Does Etsy need free shipping?
In early July, Etsy introduced a new program to help sellers offer free shipping to U.S. buyers on orders of $35 or more. Many sellers are balking at the program, however, because they’re being asked to raise their item prices to cover all or a portion of the shipping costs.
“These days, online shoppers expect free shipping everywhere they go,” wrote Etsy CEO Josh Silverman in a letter to sellers. “Etsy is no exception.”
Shoppers on the online marketplace for vintage and artisan goods are 20 percent more likely to complete their purchase when the item is marked as shipping for free. Mr. Silverman argued that the cost of shipping “should be considered like the cost of your materials and other business expenses” when setting prices.
On last week’s second-quarter conference call, he said fewer than 30 percent of listings on Etsy last year offered free domestic shipping and a significant number of items had additional shipping prices that buyers perceive to be unreasonably high.
Etsy’s tests showed that beyond higher conversions, items offering free shipping drove increased site frequency as well as higher average order value as buyers purchased more from the same shop to reach the $35 minimum. The increased conversion and higher average order “significantly” outweighed the “small contraction” when a portion of shipping costs was bundled into pricing.
Mr. Silverman told analysts, “Seller adoption has been promising to date and our plan is to begin actively marketing free shipping to buyers starting in September.”
On Twitter and online forums, numerous sellers expressed concerns about the perceived value of their items when shipping costs are absorbed into pricing. They also lamented having to cover the costs of shipping an item across the country versus not being able to offer a lower shipping fee to a nearby buyer.
In an interview with Business Insider, Mr. Silverman acknowledged some seller concerns, “We know that this is going to be a lot for sellers to absorb — it’s a real change in how they think about pricing.”
- A letter from Etsy CEO Josh Silverman – Etsy
- How to Offer a Free Shipping Guarantee – Etsy
- Q&A with Etsy admin: Offering a free shipping guarantee – Etsy
- Etsy, Inc. Q2 2019 Results Earnings Call Transcript – Seeking Alpha
- Etsy unveils a new plan to offer free shipping across its site – Business Insider
- Etsy sellers aren’t happy with the platform pushing them to offer free shipping – The Verge
- Strategies for Shipping Challenging Items – Etsy
DISCUSSION QUESTIONS: How open should Etsy’s sellers be to participating in the free shipping program and its tradeoffs? Do you agree that consumers shopping online are more turned off by shipping fees than higher sticker prices?