Etsy announced today that free shipping will soon become a core part of the shopping experience. “By making free shipping the norm on Etsy, rather than the exception, we’ll connect more people with items that they love,” CEO Josh Silverman stated in a press release.
“Time and again buyers tell us that having to pay an additional shipping cost is what keeps them from shopping on Etsy more often,” Silverman wrote in a letter to sellers this morning. “We know that shoppers on Etsy are 20% more likely to complete their purchase when the item is marked as shipping for free.”
Etsy’s main priority is for buyers to have a positive experience on the site so they’ll make a purchase and return to make buy again. Since free shipping is high on buyers’ list of priorities, Etsy is incentivizing (some might say coercing) sellers into offering it by giving priority placement in US search results to items that ship for free and to shops that guarantee free shipping to US buyers on orders of $35 or more.
Silverman acknowledges that, of course, there’s no such thing as free shipping. Amazon Prime members pay $119 a year to get it, and Etsy sellers who offer it will have to pay for it somehow. But, he says, “our data also shows that Etsy buyers will spend more to have their order shipped free.” This, to me, is the crucial point.
For many, many years Etsy sellers have raced each other to see who could offer the lowest prices. The culture of Etsy is a culture of bargain hunting and that’s a problem. (Shops that resell factory-made goods as handmade is another massive problem, and one that Etsy has yet to confront.)
In the May 2019 earnings call, Silverman made another significant, albeit subtler, announcement about that also signals a shift in culture to higher priced items. He announced a change in Etsy’s search algorithm dubbed “cushion to couch.” In the past, Etsy favored lower prices items (the cushions) in search because they had the highest conversion rate. People buy lots of low priced items. Now, though, Etsy’s algorithm is using Gross Merchandise Sales to determine what it shows buyers in search which means getting rid of that bias towards cheap items. If a buyer purchases a single higher priced item (the couch) the Gross Merchandise Sales would likely be more than if they purchased half a dozen items at a lower price.
All of this is to say, raise your prices. Raise them because you’ll no longer be suppressed in search for having expensive listings. And raise them so that you can offer free shipping to US buyers on orders of $35 or more and still make a profit. Etsy has created a new smart pricing tool, launching next week, that will make the process of adjusting your listings easier using the bulk editing tool.
Online shopping is here to stay and as it evolves, and matures, consumer expectations are changing. Yes, a lot of those changes are driven by Amazon, an unrivaled retail giant with a culture that can’t, and shouldn’t, be compared to the boutique specialness that sets Etsy sellers and their one-of-a-kind, often made-to-order products apart. Even so, I believe you’ve got to keep up with the dynamic retail environment or you risk fading into obscurity. Etsy does massive tests of consumer behavior. They’ve determined that free shipping on higher priced items will lead to more sales. I think they’re right.
Edited July 10: Etsy’s new free shipping policy presents particular challenges to international sellers who have a large US customer base. This article from Etsy has helpful suggestions as well as a case study of a European seller who made it work.
Now I’ll load up all my products so I can afford to ship them for “free”. Let’s say I sell a $25 small object that normally costs $7.90 Small Flat Rate. So I’ll add $7.90 to my selling price of $25 so the object now costs the buyer $32.90. When that buyer chooses two, seller pays $65.80 for them.
Whereas if the $7.90 was charged separately, the cost for two would be $57.90.
Is that what they meant? I’m not going to pay for S/H out of my $25 product price, I’m going to load everything up. Too bad for the buyer, but yay, we sellers are finally winning on the S/H by getting that “extra” $7.90. Or what am I missing.
I make custom memory quilts and I am being forced to add on the shipping price to the cost of the item. I will do this since I don’t want to go off the radar for search results, which are not great now, I will say. It is often $30-$50 for shipping so the item will appear a lot more expensive. I have had a huge downturn in my Etsy business since 2016 which I am not unhappy about since I teach more these days.
http://www.etsy.com/shop/Quiltsfromclothes
Is it possible to ship your quilts in a Priority Flat Rate box, Jane?
I think those boxes are too small!
Ah, I see.
I’m torn about this. Having a shop with higher price point items means that when I have a sale, I can only afford a 10-15% discount. What I found more enticing to shoppers was having a free shipping sale. Now I won’t be able to offer that as a perk. If everyone across the board raises prices to cover their shipping costs, perhaps it’ll even out in the wash, but I’m guessing raising prices on already expensive pieces just to offer “free shipping” will edge me out of the competition for similar items across etsy. It feels shady to me, like we’re tricking the customer by shifting the money around but still having them pay the same amount. I’m in the group that feels I’m being bullied by etsy to offer this. The fact is, I’m not Amazon. Customers don’t shop on etsy thinking it’s Amazon. And I think sellers are gonna ultimately take the hit as postage charges also continue to rise.
I think the reality is that as ecommerce matures we’re realizing that shipping costs are part of the cost of doing business, the same way that rent is part of the cost of doing business for brick-and-mortar shop owners. Those costs have to be factored into the retail price of the goods in order for the business to be profitable. When ecommerce first started this wasn’t evident, but now it’s becoming increasingly clear that this is what consumers want and expect.
I’m really not happy about this change. I think it’s OK to encourage it for shops for whom it makes sense, but I don’t feel that my shop is one of them. I sell a lot of low-priced items, so bundling in shipping would double the price. (Ex: A $4.50 card costs me $3.50 to ship, so I’d have to charge $8 a card.) I need to be able to keep my prices consistent across the board, which this doesn’t allow.
I was on the fence about keeping an Etsy shop open anyways, so I shut mine down yesterday. I’m just done with Etsy bullying its sellers about the best ways to run their shops. It feels disrespectful of the research and hard work I’ve done to set up my shop in a successful manner.
Now my only Etsy presence will just be the knockoffs of my work that Etsy allows people to buy and resell from Ali Express.
Keep in mind there will be a threshold that buyers need to meet to get free shipping. So it’s on orders that are $35 or more. If your cards are $4.50 and a buyer is considering ordering 6 cards ($27) this could encourage them to add a two more to their cart ($36) in order to qualify for free shipping. It could be a really good thing for your business if you think about it that way and market it to your buyers that way.
But she has to list the cards for $8 because if she listed them for $4.50, she would be paying postage out of her $4.50 when a customer only buys one. She cannot list them for different prices depending on the quantity being purchased. So she cannot really sell 6 for $27 as you suggest.
We are giving up some flexibility we previously had, to adjust the separate s/h for multiple purchases. This is not a good situation for the true Etsy sellers (ie anyone who is still making and selling real products vs importers and mimic makers). Cate is right about Etsy bullying.
In the last 4 days I have been seriously considering becoming an etsy seller, and performing my due diligence on what would be the ultimate cost of that idea. Interesting how I have suddenly been getting so much information about etsy, both good and bad, from so many different sources. My takeaway feeling is that I would be working for etsy, except that I won’t be getting paid to do so. Everyone seems to say etsy is great because it does “everything” for you –but that includes dictating to you how you can do your own business. In a way it grates against my desire to be completely independant to sell whatever I want to, in any way I want to. On the other hand, they have created an algorithm I could never afford but can benefit from if I choose to work for them. It’s a no-brainer that I would have to raise my prices in order to cover shipping and then turn around and present my goods as “free shipping.” However, for some reason, myself included, somehow seeing “free shipping and handling” when considering an online purchase always gives me a little tingle. Some things just aren’t logical…
The last group that seems to comprehend the need to raise prices are the very ones who make quality goods to sell. I am speaking, of course, to all makers out there, myself included. As many of us discover, when we do a price cost analysis, the ultimate profit is often close to zero. I have been guilty of this in the past. If etsy is in fact forcing makers to turn a profit by increasing their prices, then the end result is that we will finally be fairly paid for our labor. So in my opinion anything that forces me to put a more realistic price on my goods is a good thing in the long run. However, whether or not I want to march to the etsy tune is still up in the air.
This is a really fair assessment, Madelyn.
I’m sorry to see this happening for a couple of reasons. First, I don’t like the idea of selling my handcrafted jewelry for a discount, so I never have sales, but I do offer free shipping now and then. With these changes, free shipping will no longer be special.
Second, I’ve worked hard to keep my pieces at just under $100, partly because I think that jump to three digits can really keep people from buying. Adding the shipping fees will bump my prices over $100, which could really affect sales.
And Etsy is not only (sort of) forcing us to do what they want on their website, but on our own websites, too, since we really should charge the same prices in both places.
I have to say that I agree with you on this. Prices need to be consistent across the board which means changing them on all ecommerce platforms, therefore Etsy is dictating pricing everywhere. Again, though, I think free shipping is where ecommerce is headed everywhere so it may be for the best.
I’m just curious. I don’t have an Etsy shop, but I’m a frequent buyer on Etsy. I buy special threads for hand embroidery pieces, fabric, vintage linens, art supplies and small handmade gifts. Quite a few Etsy sellers I buy from also have websites and sell their items there (as someone mentioned above). My curiosity is this: if, by their behavior and intent as stated in their written documents and the results we will see over time with regard as to how it will affect prices on seller’s websites and other sites – is Etsy sure that they are fully complying with all of the consumer protection laws? I’m one of those people who always wants to know the back story in the news, etc. I understand the logic behind Etsy’s decision but I wonder how wide the effect will become.
One thing I buy on Etsy is Blackwing pencils. I like to use those in my sketchbook drawings. I buy them on Etsy because I can buy less than a box for $25. Retailers have to sell Blackwings by the box – 12 for $24.95. I use three different types of Blackwing pencils and I don’t want to have to purchase three boxes at a time. I don’t use them up that quickly. There are a couple of sellers who sell the three I use as a combination of three=one item. I’m glad to pay a little more to be able to buy less than twelve at a time. I usually spend $35 or more when I order because the sellers have other supply items I buy. This is a similar example to Cate’s cards. I know a lot of artists who buy Blackwing pencils like I do. Most of the retailers who sell them only by the box offer free shipping.
The difficulty with the “free shipping” is that we are individuals who do not have the resources of Amazon or Walmart and will have to recover that shipping in our product prices. Depending on your product-it may make it very difficult to justify to a customer that your once priced $55.00 item is now worth $75.00 or $80.00. In my opinion no matter how well you make something, how custom, yada-this may be very difficult to do period. Makers have to come up with a blanket cost to recoup that shipping-so we will “lose some, win some” re covering that shipping in the mix depending on where a customer lives and the cost to get it to them.
What if a maker just enjoys making smalls-sachets? Is a customer going to want to pay the prices for some items because now we not only have to cover the free shipping-USPS has increased their costs too recently-so there is going to be some sticker shock. I have concerns and am thinking this could also be a big negative for Etsy as a company. It would be nice if they could procure some shipping discounts for makers or lower their fee-some offset-which probably isn’t going to happen. So the whole misson of providing a small maker/artisan, crafter selling platform is in my perspective being diminished by this change.
Purchasing shipping labels through Etsy gets you a discount over what you would pay at the post office so there’s some savings there. I use ShipStation to purchase my shipping labels because I sell on multiple platforms and they also offer discounted postage, although there’s a monthly fee (which is well worth it for me).
Thanks for tip!:)
Do you mind sharing more about your experience with ship station does it integrate with PayPal and Etsy – thanks
Once again overseas sellers are being discriminated against. It’s not really feasible to offer free shipping on an item being sent from New Zealand. And yet some USA sellers try to rip us off with shipping. I was quoted $80 (US) to mail a small knitting machine part that I was able to get sent through the New Zealand Post depot in Oregon for a total cost of $8(US). This has happened several times.
I mainly sell on my own webshop but have had a small presence on Etsy for many years. As CA is not a state that adds sales tax to shipping costs, their new policy has CA buyers paying sales tax on the increased pricing(now including shipping costs).
Can you address this?
Also, if a seller increases pricing to include shipping cost for “free shipping”, then international customers will pay twice-once in the increased pricing and again for international shipping.
Am I mistaken?
Questions such as these are insufficiently answered by Etsy.
I use Etsy to sell my items, but it is only one part of my business. I attend craft shows, quilt shows, sell on Facebook and use Instagram. I knew this was coming and changed all my items to free shipping just last week. It took many hours for me to determine profitable and fair pricing, but I did accomplish it. So far, it seems to be working in my favor. The other plus, I am considering discontinuing my promoted listings as it may not be necessary now.
I agree with Monica on the topic of promoted listings. It seems to me that whether we decide to switch to free shipping or not, paying for promoted listings would conceivably become irrelevant.
Free shipping shops are moving to the top of the search results anyway, and non free shipping sites, presumably no matter how much their Promoted Listings budget is, will will not be prioritized over free shipping sites.
I think having Etsy be one piece of the puzzle is really smart, Monica. And looking at your business in the big picture to find a way to offer free shipping and still be profitable sounds like it worked for you. I have never used promoted listings and have had a lot of success on Etsy over the last 15 years.
While I am excited about *any* change to the Etsy search algorithm, I can imagine this will be a real shake up for many sellers. However, I am hopeful prioritizing higher proceed items might shift the target market more toward customers who value handmade goods, and purchase based on quality, not that it’s cheaper than Wal-Mart. That said, I had been torn between revamping my Etsy store and focusing more on making things, or opening a shop on Shopify. On Shopify I can also sell things made by friends and family and things that might not fit Etsy parameters, and there are other benefits to Shopify. This free shipping and algorithm change has only reminded me that I am a control freak, and generally don’t want to be one of the crowd of sellers in a massive bazaar that also sells old action figures and other “vintage” stuff. I don’t want to do the hard work of bringing shoppers to my table only to lose them to a junk dealer. I want my stuff to feel special, but accessible, and I want my customers focused on what I’m offering. I think the vintage category is abused and that is what has brought the flea market crowd and their cheap mentality to Etsy. That stuff lessens the specialness of all the wonderful handmade products on Etsy. So, free shipping might be a hassle to implement, and require frequent price checking with all the shipping providers (for big stuff fed ex is often cheaper than USPS) but I’ll likely do it even in my Shopify store. It just simplifies things for the customer, and that is always good for business. Yes it muddies the whole sales tax and processing fees issue, but I’d rather pay a little more for a sale made rather than save money by not making one at all.
That’s such a thoughtful approach, Rebecca. Thank you for sharing it here.
“Silverman acknowledges that, of course, there’s no such thing as free shipping. Amazon Prime members pay $119 a year to get it, and Etsy sellers who offer it will have to pay for it somehow. But, he says, “our data also shows that Etsy buyers will spend more to have their order shipped free.”
What an utterly bizarre statement that is! The ‘free shipping’ that isn’t. How do trading laws allow for this?! It would be seen as fraudulent in the UK. I am not sure that UK sellers could even lawfully comply unless they actually paid the costs themselves and it was actually free shipping for the buyer.
‘Free shipping’ is ridiculous. It is very rarely free for the buyer. It is either extra on top of a sales price or more rarely the seller is paying it and then it is not free for them. If I the buyer am paying it as part of the overall purchase price then it is not free, and the seller paying it is just not a sustainable loss for many – and why should they have to do it?
If the cost is just added to the selling price, then it is properly correct to say ‘postage included.’ It is in fact a lie to say otherwise and would simply not be allowed in the UK. Does etsy think we are so easily deluded?
I don’t mind the price being included but I still want to know what that is, so I can see the value given to the item I am purchasing and if the postage costs are reasonable. I think the tactics etsy is using on sellers to go with this model are unacceptable. I see etsy as increasingly an untrustworthy brand. Many of my purchases are now elsewhere – mainly because so many sellers have shut up shop and moved on anyway.
Many of my pinned items no longer lead to open shops on etsy and the instagrammers, youtubers and bloggers links invariably now lead elsewhere. Some left due to the payments debacle or raised fees, others due to lack of customer support (sellers are etsy customers too), and I am sure this will lead to more sellers leaving them. They are all smaller handmade sellers and I am sure etsy does not care about losing them. They will have factored in the cost of small sellers leaving the site while the bigger shops using manufacturing remain . Etsy will have worked out that they think more money is to be gained than lost with this policy. Sadly etsy have moved far from the original ethos of the shop, which they moved on from ages ago. Others may not care about that. I still do.
So I own a Canadian online fabric store. I have my own domain and for the last few years an Etsy store, which carries about 15% of my listings and is a small secondary market. The majority of my Etsy buyers are American, while 99% of my domain website are Canadian. I sell “raw” goods and the price of the fabric listed on Etsy is the same as my domain site. There is no way I could raise Etsy prices to recoup free shipping. Also our shipping rates are much more expensive than US rates so a $35 threshold for free shipping is way too low to come close to covering the actual cost. Shipping a $25 order from Canada to US can cost $10-$12 CDN. I currently offer free shipping to Canadian customers on orders over $200. Most US fabric stores offer free shipping with a much lower threshold, but you have flat rate boxes which we don’t. Unless fabric stores all raise the price of their fabric to “cover” free shipping, I don’t see how this new policy will work for international sellers and unless I am also missing something will close my Etsy store.
I can see that for the artisans, crafters this kind of works – they can raise their prices and who really knows. Those of us who sell supplies to many of you do not have that advantage. Etsy has zero concern for we vendors just their bottom line and they prove it over and over. Supply vendors bring in the most income and are treated as disposable – always – yet our efforts help Etsy run. Under Mr. Silverman I pay more and more every month to be on Etsy. – really enough!! I have to spend most of my time to work around these Etsy “benefits” . I do not believe it will be ok to jam up prices – customers are not idiots they see what is going on. As a Prime member I will not order from vendors who do this – i will go to Walmart or someone else instead. “Nothing is Free” – people know this. Goodbye Etsy enough is enough. I do not want to work for Etsy for little pay. It is my business, I take all of the risk.
I agree with you Abby, I think this will ultimately be a positive for many sellers and buyers on Etsy (though I sympathize with sellers who haven’t already built shipping into their price structure, and those outside the US). I think we should remember that Etsy isn’t *forcing* anyone to offer free shipping. They’re simply going to prioritize search results to highlight a feature that buyers say is very important to them. If your business relies primarily on being found in Etsy search results, then you were already at a disadvantage and subject to the whims of changes in the algorithm. Building a loyal customer base apart from Etsy, through social media, blogs, newsletters, craft fairs, etc is the best way to insulate your business from changes like these. And offering free shipping (if it works for your shop) will only help convert more first time buyers into true fans, who will buy from you again and again, regardless of your ranking in search results.
These are great points. Etsy search ranking should only play a small roll in your overall marketing strategy. It’s important, of course, and something to continue to stay on top of, but it’s one piece of a much larger puzzle.
I don’t agree with this at all. If it costs $8.00 to ship an item to the East Coast, and $14.00 to ship it to the West Coast, how much should I add to the item price?
If I split the difference and add $11.00, how do I know if I am going to be selling more, or losing customers, from the change? I am also getting the East Coast buyer to subsidize the West Coast buyer. This is not professional.
Hope the extra money makes up for the anger, resentment, and confusion you are causing your sellers, Etsy.
Etsy’s free shipping policy is horrible. Almost everyone agrees. I tried it for a sec…. immediately lost money. And quickly opted out.
Now my sales are down 80%. I used too be able to pay my bills with this shop, working the shop full time. I have had to go back to working in construction and do the shop on the side.
Thanks Etsy. I will do what my Etsy friends are doing. Building Shopify and looking elsewhere.
Kim – Our shop sales are down significantly too, but I can’t tell if it’s because retail, as a whole, is down across the board, or if it’s the free shipping policy that we’re not participating in. I’d appreciate hearing from shop owners that are participating in the free shipping to know if it’s blowing the doors off their business. It does help me to know that you tried the free shipping and shifted back. I laid awake last night thinking I might need to do that, but I’ll pause. Thanks for sharing that!