Etsy To Raise Seller Transaction Fees

Online crafts marketplace Etsy saw its shares surge on Thursday (June 14) after revising its seller transaction fee.

According to CNBC, the company’s stock soared 26 percent by the end of trading, after rising as much as 35 percent to $44.78 earlier in the day.

That same day, Etsy announced that starting on July 16, the transaction fee charged when a seller makes a sale will change from 3.5 percent to 5 percent, which will also apply to the cost of shipping. The company explained that the revised fee structure will enable it to make further investments in marketing to attract buyers, enhance customer support and drive product innovation.

“Our revised fee structure will allow us to make more meaningful investments on behalf of our sellers while remaining what we believe is the best value for entrepreneurs looking to start, manage and grow a creative business,” said Rachel Glaser, Etsy’s chief financial officer. “We plan to increase our 2017 direct marketing spend by at least 40 percent in 2018, revamp our Etsy community platforms and execute against an exciting product roadmap. We believe all of this will help drive near-term growth and increase buyer lifetime value.”

As a result of this new fee structure, Etsy revised its 2018 financial guidance, which included GMS growth of 16 percent to 19 percent (versus prior guidance of 16-18 percent), revenue growth of 32 percent to 34 percent (versus May 2018 prior guidance of 22-24 percent), and adjusted EBITDA margin of 21 percent to 23 percent (no change from prior guidance).

These adjustments reflect Etsy’s other changes, including new subscription packages, increased marketing and enhanced tools and shipping experience.

“Empowering creative entrepreneurs is at the heart of Etsy’s mission to keep commerce human,” commented Josh Silverman, Etsy, Inc. CEO. “Our two million active sellers have individual business goals and aspirations, and we want to support them no matter where they are on their journey. By listening to the needs of our sellers, we designed our new subscription packages with a combination of tools to help them succeed at each phase of their business lifecycle.”