Etsy is still trying to assuage sellers’ concerns months after the newest ad product launch.
On Wednesday, the company published a blog post to address three “myths” surrounding offsite ads to assuage sellers’ concerns.
Etsy has seen an explosion of growth as sales of masks soared due to the pandemic. In second quarter earnings, the company reported $346 million in mask sales alone. It also said that habitual buyers, customers who make six or more purchases a year, are up 64% year over year.
“The key driver will be how many new buyers will be retained and continue to come back,” says RBC analyst Shweta Khajuria. “And how many will they continue to attract going forwards?”
Offsite ads places ads of sellers’ products on third-party sites such as Google, Facebook, Instagram, and Pinterest. While Etsy fronts the cost of the ad campaigns, sellers must pay a fee if they get a sale that resulted from an ad click. Sellers were stunned to find that the ads, and the fees, would be mandatory.
The ad fees had two tiers. If a seller made less than $10,000 on Etsy in the last twelve months, they are charged a 15% fee for an order that came from an ad click. If they made more than $10,000, that fee decreases to 12%. A sale can be attributed to a click up to 30 days after.
The goal is to retain consumers who came to the site for a mask. This has led to a surge in Etsy’s marketing strategies in TV and across the web as it entices mask-buyers to stick around for a pair of earrings, a new print, or a coffee mug as many consumers turn to small purchases to spruce up their homes.
In May, Etsy allowed sellers making less than $10,000 to opt out of the offsite ads program. The company said that less than 2% of sellers had opted out as of the end of the second quarter.
Caitlin Coughlin, owner of WaywardPlaids, did just that. “I took most of my higher priced stuff down so I wouldn’t be forced to hit the opt-in.”
Etsy sellers are already charged other fees to be on the platform, including listing fees (.20 per listing), shipping fees (5% of the shipping costs), and payment processing fees (3%+.25 for the U.S.).
Etsy shares closed at $131.63 on Friday, up over 240% from its lowest point at $38.13 on March 18th.