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.