If you want a quirky, can’t-find-it-at-the-mall kind of gift, you go to Etsy. Etsy is the go-to marketplace where artisans and craftspeople would sell their wares. However, Etsy has recently jacked up their transaction fees, to the dismay of their clients as well as anyone who shops there.
Going from 3.5% to 5% per transaction – with no increase in benefits to clients – demonstrates just how centralized institutions like Etsy may not always benefit their clients. Etsy has a corner on the market, and it’s taking advantage of the situation to drive profits. Short of increasing their prices to compensate, which then hurts the consumer, sellers on Etsy have no choice but to take the financial hit. While a jump from 3.5% to 5% per transaction may not seem significant, it adds up in a most unwelcome way.
Brian Hoffman, founder of the decentralized marketplace OpenBazaar – where transactions are handled in cryptocurrency – says that this move by Etsy is not possible at OpenBazaar.
“A marketplace like OpenBazaar can never do that overnight,” Hoffman said recently at Yahoo Finance’s All Markets Summit: Crypto in San Francisco. “The protocol is completely free, you don’t pay for any part of it except for the transaction fees associated with cryptocurrency. And you have a choice of cryptocurrencies, so if fees go up on Bitcoin, you can switch over and accept something else.”
The question is, will Etsy users switch over to OpenBazaar? OpenBazaar does not permit buyers to pay in fiat currencies. According to Hoffman, this is “out of principle.” However, even though Hoffman considers this an organic way to get into the crypto market (rather than going through an exchange) it may not appeal to people who resist the crypto trend.
“There’s a garage-sale feel to it… I think the same type of people that use Etsy are willing to try a new platform, and if they have something very unique to offer, that people are willing to part with their cryptocurrency for, that’s the target audience,” says Hoffman.
Etsy’s sellers are not happy with Etsy’s move. Many say that this fee hike serve as the catalyst to set up another shop elsewhere and potentially move all of their business over. As one Reddit user put it, “This is what happens when you incorporate and have shareholders to please. Etsy has now become all about its bottom line and hopefully a lot of other sellers realize it isn’t worth the premiums.”
The only reservations seem to come from sellers who are worried whether a crypto-only shopping platform would be detrimental to their business, since cryptocurrency is not yet widely accepted or understood. In other Reddit threads, some users complain that OpenBazaar isn’t fully functional yet. Still, with Etsy’s move, most seem to be willing to give OpenBazaar a try.
How, and whether, this will affect Etsy’s position remains to be seen but it’s good news for artists and craftspeople whose margins are low, and who want to cut out the middleman.