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?
Georganne BenderPrincipal, KIZER & BENDER Speaking
Georganne BenderPrincipal, KIZER & BENDER Speaking
Patricia Vekich WaldronContributing Editor, RetailWire; Founder and CEO, Vision First
Patricia Vekich WaldronContributing Editor, RetailWire; Founder and CEO, Vision First
Georganne BenderPrincipal, KIZER & BENDER Speaking
Georganne BenderPrincipal, KIZER & BENDER Speaking
Patricia Vekich WaldronContributing Editor, RetailWire; Founder and CEO, Vision First
Patricia Vekich WaldronContributing Editor, RetailWire; Founder and CEO, Vision First
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8 Comments on "Does Etsy need free shipping?"
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Principal, KIZER & BENDER Speaking
I am less inclined to look for free shipping on sites like Etsy because I know the items I buy are sold by indie merchants and craftsmen.
I understand the sellers’ hesitation because the cost of shipping an item across the country versus across town is significantly more. As a consumer I don’t want to be penalized because Etsy’s free shipping policy is inflexible.
Principal, KIZER & BENDER Speaking
I just received an interesting email from a consumer regarding this post:
“So many of the small artists I follow on Instagram are leaving Etsy because of the free shipping, it’s not Amazon.”
Professor, International Business, Guizhou University of Finance & Economics; Executive Director, Global Commerce Education
Prime aside, even on Amazon free shipping isn’t free.
The shopper is paying for shipping. You may not see it as a separate charge, but it is in the price.
That being said, free shipping is the ante to play the game.
CFO, Weisner Steel
Mr. Silverman is exaggerating, but certainly “free shipping” has become the norm. Whether or not this is good we can debate endlessly, but if two sellers of the same thing — say shirts — both offer free shipping, and both use the same common-carrier to provide it, the effect is neutral.
But ‘Etsy’ doesn’t sell commodities, it sells hand-crafted goods. The shipping costs very widely depending on the product, the sellers are often small vendors who don’t have sufficient volume to get shipping discounts, and — most importantly — the products have specific qualities on which they can be differentiated.
If ever there’s a place that can break free from the bondage of “free shipping” this would seem to be the one … go for it!
Contributing Editor, RetailWire; Founder and CEO, Vision First
Etsy isn’t Amazon and indie sellers aren’t global brands. I bet sellers would appreciate having the option to select their own free-shipping threshold amount.
Etsy already takes a percentage of each sale, a fee for each item listed and a shipping charge …
I understand the flat $35 for braid-based marketing, but wonder how standardization will impact seller attrition.
Director of Supply Chain, Circle Media Labs Inc
This is a move by Etsy which will continue to cause disruption with their seller community as it seems counterintuitive to the site’s original ethos. This feels like a step away from indie and a step towards corporate.
President, Protonik
Note what isn’t discussed here: Profitability. Have we forgotten that it’s the obligation of companies to care about profitability?
I don’t have clients with firsthand Etsy experience, but this seems like Etsy going out of its way to make investors happy at the expense of sellers on their site. And that’s the wrong way to look at it.
A company like Etsy can only have a strong relationship with investors by having a strong relationships with sellers. All other investor “wins” are purely short term.
The entire market needs to reset: Free shipping is not a viable solution in most cases and it creates far less economic and consumer power than companies are told.