward Yruma during Wednesday's earnings call).

In May, Etsy's Chief Financial Officer Rachel Glaser had teased the purchase protection program at a Wall Street presentation (the Needham Technology & Media Conference) on May 16, 2022.

She said Etsy had a support process to support claims, "but for the most part, we send buyers back to the seller to figure out where their item went, and most sellers will work with the buyer to make it right. But not always. And so we're now investing in what we think is necessary to really enforce out trusted brand concept. That we have a buyer's back."

Silverman told analysts on Wednesday the new buyer protection program was not a "silver bullet." But, he said, "Brands that are known to have your back engender loyalty and frequency. We know that nagging voice in your head, "what if it doesn't arrive, what if I don't like it," can be a real friction point. The nature of Etsy is that you're buying an unbranded product from a non-branded seller. So we think that by backing it with the full faith and trust of Etsy can give you the confidence."

Etsy is hoping that by marketing new Purchase Protection program to buyers, it will result in more sales. 

That's a good thing, as long as buyers don't see it as an invitation to get goods "for free." After all, if it were easy to resolve disputes between buyers and sellers, wouldn't Etsy and other marketplaces (eBay) have already perfected such a program?

The new program goes live Monday. When you start to see Etsy market the purchase protection plan to buyers, let us know what you think of its approach.



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Readers Comments

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This user has validated their user name. by: Lightning

Sat Jul 30 02:54:55 2022

Wow, what a novel idea....copied from every OTHER marketplace.  

The $25Million??  That's just to pay the extra CS staff to handle the onslaught of claims.  Or spend $1Million on extra CS support and pocket $24Million.

None of that money will reach buyers or sellers.  The buyers get their money back from the sellers.  Sellers...well as always, they get the shaft, and are out another $25Million in new fees.

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This user has validated their user name. by: The End

Sat Jul 30 05:58:33 2022

Ya, That won't work.
I had a "DRUNK PURCHASE" wherein the "buyer" , upon notice of shipment, said , " 1) I didn't buy that, 2) my information isn't even on file to make the purchase, 3) I couldn't  zoom in the see the photo."
What a load......
Lost my a88.

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This user has validated their user name. by: iheartjacksparrow

Sat Jul 30 11:33:39 2022

How will Etsy know who the liar is? I take video of every item as it's being packed, including the mailing label showing the name and address of the recipient. But we all know that even if the USPS (or other shipping company) shows "delivered," buyers still claim they never got their package. Or received their merchandise damaged without any proof of their claim. Unfortunately, without buyers, a marketplace can't survive, so said buyers have to be coddled and appeased. The sellers are always going to be the ones who end up on the losing side.

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by: LDWCallsOut This user has validated their user name.

Sat Jul 30 13:07:36 2022

Etsy is the only marketplace that I know of that requires sellers to list their items as something they are not in order to use the site.  All the fake vintage and fake handmade are ''not as described''.  Then there are all the infringement listings with descriptions that ask shoppers to contact them to see the real photos of the real item, and an accurate description.  

Since Etsy has bots that read a listing's description for keywords to aid in placement in search results, I would think a bot could be coded to search for scam listings, but that's not happening that I can see.

Anyone who wants to go shopping without paying should click on over to Etsy and load up their carts.  On any given day, I am guessing that about half of all purchases made on Etsy were done through deceptive listings.  Sellers who deliberately create dishonest listings are inviting it.  Go get a grab of those goods, people!!!

Of course, I sympathize with shop owners who are selling legit handmade and authentic vintage, and stuff that is actually supplies.  But...they know what kind of venue they are using, so they know the risk of selling in a majority dishonest environment.

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by: Snapped This user has validated their user name.

Sun Jul 31 20:02:16 2022

“ Etsy is hoping that by marketing new Purchase Protection program to buyers, it will result in more sales.”

Indeed it will.  Increased fraud opportunities that in practice, despite any ‘promise’ to the contrary, lack any accountability for it, usually do.

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by: Stone Cutter This user has validated their user name.

Mon Aug 1 01:54:37 2022

***My disappointment ...Overseas sellers****
This is what happens when sleazy sellers don’t allow for “returns”. I offer “returns” at the owners expense and I’ve never had a problem....very few returned items per year. Video photography is “key” for my jewelry shop.

As an Etsy Seller, I’m also a Buyer. Products I’ve purchased from many overseas Sellers are not as described. I don’t blame Etsy for this one.  

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by: Cbaker This user has validated their user name.

Mon Aug 1 08:29:14 2022

Guaranteed this will increase the buyers who want something for nothing.  There are already those who don’t bother to read the titles or the descriptions so they will now be rewarded for their lack of due diligence.  Ridiculous policy!

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by: AnotherTime This user has validated their user name.

Mon Aug 1 10:35:53 2022

Oh, the horror
Just in time for fall buying season too.
Every aspect of this idea is wrong in my opinion.  Instead of strengthening the qualities of the platform Etsy is taking a ridiculous scheme right into the hearts of those who would abuse any system.  It just got easier for crooks.  

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This user has validated their user name. by: Rexford

Mon Aug 1 19:36:06 2022

Look at Little eBay go.  

This is music to the fraudsters' ears.  Not good news for sellers because with this statement they've pretty much told sellers to pay up.

So is Etsy just going to refund the money and let the buyer keep their purchase or will the buyers have to ship the item back?   When a delivery confirmation states delivered will the liar buyers get the money if they claim that the item didn't arrive.

Like eBay, Etsy aka Little eBay is always giving their sellers another lashing.

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by: 18321 This user has validated their user name.

Wed Aug 3 02:55:23 2022

In the long term, this is likely to do more harm to Etsy than good, given that the average buyer only makes a few purchases a year from Etsy.

Postage
-  sellers will increase their postage to either provide tracking or to purchase an Etsy label.
(In the UK an Etsy international shipping label is £4.50 - that means the seller has to charge around £6.90 to cover the Etsy fees charged on that postage cost of £4.50). Add that cost of postage to an item and Etsy will immediately tell you you are charging too much for postage.

Many business sellers on Etsy have heavily discounted Royal Mail rates for international postage. This makes postage high for international orders which will result in fewer international sales for business sellers

Christmas - postage delays galore and Etsy will be issuing refunds for nearly every order as it never arrived within the time frame

- item not arrived in the time frame - sellers will extend estimated delivery times, so buyers will be put off from purchasing if they need it quickly.


Item Not Described
- sellers will start to keep more detailed records of what is sent to buyers, which will
add to the cost of the item (seller spends more time making packing so charges for their time)

Interestingly the fee increase is apparently funding the $25million, so sellers are collectively paying for this.



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