If you sell on Etsy then it’s important to realised that the marketplace has declared war on shipping charges and would prefer most product to carry free shipping. In their latest earnings call, Etsy CEO Josh Silverman discussed the state of shipping charges on Etsy and share his plans for the future of shipping charges on Etsy
Josh started out by stating that shipping costs are one of the biggest annoyances for buyers on the marketplace with over half of all products offered for sale carrying shipping charges that buyers think are too high. He pointed to efforts to educate sellers and moved on to discuss carrot and stick methods of coercing sellers into offering low or free shipping.
“We know that shipping remains one of the top friction points in our marketplace. For example, in the third quarter, less than 20% of listings on Etsy offered free shipping and our research suggests that buyers perceive about half of the items in our marketplace as having high shipping prices.
It not only impacts conversion rates on those items, it also damages the brand perception of Etsy overall. We are determined to fix this. Our first step has been to educate sellers about the impact of high shipping prices and ask them to think of shipping as just another component of their cost of goods sold.
Next, we’re evolving our search algorithms in order to more prominently promote items that have competitively priced shipping. We’ve introduced notifications to sellers whose shipping prices are perceived as too high, tools to help them adjust shipping prices, if they so choose and we launched the Holiday Sweepstakes for sellers who offer free shipping.”
– Josh Silverman, CEO, Etsy
It’s very easy for sellers to get defensive over their shipping costs. It’s easy to add in the cost of packaging and taxes on top of the carriage charge. We also often hear sellers defending themselves and state that their shipping charges reflect the actual cost to themselves. In reality it doesn’t matter what shipping really costs and whether you charge higher or lower shipping charges than your costs. What matters is if buyers perceive your shipping costs to be higher than what they’d expect from other retailers and if the marketplace, in this case Etsy, lower your products in search results.
There is no mandate for what level you should set shipping costs but it’s hard to contest the supposition that buyers do like free shipping and certainly buyers will be put off from buying if they feel that your shipping charges are too high.
10 Responses
Yet another clown without ever having sold a physical item in his life trying to tell us that packages are delivered by the tooth fairy, completely free of charge, and that all sellers are trying to do by charging postage is profit from it.
Nice one Josh… Why not just get yourself a nice big branding iron so you can stamp us all with the same mark. Sounds like you’re training to be the next CEO at eBay.
I’ve a feeling this article this won’t go down well with many sellers on here… (waits for riot to start)
Why do these platforms think that they can dictate what your postage is. If buyers don’t like the cost then they will move on. If you turn round to ETSY and say don’t take a cut of my postage and I will reduce my postage accordingly some how I don’t think that will happen.
It will be at a certain cost for a reason.
Everything we sell on ebay and Amazon has a “free P&P” option, which most buyers go for, not wanting to spend a penny more to get it a day quicker.
It’s not really free of course, rather it’s been built into the sale price already. The buyer is most definitely paying it.
This is great when multiple items are going to the same buyer. You can take a look at a sale and think, OK, he’s taking 8 of those, that means £4.50 extra profit just on that sale. Nice.
All these saved built in P&Ps costs add up. Depending on your business, you could easily be making £100s or £1000s extra a year off the back of them. So stop moaning and start making your own Scrooge McDuck money bin to dive into.
There is NO such thing as free postage and packing. Someone in the buying /selling chain has to pay for it. If the seller pays for it then it comes out of the profits and they probably wont stay selling for very long.
It is obvious that if the buyer wants the item and they cant pick it up, then they should pay for it to be delivered. Whether its included in the price or shown separately is a matter of taste. Personally when I buy something I prefer to see how much the item really is and how much I’m paying for postage. If the postage is reasonable I wont mind paying it, to me it shows the seller is likely honest.
Free shipping?
The only free cheese is in the mouse trap!
Why should a seller give free shipping? It costs them money. Of course what is often meant is that the cost is added to the product, so not free at all. Well as a buyer I find that very deceitful and more annoying than steep shipping. Etsy has no business dictating to people and certainly should not be adding their own percentage charge to the shipping costs. Greedy behaviour which helps no one. I want honest shipping prices but postal costs are what they are. Mostly I want transparency, and pretending shipping is free when it isn’t is wrong, when they do in fact mean shipping is included in product price. How stupid does etsy think its buyers are?!
Josh states that buyers “perceive” about half of the items in the marketplace as having high shipping.
Just think what might happen if he spent as much time educating buyers as the actual costs of shipping rather than coercing sellers to offer free shipping.
Let’s fix the problem instead of just treating the symptoms.
Free shipping eliminates the ability to offer low priced items. You can build $3 to $5 of shipping costs into a $30 or $40 item a lot easier than a $5 or $6 item.
There is also not much of a solution for returns when you roll the price of shipping into the item and offer “Free Shipping”. You end up having to refund the entire amount as no actual shipping was charged, leaving the seller out the original shipping costs. Buyers don’t like restocking fees, which would be the only way to recoup the money.
I only charge my buyers exactly what it costs to ship and not a penny more. I will not be dishonest and load my item price in order to make my shipping prices lower or ‘free’.
When shipping companies will post my buyers’ items for free, then my buyers items will be sent for free. Until then, Josh Silverman, isn’t it time you got off your ‘Free Shipping’ soap box and did some proper work?
What Mr Silverman wants us Etsy sellers to do is to take the shipping price and add it to the price of the goods – and this is dangerously disingenuous. And deceitful.
He is really keen to push domestic shipping being free, but many Etsy sellers deal in one-off items that would appear over-priced on the international market. The weight or size of the parcel is not considered, nor is insurance, tracking and signature. (The magic fairy deals with that!)
So now he is telling the world that the platform he runs, and where we sellers pay our dues is overcharging on shipping. Essentially he is calling Etsy sellers dishonest – is this the pot calling the kettle?
I have frequently sold items with a shipping price higher than the item price, because buyers are not stupid. They know they are buying a unique product from a small scale seller and if they want it, they will pay for it. It is their choice.
It is hard work selling on Etsy – essentially you have to do a lot of work to drive traffic to your shop. Etsy is not a great help doing that work. The constant changes, some of which are so ill-thought out without any buyer or seller consultation, are very demoralising. Also there is terrible communication from Etsy to the sellers – not sure who writes it, but it is often as clear as mud, or just very patronising. And this free shipping push is straight-forward bullying. I do not work for you, Mr Silverman – without people like me you have no business.
I just don’t think he gets what Etsy is all about. There is a lot to fix and improve on Etsy, and I would rather he and his team turns their attention to charming buyers and improving systems.
Unless this is just a deep dark plot to get rid of the small scale sellers and rather deal in large volume suppliers which would certainly keep his shareholders happy! Then Etsy could play on the same field as Amazon and Ebay selling all the same stuff.
And is being an unethical bully nowadays somehow seem to be acceptable or ethical?