Corporate greed, a savvy business strategy, or a bit of both? That’s what Etsy sellers were wondering when the news dropped inside last week’s Fourth Quarter and Full Year 2021 Results that Etsy’s seller transaction fee is increasing from 5% to 6.5%, effective April 11, 2022. If April 1 is April Fool’s Day, is April 11 Double April Fool’s? Let’s unpack the press release and find out.
First, let’s look at the big numbers. Etsy showed significant growth in both Q4 and for the Full Year 2021. In Q4, Etsy’s consolidated GMS hit a record $4.2 billion, up 16.5% year-over-year from 2020. Overall, in 2021 Etsy’s GMS grew 11.8%, rising to $13.4 billion from $10.2 billion the year prior. Benefitting from the overall rise in ecommerce due to the pandemic, Etsy also managed to bring in approximately 10 million new buyers in Q4 while reactivating 6.8 million buyers who had not purchased in a year or more.
It should be noted that Etsy’s consolidated numbers also include figures for Etsy-owned concerns Elo7, DePop, and Reverb. That said, Etsy’s consolidated revenue was up 16.2% year-over-year – a record $717.1 million for the marketplace. It was a pretty great year for Etsy, enough so that following the release of the report to investors, stock prices rose more than 15%. And in an all-too-common sign of the times, on page 5 of that report, Etsy decided to stick it to the people that made it all possible – their sellers.
Etsy takes a 30% fee increase, sellers get promises
While some large marketplaces will increase fees without explaining why to sellers, Etsy is taking the opposite tack. According to the press release, they are “planning to invest even more in making Etsy the best place to run a creative business – in fact, we expect to invest most of the incremental revenue from this fee increase in marketing, seller tools, and creating world-class customer experiences.” Further, Etsy claimed that they “have demonstrated our ability to make improvements that directly translate into more sales for our sellers, as evidenced by record sales per seller in 2021.”
But is that really the case? In Etsy’s recent history, sellers had issues with other alleged improvements. There was the Offsite Ads program, which angered sellers due to the difficulties opting out and Etsy taking a cut of sales. Or the Free Shipping program in summer 2019, when Etsy warned merchants that if they didn’t give free shipping on orders over $35, their listings would suffer in search and advertisements.
While raising transaction fees from 5% to 6.5% doesn’t seem like much on the surface, the reality is that it will disproportionately affect smaller sellers and lead to prices rising in the marketplace. Along with more and more resellers populating the marketplace, one wonders if Etsy is slowly pushing out the small, handmade craft sellers that it was founded upon.
War in Ukraine affects global ecommerce
The onset of war in Ukraine due to the Russian invasion has already led to effects on global ecommerce, a sector already battered from the pandemic, supply chain issues, and inflation. The international community has denounced Russia and President Putin’s actions in this conflict and has enacted numerous economic sanctions, bans, and other measures against them to press an end to hostilities while supporting the beleaguered Ukraine people.
Here are some key points of interest related to the situation for marketplace sellers to be aware of.
- Expect further supply chain disruptions globally as the effects of the conflict ripple out, along with increased inflation. European markets will likely be affected before others.
- EBay has waived Ukraine seller fees, protected sellers from late shipment penalties and negative feedback, announced 2:1 matching of employee donations to organizations supporting Ukraine, and temporarily paused sales and shipping to buyers with shipping addresses in Ukraine and Russia.
- Etsy has canceled the current balances owed to Etsy by all sellers in Ukraine, which includes listing fees, transaction fees, advertising fees, and more.
- Amazon has donated $5 million to organizations providing critical support on the ground, including UNICEF, UNHCR, World Food Program, Red Cross, Polska Akcja Humanitarna, and Save the Children.
- Major brands have suspended Russian sales and/or operations, including Apple, Nike, H&M, Netflix, HP, Oracle, and more.
- MSC, Maersk, and CMA CGM, the world’s three largest container shipping companies, have halted all shipments to and from Russia.
- According to the Wall Street Journal, UPS and FedEx have ceased all shipments to Russia.
- Finally, Russian ecommerce giant Ozon, the so-called “Amazon of Russia,” had its stock tank.
For sellers with business interests in that region, you will feel the effects sooner rather than later. There are many unknowns at play for other sellers, so keep monitoring the situation globally and try to be prepared for the inevitable ripples that will cross your path, especially if the conflict drags on or broadens.
With all that said, our hearts go out to the Ukrainian people, and we wish for a peaceful resolution to the conflict. If you would like to donate to help the people of Ukraine, we’ve provided links below.
Amazon announces generous New Seller Incentives
Amazon announced the introduction of its New Seller Incentives program effective March 1. The program aims to attract new sellers and put them on the path to success by utilizing a range of its initiatives to help them build “the perfect launch.” New Professional sellers who list their first goods on or after January 1, 2022 are eligible to participate.
While the initiative is aimed towards new merchants, established sellers who launch in a new location can also benefit. The program is available in the United States, Europe (France, Germany, Italy, Spain, and the UK), and Japan.
The program offers a generous amount of incentives to new sellers, with benefits for brand owners with Amazon Brand Registry (a 5% bonus on up to $1 million in eligible branded sales, with up to $50,000 in bonus value!), FBA sellers, and sellers who use Amazon Coupons. According to Amazon, the initiative is designed to help small and medium-sized sellers develop and create new products globally.
For prospective new Amazon sellers and existing Amazon sellers looking to expand to new markets, this looks like the proverbial “offer you can’t refuse.”
Read more at Amazon.
Start getting ready for Amazon PRIME Day 2022
It’s prime time to get ready for PRIME Day 2022. Amazon posted what amounts to a teaser, alerting US and UK sellers to prepare their PRIME Day sales early and stock sufficient product inventory.
The key takeaways:
- Participate in Prime Day by creating a deal. Submit your deals by April 29 (US) or May 13 (UK).
- Plan and send your inventory shipment to arrive at fulfillment centers before June 20 (US and UK). Keep in mind that ongoing supply chain issues mean that it may take an extended time for inventory to ship to fulfillment centers.
While PRIME Day 2022 dates have not yet been officially announced, the due date for sellers’ inventory shipments and a recent article by Kiplinger’s point towards Monday June 20 – Tuesday June 21 as the likely sale days. By a quirk of the calendar, these are the same two days as last year.
PRIME Day remains one of the most significant sales opportunities of the year in the marketplace. Last year, Amazon sales totaled $11.19 billion for the retail holiday. During the 2021 event, Prime members purchased over 250 million items globally. Consider this your notification to get your PRIME deal strategy ready and your products ordered because June will be here before you know it.
Top global and US online marketplaces of 2021 revealed
In 2021, the world’s Top 100 largest online marketplaces sold $3.23 trillion in goods. According to Digital Commerce 360’s data, sales through platforms like Alibaba, Amazon, eBay, and others accounted for two-thirds of all global ecommerce sales last year.
The top three global marketplaces were #1 Taobao at $711 billion (China), #2 Tmall at $672 billion (China), and #3 Amazon at $390 billion (US). Those three marketplaces accounted for more than 60% of the Top 100’s GMV in 2021.
Other key findings were:
- Marketplace sales now account for 67% of global ecommerce, with the Top 100 marketplaces accounting for over 90% of global marketplace sales.
- North America was home to 51 of the Top 100 marketplaces (49 in the US), while Europe was home to 22. No other region had more than 7.
- The US marketplace leader by third-party GMV was Amazon, followed in order by eBay, OfferUp, Walmart, and Wish. Amazon grew its third-party GMV by 30% in 2021.
It’s interesting to see OfferUp included here, as the popular app essentially serves as a mobile P2P used goods marketplace. Presented in an interactive infographic, the data is an intriguing snapshot of global marketplace sales that grew by 18% last year – and will continue to grow in the future.
Read more at Digital Commerce 360.
Also in the news
- FBA New Selection changes in 2022. Amazon US. Amazon UK.
- Information about upcoming changes to buyer-initiated order cancellations. Amazon.
- Transparency adds more customer engagement features to code scanning experience. Amazon UK.
- eBay announced changes to its store offering in the UK. EcommerceBytes.
- eBay is finally rolling out sending coupons to buyer groups. Value Added Resource.
Webinars in the week ahead
March 8-10: Meet the Marketplace (for D2C brands and retailers looking to expand into new and international channels in 2022.) Linnworks.
March 10: Pinterest Presents Global Ads Summit. Tamebay.
Various dates: Amazon advertising’s global webinar program continues with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization, and tips. Amazon.
For US sellers
March 8: Amazon Ads – Strong products, strong ads: Pick ASINs that help improve your performance. Amazon.
March 8: Amazon Ads – Introduction to bids and budgets. Amazon.
March 8, 10: Amazon Small Business Academy Pathways Series March. Amazon.
March 9: Offset Amazon Fake Reviews with Editorial Recommendations. eComEngine.
March 9: Amazon Ads – Get started with sponsored ads. Amazon.
March 9, 10, 11: Seller University: Introduction to adding products and creating listings. Amazon.
March 10: eBay Spring Seller Check-In. eBay.
March 10: Brand Protection on Amazon. Tinuiti.
For UK sellers
March 8: Amazon Ads – Strong foundation, strong ads: get ready for advertising. Amazon.
March 9: Amazon Ads – Get started with sponsored ads. Amazon.
March 10: Amazon Ads – Strong products, strong ads: Pick ASINs that help improve your performance. Amazon.
March 10: Amazon Ads – Building your brand identity with Amazon Advertising. Amazon.
Those darn kids are abandoning ecommerce shopping carts
At the risk of sounding like a grumpy old person telling those darn kids to stay off their lawn, we feel obligated to comment on CNBC’s report of the newest young person’s pastime. It seems the latest pandemic-driven fad is online window shopping, in the form of browsing ecommerce sites, adding items to virtual shopping carts, then abandoning them without purchasing. A recent study by Ve Global found 43% of Amazon shoppers guilty of this game of online shopping meets “ding-dong ditch.”
While it’s fair to say that we’ve all done this at one time or another, this form of “virtual retail therapy” has exploded during the pandemic, where going to physical stores is far less safe than chillaxing on the couch. And like actual retail therapy (aka shopping sprees), the practice leaves a positive dopamine hit in the brain, which is needed more than ever these days.
According to Ve Global’s findings, 14% of consumers explore online retailers daily without intending to buy anything. But on the whole, more traffic to ecommerce platforms since 2019 has increased sales by 32.4% in the US alone. For sellers, there are some upsides to this trend. More eyeballs are being placed on products, and in many cases the abandoned shopping cart acts as a wish list for future purchases. The one negative side that jumps out is that sellers may be paying for advertising on products that are added to carts and not purchased, so they are not seeing an immediate return on the ad spend.
Experts consulted in the CNBC report generally feel that cart-abandoning is actually a positive indicator for future business. The other good news? Those kids on your lawn aren’t posting themselves eating Tide Pods on Instagram like they used to. Those things really ruin your crabgrass.
Read more at CNBC.