Etsy hits sellers with 30 percent higher transaction fees

After a record-breaking fourth quarter in 2021, Etsy is increasing its transaction costs for sellers from 5 percent to 6.5 percent, the company announced today. In a report to investors today, the company says the 30 percent increase will take effect from April 11. The transaction fee is the percentage of the total order amount that Etsy charges when a seller makes a sale.

The additional costs for sellers come as Etsy announced fourth-quarter revenue of $717.1 million, which the company attributes to a strong shopping season ahead of the holiday season. Etsy added 10 million new buyers in the fourth quarter of 2021, bringing the number of active buyers to a record 90 million. Shares rose more than 15 percent after the market closed on Thursday following the report to investors.

“We’ve demonstrated our ability to make improvements that translate directly into more sales for our sellers, as evidenced by record sales per seller in 2021,” Etsy CEO Josh Silverman said in the report. “Our new transaction costs allow us to invest in key areas such as marketing and support to further extend our strong momentum.”

Etsy says the fee increase will primarily be paid for “marketing, seller tools, and creating world-class customer experiences.” But previous changes to merchant features — such as the controversial advertising program — have not gone down well with merchants, some of whom are unable to opt out.

Higher seller fees are likely to upset merchants on the platform, who have complained for years about changes at Etsy as the business grows. The last time Etsy increased transaction fees was in 2018, when it went from 3.5 percent to the current 5 percent, and sellers also pay $0.20 for listing an item, plus payment processing fees.

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