The Marketplace Boom   //   November 1, 2023

Etsy is pushing sellers to offer discounts earlier than ever this holiday season

Etsy sellers are weighing the pros and cons of offering discounts this holiday season.

For the holidays, Etsy is promoting a five-week cyber sale that started on October 23 and will continue all the way through November 29. Etsy is encouraging sellers to opt into the sale by offering 25% off or more at some point during the five-week long campaign; in exchange, they will be featured in a personalized deals hub. According to Etsy, the company is “doubling down on deals, earlier than ever” this year. This began in September when, for the first time, Etsy offered shoppers $5 off orders for 48 hours, which the company funded. While some sellers say the ability to participate in sales helps bring in more customers, others see it as a tactic that generates sales at the expense of eating into their margins. 

An Etsy spokesperson said, “This holiday season we’re making it even easier to discover the best deals offered by sellers in a personalized deals hub rolling out now only on the Etsy app.” These curated items will include listings from high-ranked shops. 

Jessica Ramirez, a senior research analyst at Jane Hali and Associates, wrote in a report that the five-week long sale encourages sellers to opt in for the chance to have their items featured. “As the holiday season approaches, Etsy has introduced programs to its sellers to help drive traffic and expand its purchase protection program,” Ramirez wrote. These include the new Share & Save program, which rewards sellers with cash back for converting sales through their own social media posts. 

For handmade jewelry shop owner Elew Mompittseh, Etsy-sponsored sales are useful for bringing in new customers, as the company has an array of resources to organize and market sales on behalf of independent sellers. “They [Etsy] have full teams of marketers who can do the math on a larger trend scale,” Mompittseh said. “That said, I find 25% a bit steep and prefer 20% for handcrafted listings.”

The option to opt in is also important for shops that sell handmade merchandise, because they can’t always support a large volume of sales. Mompittseh said she wasn’t happy with the $5 off sale, because “they shouldn’t be making business decisions for shops.” She added that sellers were still responsible for the 6.5% transaction fees.

Another seller, who asked to remain anonymous, said that the Etsy-organized sale “doesn’t affect my stores really.” This seller has built out Shopify storefronts to direct shoppers to — as those pages have higher conversion rates and can directly collect customer data. The Etsy storefronts are used to generate traffic and acquire new customers. 

Portland-based painter Dusty Ray said that testing the 25% off promo brought a few customers to his Etsy shop, but the figures weren’t much different compared to the typical sales he brings in through social posts. Instead, Ray will be running his annual winter sale of 15% off in the coming weeks. “That should boost my sales as it usually does,” he said, which is helped by increased holiday shopping traffic.

“Overall I think their promo is just another gimmick pulled because of sellers’ bad reaction to the fee hikes,” he said. The transaction fee increases, which Etsy implemented in 2022, meant sellers pay 6.5% on each sale compared to the previous 5%. 

Ray, who has over 550,00 followers across social media platforms, said pushing discounts may help sellers who rely on Etsy for marketing. “I get it for sellers who rely solely on the marketplace to sell,” he said. “But people like me, who mainly use it as a shopfront for an existing audience, could really care less.” 

As Etsy invests more into sales campaigns, sellers of various store sizes have to consider whether opting into the deep discounts is worth the temporary bump in sales. Mompittseh said getting into discounting can impact the smaller sellers who can’t always compete with big box stores during busy shopping seasons. There’s a balance, she said, “between offering sales and protecting the margins of handcraft sellers to be found.”