There has been a lot of talk in the Etsy community — and I mean A LOT of talk — about Etsy’s payment account reserve
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In July 2019, Etsy rolled out some important changes in their algorithm to favor listings and shops in US search results that offer free shipping to US buyers.
This article aims at covering:
It is a long article, but you can click on the outline below to be taken directly to the point that’s of interest to you. I will keep this article updated as new information or new tools are being released by Etsy.
If you find it useful, make sure to share this article with other makers!
In July 2019, Etsy released an announcement stating that priority placement in US search results would be given to items that ship free to US buyers.
And… even outside the US, the lower your shipping fee, the better.
Offering free shipping was already a factor in Etsy’s Search Result Algorithm before this announcement was made, but it was unclear exactly to what extent.
In the words of Etsy CEO’s himself:
“Starting on July 30, 2019, we’ll give priority placement in US search results to items that ship free and to shops that guarantee free shipping to US buyers on orders of $35 or more. This means that shoppers in the US will primarily see items that ship free and shops that guarantee free shipping on orders of $35 or more in the top and most visible rows of search. We’ll also begin to prioritize these items wherever Etsy advertises in the US—in email marketing, social media, and television ads.”
For now, this only affects US search results, so only what US buyers see when they search for products on Etsy.
“What about OUTSIDE THE US?” – Good question!
If you are in France, and you can’t offer free shipping to the US – but you are able to offer free shipping to France or to even just LOWER your shipping fee, this is beneficial too.
Here’s what Etsy says (from the Seller Handbook):
“We also include shipping price as a factor in search ranking. If you don’t offer a US free shipping guarantee or free shipping to US shoppers, offering free shipping or lowering your shipping costs for shoppers in your country can improve your search ranking.”
This simply means that (if you turn on this guarantee) any order from your shop of USD$35 or more will ship for free.
Important note: This guarantee is on the total order value which means that…
You don’t have to turn this on in your Shop manager, but you can decide to do so (more on this below, in the shipping strategy section).
According to Etsy, they ran a few tests, and used surveys and analytics to determine this number. Here’s a little sum up of the info they have shared with us to explain this decision:
“We put a lot of thought through both research and analytics to determine the $35 threshold, and spoke to buyers and sellers. These statistics are inclusive of heavy and expensive items:
Yes. Even if you don’t turn on the free shipping guarantee for orders over USD $35 shop-wide, you can still decide to ship individual listings for free (even if they are priced under USD $35) and they will get priority placement in US search.
The short answer is no.
Only individual items shipping to ship to the US for free unconditionally (no minimum amount, no minimum quantity) OR items covered by the free shipping for orders over $35 guarantee will get priority in US search.
You only need to offer free shipping to get priority placement, so your customers would still pay for shipping upgrades if they want, for example, express shipping (phew!).
You’re not going to like this, but yes.
You would refund what the customer has paid which would be the actual item price + the shipping cost that was bundled in your “free shipping price”.
Granted, it stings… but that’s the risk Etsy sellers who offer free shipping are willing to take. The idea is that you shouldn’t get many returns anyway and when you do – it’s a business expense.
You can always change your shop policies to state that you don’t accept returns, or (at minima) to make sure that your policy sets clear shipping boundaries:
Will you offer full or only partial refund to cover return shipping prices?
How many days after reception can they still claim a refund?
Does the item need to be in its original packaging? Unused?
Do you need a picture upon reception and of the packaging if broken during shipping transit? Etc.
Try to cover all your bases.
Etsy also suggests: “Consider […] charging a restocking fee for returns if it makes sense for your shop. Remember, you’re responsible for complying with all laws, including laws relating to returns, that are applicable to you.”
Important note: some countries have laws around handling returns, so do your due diligence to make sure you are compliant and if you need to, seek professional legal advice.
This one has been coming up a lot.
The idea is that it’s not really free shipping because someone has to pay shipping costs for it, and that increasing your prices to cover up for the free shipping and pretending that buyers don’t pay for it when they are, is kind of unethical.
Many Etsy sellers have asked if saying “shipping included” instead of “free shipping” wouldn’t be a better option?
My honest opinion? Yes, it would be. No doubt about that. It would be honest, when calling it “free shipping” truly isn’t. It would also be great to see the item price + shipping total from the search results so buyers know from the get-go what the total is going to be – no nasty surprises at checkout.
… Sadly this is not the standard the e-commerce industry has set and although you, as an Etsy seller, are NOT competing directly with retailers like Amazon and other giants, customers are used to the term “free shipping” because of those giants who have set such standards.
With that said, customers know that free shipping isn’t free, they’re not idiots. Even Amazon prime is a paid service.
The reality is that when they shop online and see “free shipping”, all they are reading is “no nasty surprise at checkout”. They want to know the total value of purchasing that item AND its shipping cost, which is the “true” price of the product to them.
So yes, “shipping included” would be much more ethical and much more accurate, but don’t feel too bad about this because (alas!) it is common practice nowadays to call ‘shipping included’ => ‘free shipping’.
Now this is potentially a bigger problem for Etsy sellers.
It appears that some countries have laws prohibiting sellers to “inflate” their item prices to promote them as “shipping for free”.
When asked about it, this is what Etsy had to say about the issue:
“As a business selling online, you’re responsible for complying with laws that apply to you. We can’t provide you with legal advice, but if recovering shipping costs within your item price when you offer free shipping is not compliant with local laws in your market, you should consider other ways to make free shipping work for your shop, if it’s something you want to offer.”
I wish I could be more useful here but I am no legal expert and I am by no means qualified to give you legal advice so please do your due diligence and seek advice from a qualified lawyer in your country if you think this might be a concern for you.
If you’re concerned that Etsy would be getting more from sellers in fees because there’s no way to differentiate the sale price from the absorbed shipping cost and therefore you’d be getting charged fees on a higher amount, this is NOT true.
Well, not really. Etsy already charges fees on the total order amount (including shipping), so nothing changes here.
Now… side note: Is Etsy doing this to make more money?
Of course! The entire reason behind this policy is to boost sales on the social media platform because the more YOU sell, the more Etsy makes in fees. Win-win.
That’s one of the biggest concerns amongst Etsy sellers. Here’s a little example of the issue (before we discuss it).
Imagine you sell cards:
If you were to absorb the shipping cost in your price to offer free shipping on all individual items, you would need to start selling your cards at $7.5
If a customer orders 5 cards, he/she is now paying 5×7.5=$37.5 (while you only effectively pay $3.5 of shipping) when they used to pay 5*5+3.5 (for shipping)=$28.5
If that’s an ethical concern for you and you feel this is charging the customer unnecessarily and putting prices too high, potentially reducing sales rather than increasing them, here are 2 things to consider:
Remember they make more money when you make more money and if the data from their shoppers studies and the test they have been running showed that overall this would decrease sales – they wouldn’t have decided on it. If this helps increase the average order value in your Etsy shop, it is a good thing.
In our example, you could decide to:
E.g. all individual cards could be $5.5 instead of $5. To get to the $35, they would need to buy 7 cards, essentially covering 0.5×7=$3.5 of shipping costs.
It sure is more complicated than if you can ship for a flat $5 anywhere in the world, there’s no denying it. Check out section 4 for suggestions/potential solutions.
Pricing your products on Etsy is both an art and a science, and a fair bit of psychology goes into the process too.
A product priced $34 can feel disproportionately more expensive than the same product priced at $29 if your customer has put a limit of $30 to their purchase in their head.
That’s why you see a lot of products prices ending in 7 or 9 … $39, $79, $87, etc.
If you are concerned that adding the shipping cost to your prices will put you over this “psychological limit”, you have to experiment. There simply isn’t another way to know what is going to work and if/how seriously this would affect your Etsy sales.
Put your prices up to compensate for the free shipping and (after enough time has passed to gather enough data – don’t just wait 2 days before calling it quits) ask yourself:
I think you might be surprised by the results and find it doesn’t affect your sales as much as you expect it to. If Etsy’s data is right, 20% of people who would usually have abandoned their cart should finish their checkout – that could compensate for people who thought this was “above their max budget”.
Of course, it will (greatly) depend on your specific situation, so again: you have to run a test.
When asked about how international sellers can compete with US shops:
“We also understand that sellers like you need additional tools to offer different prices for your international and domestic customers. We’re working on creating long-term solutions and will keep you updated as they become available.”
Now that’s a super unclear, blurry, foggy answer. Cool. They’re working on something. Long-term.
To say this doesn’t tell us much is an understatement. I am not sure how this will help with the “competing with US shops” issue but I assume this would at least be some kind of tool making it easier to bulk edit your prices based on the shipping location.
I will update this article with more info as Etsy releases it/launches the tool.
As we’ve covered in this section, it can be tricky to offer the free shipping guarantee for orders over $35 to US buyers: how much should you add to your individual prices so you don’t charge an unnecessarily high shipping cost on individual items while not having to pay the shipping over $35 from your own pocket?
When you turn on the guarantee Etsy let’s you bulk edit your prices for items over $35 – but nothing for items under $35 yet.
Here’s what Etsy has announced:
“You can adjust your item prices by the average cost to deliver your items under 35 USD. We’ll calculate this for you, and it will be available in your Shop Manager soon. This calculation will take a look at your orders that qualify for the guarantee that include items under 35 USD. It will determine the average amount you’d need to add to your items under 35 USD to recover postage costs.”
Here again, I’ll update the article when we get more info or when this gets launched but I assume it will help you calculate what to add to individual prices (the $0.5 increase we used in this example) based on your order history, if you have one.
Make sure not to “guesstimate” the percentage of your orders that are from the US. Use your Etsy shop manager to get actual data.
Here is Etsy’s how-to:
“Go to Shop Manager > Settings > Options > Download data. In the dropdown menu for “CSV type,” select “Orders” and pick a timeframe. After you download the CSV file, you can sort the list by “Ship Country” to see what percentage of orders are being shipped to the US.”
Now that you have that data, let’s think through the different situations you might find yourself in.
This is the trickiest one. International sellers are being put in a less than ideal situation. There’s no denying it.
It would be pretty risky not to offer free shipping and risk losing search result visibility, but it can be quite challenging to offer free shipping at the same time.
The main concern here sounds a bit like this:
In a way, you were already competing with US shops before the change, but the competition was much less confrontational because shoppers got to compare search results per item price and didn’t get to see that your shipping price was $10 more expensive before they were already “in their cart/checking out”.
Etsy would tell you that at least now they know upfront what the “total” cost (including shipping) is, which means that you should (in theory) get less cart abandonment than you did before.
The truth is that you don’t have much of a choice.
Here’s a rock.
Here’s a hard place.
You get to sit in between.
If you don’t offer free shipping, you will most likely lose views.
If you roll out free shipping, your items will most likely look (and be) more expensive than your competitors.
This means one thing: Your Etsy listing can NOT be average anymore. You can’t be $10 more expensive (to keep our example) with average photography.
You have to increase the perceived value of your items (a pricing strategy you hopefully are already using) with outstanding photography, fantastic copy, and overall an incredible brand and Etsy shopping experience.
You shouldn’t be affected as much, as this new policy will affect search results for buyers based in the US only, and the guarantee will apply to US buyers only.
A few things to consider (every Etsy shop is different, no one-size fits all):
Check what your competitors are doing (some niches with bulky/heavy items might not change all that much, but others will see free shipping being offered widely) and review your item prices to include shipping and turn on the free shipping guarantee for US orders over $35.
Too big of a market for you to risk losing.
If you decide to turn on the free shipping guarantee for orders over $35 to the US, you are going to need to adjust your prices and increase them to cover for that cost. But, if you increase your prices by say $4.5 … that’s not exactly fair to shoppers outside the US who are not getting free shipping and just paying an extra $4.5 for no good reason.
That’s why if you adjust your shipping prices to cover your US shipping cost, you should then adjust your international shipping profiles to reduce the shipping costs by the same amount you just increased your prices by.
That was quite a mouthful so here’s an example.
The ‘smart pricing tool’ should do this for you for items over $35, more info here.
If you have an Etsy shop with items of various sizes and weight, it might be ok to offer free shipping on some of them, while for others it seems totally unreasonable.
If you’re an artist selling your original artwork (bulky, heavy paintings) as well as prints of your art such as cards, posters, etc. (much smaller and lighter), it doesn’t make a ton of sense to turn the free shipping guarantee on shop-wide.
Same if you are a vintage seller and ship small items (such as vintage jewelry) as well as bigger items (like vintage plates, signs, baskets, furniture, etc.).
So the answer to this question really depends on whether all the items in your Etsy shop are quite similar in cost when it comes to shipping – or not.
If they’re not, remember that Etsy will give priority placement in US search results to items that ship free individually EVEN IF you don’t turn on the shop-wide free shipping guarantee. You get to pick and choose.
If they are all similar, here are a few suggestions/ideas:
If you offer shop-wide free shipping guarantee for orders over $35 to the US:
Having consistent prices across all your sales platforms is definitely ideal, but also unrealistic. With many platforms and currencies, it’s normal that your prices vary slightly.
It also is very unlikely that someone would contact you demanding an explanation and if someone did:
So, can you get away with not having the same prices everywhere? I think “yes” but with one condition: Your direct sale channel (your own website) should always offer the best (lowest) price.
So if you sell on Etsy, Amazon, Zibbet, etc. and your own website – make sure that your own website has the lowest price/best offer.
Often the problem here is that adding the shipping cost to the price of your Etsy products means that your customers are going to end up paying much more in shipping prices than what it actually costs you to ship to them when they start ordering more than one, which is #notcool.
For suggestions on dealing with this, see this point.
This one is definitely a painful one. Trying to offer free shipping across the board on big, difficult and expensive-to-ship items sounds pretty insane, and it’s understandable that many sellers on Etsy have been extremely frustrated with this issue.
I can’t fix it with a magic formula that would work for every Etsy shop (sorry! and if you have one, let me know!) but here are a few things to consider:
1. Your competition has the same problem. This is only partial reassurance I know, but it does matter. If you sell chairs or framed art, you’re not competing with Etsy sellers who sell printed stickers or enamel pins. Your competitors are having the same shipping issues. Research your niche and keep a close eye on what your competitors are doing.
In an ideal world, none of them add the shipping costs to their price and so no one gets prioritised in US search.
If most of your competitors do end up adding those costs in their price, this tells you it is working for them and will most likely work for you too.
2. Cart abandonment. Although adding the shipping cost to the price will most likely increase your item price considerably, shoppers won’t have a super nasty surprise at checkout when they realise they need to pay almost double what they were ready to pay to have the item shipped to them.
It’s true that “people who buy a chair online know to expect higher shipping costs” but wouldn’t it make their life easier if they knew from the get go the price was all inclusive? It gives them peace of mind while shopping and could significantly reduce your cart abandonment rate.
How the he*k are you supposed to incorporate that shipping cost to your price though?
Etsy recommends calculating and adding the minimum, median or maximum shipping cost (based on possible distances and weight) to the price of your item, stating that “costs will balance out between the various distances traveled”.
Hum… I am not sure how it balances out if you only add the minimum to your items? Sounds more like you’d be out of pocket each time someone orders from a little further than your minimum distance. So that would be a “no” from me 😉
I’d only consider adding either the median (then it does balance out if your sales are evenly spread across different regions) or the maximum (but then you risk pumping up your price a lot more than necessary and some customers would pay a lot of shipping even if they are close to you which is #notcool).
IF you decide to try out free shipping, median seems to be the way here – but you have to make sure that you keep track of stats so you can adjust your prices if most of your customers suddenly seem to be in California when they used to be in New York. Your median is not set in stone.
Finally, remember you do NOT have to offer free shipping on those items (this would be largely dependent on what your competitors are doing) and that you can test this out for a few products first – to see how the market reacts.
Bottom-line: as with everything, you have to test and see if your sales are positively/negatively impacted.
What’s below is my opinion, not hard core facts. Take it or leave it, and most importantly, let’s discuss (always respectfully) in the comments below 🙂
For years now I have been passionate about helping makers charge a price that is fair to their customers but (most importantly) to them.
The majority of Etsy sellers are undercharging, barely covering costs, guesstimating prices, or thinking they’re making a profit but really only paying themselves a couple of $ an hour, and certainly not making a sustainable profit.
This is an issue that’s not only hurting the makers themselves (underpaid, tired, overwhelmed, stressed), but also the community as a whole (customers can’t understand what the true value of a handmade product is if you try to sell it for what it is really worth while others are happy to just cover the cost of their hobby).
What I have seen everywhere are Etsy sellers who don’t take the time to strategically price their products – instead guesstimating their prices (“that sounds about right” or “that sounds about what I’d be willing to pay”) or using formulas they don’t properly understand or that don’t actually work (e.g: cost x 2 = retail).
There are many reasons that explain this:
I am not saying that including shipping in the price of items will fix ALL these problems, and I am most certainly not saying this makes this new policy OK, but it certainly will force sellers to think A LOT MORE about their pricing strategy.
When it was easy to think: “I know my price covers at least the cost of my materials and the customers pay for my shipping costs so I should be alright” it is not an option anymore as you can find yourself paying shipping out of your pocket much more easily.
To add shipping to the price, sellers will be forced to understand and review their profit margin (and no, it’s not as easy as x2), to understand and use perceived value, and overall – to look deeply into how each item price is broken down.
And that makes me really happy.
Following on this train of thought…it means that, as a whole, the handmade community will have to take pricing much more seriously.
It means many makers will need to recalculate their prices and adjust their strategy, and I bet many will realise they have been undercharging for too long and that their pricing structure is not allowing for this new policy.
Handmade is not cheap. Now more than ever, it is time to raise your prices and to stop competing on prices because, as William T. Brooks once said:
“Low price is the dumbest thing for you to try to compete on”.
There’s no doubt about where the e-commerce industry is going as a whole: customers want free shipping and next day delivery.
Here’s a quote from Abby Glassenberg (Craft Industry Alliance), who says:
“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.”
I believe there is a lot of truth in that.
The anger many sellers are feeling (understandably) is that Etsy is following those changes, driven by bigger retailers to stay relevant on the e-commerce market, when the platform used to be… different.
It was about supporting the small Etsy shops, the family-owned businesses, the one-of-a-kind items makers.
Over the last few years, such makers have felt less and less supported by the very social media platform they’ve helped grow and succeed. Understandably, it hurts.
Although it’s normal and acceptable to be angry for a minute, you have to think beyond this and decide if you’re going to stick with Etsy (and accept that they are ultimately in charge of the direction the company is going) or consider alternatives to sell your products.
Could Etsy have chosen not to follow the e-commerce trends around offering free shipping? Yes. Could they have chosen to say “included” instead of “free’? Yes.
Could Etsy choose to be more supportive of one of a kind, made to order, vintage, or heavy items in their algorithm? Yes.
They didn’t though, and as a business owner I urge you to not dwell on it for too long and to look at what your next move is going to be instead.
If you need to grieve the good old days of what Etsy used to be, take a day or two to scream it out – but then come back to work and make a plan. Be in control.
Like it or not (and I am not trying to be blunt – nor saying it makes those changes cool) you entered a contract with the platform the moment you opened your Etsy shop, and they’ve got every right to make those changes if they feel this is taking their company where they want to be.
You, on the other hand, have every right to say “enough” and to look at alternatives if you strongly feel this does not align with your business and personal values anymore, or if you think this is simply not going to work for your shop strategically.
Something that is incredibly important to remember is that you should never rely exclusively or primarily in being found in Etsy search results to run a successful shop. Doing so puts you in a situation where you are subject to the changes in algorithm frequently thrown at you.
This isn’t the first time Etsy has done something like that, and it won’t be the last. You have to diversify your marketing strategy. Build you email list so you can own your marketing and your traffic and be in control, start driving traffic to your store using social media platforms, a blog, your newsletter – don’t put your eggs in the one Etsy-SEO basket OR accept that these changes will come and that you will need to adjust to them.
It most definitely feels like international sellers are being discriminated against as it’s becoming increasingly harder for them to compete against US sellers.
Truth is, I don’t know what Etsy strategy for international sellers is. No one but them does. But here’s what I think:
I think long-term, Etsy doesn’t want international sellers to have to compete for a part of the US market, they want to have a big enough market in each country so that you would be successful enough by selling domestically.
I think they want to attract many more customers to the European market (for example) and turn Etsy into a go-to for European shoppers. Etsy already exists in many countries, but it is FAR from being as popular as what it is in the US for now.
I suspect that Etsy will eventually want to put in place similar shipping policies for each country (e.g. Ship for free to Spain to get priority placement in Spanish search results).
Of course, this is not the case for now and is entirely assumption-based.
We shall wait and see.
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