This week Etsy announced it would make Free Shipping a core part of the Etsy shopping experience.
Since last year there have been suggestions that Etsy may push toward a higher adoption of offering free shipping by sellers, but it has not actively promoted the idea and it did not significantly downgrade listings that did not offer free shipping.
The unique products on Etsy versus Amazon and other ecommerce retailers makes the marketplace stand apart from “product catalog” shopping.
Etsy grew tremendously over the last two years after years of being stagnant. This growth came with a mix of sellers offering free shipping – mostly on higher-priced items – while others continued to add shipping costs.
Free shipping – why?
This begs the question, is it really necessary for Etsy to actively promote free shipping when its growth is still strong?
Do Etsy sellers really compete with Amazon or eBay’s catalog products where free shipping is almost a necessity to get sales?
Etsy claims that internal metrics show higher conversions when sellers offers free shipping. The marketplace points to a limited time free shipping promotion in May that led to higher order values.
But what was the impact on the bottom line for sellers during this promotion? What will it be as more sellers feel they need to offer free shipping to compete on Etsy?
Normally, when offering a SKU from Brand X and that product is offered by hundreds of other sellers on a marketplace or on other websites, free shipping is an easy decision.
With Etsy, there is a case to be made that its unique products don’t need that “free shipping” push.
They may argue that Amazon Handmade is becoming a larger competitor and they must ensure its leading position in the unique products segment.
But how “unique” are the products on Amazon Handmade if they ship them from Amazon warehouses via Amazon FBA?
Etsy seller responses
Etsy sellers on social media had a lot to say about this “free shipping” initiative. Especially sellers on the US site where products offered with free shipping will turn up higher in search results.
“I think it’s unfair. We aren’t amazon. My customers didn’t pay a yearly fee for free shipping. We are small businesses. This IMO is going to make a lot of sellers leave…”
“The items I sell are usually 2-6 lbs. To up my prices appropriately to cover shipping to the other side of the country, I will also be taking more money from customers closer to home. Of course, that is IF anyone buys the items with the marked up fee. This will be very hard on many shops.”
“I think Etsy lost the whole meaning of “Crafters”. When I signed up for this website, it was for small business to sell their crafts. They have now tried to turn it into “Amazon” which they will never be able to compete with. If they want us to offer free shipping, then charge the “BUYER” a yearly fee like Amazon does and share that fee with all the sellers on Etsy. That is the fair way to do it. I’m a small crafter and I cannot afford to offer free shipping on all my items, and if I raise my prices to cover the shipping cost, no one will buy, items will be way too expense. Thanks Etsy, thought you cared!!!”
“Free shipping offered makes no difference when there are zero sales…”
“I am not offering free shipping. My shop barely gets views as it is. I am not going to stress myself out and alter my whole shop and disappoint my “actual” customers who do not mind my $5 shipping charge. People’s stats will skyrocket at first and then it will all bottleneck like it usually does when there is a big change. Then many people will claim success while others will close up shop…”
The bottom line
Etsy management had to know this announcement would garner some negative feedback from sellers.
When eBay pushed for free shipping several years ago, there were many similar reactions from the seller community. Even today many eBay sellers, especially those selling unique products, complain about having to offer free shipping to get visibility in search results.
Etsy CEO Josh Silverman has grown the company beyond most expectations since he took the helm at the top spot. It is hard to fault him for taking this step to better compete in a market where free shipping is the norm.
But there is also a good counter argument that Etsy’s unique products really don’t need to compete at that level.
Unfortunately, with such a change, there will be some that do well with free shipping while others may end up leaving the marketplace. Only time will tell what impact that will have on Etsy.