Dan said Etsy was holding £7,000 of his money
By Faarea Masud
Business reporter
Online marketplace Etsy has said it will change its policy after sellers complained of money being held.
The U-turn comes after the BBC reported that some sellers had 75% of their money frozen for 45 days.
Etsy said it was “substantially decreasing” the amount of money it would put on hold but did not state the new rate or time frame.
Sellers like Dan, who said Etsy had £7,000 of his takings on hold, said the announcement “lacked detail”.
Etsy’s tension with sellers has sparked boycott calls and raised pressure on the company, which on Wednesday reported a decline in profits.In the months April to June, its profits fell to $61.9m, down by 15% compared with the same time last year.
It also forecast lower revenue than expected in the next three months.
Etsy, which owns fashion marketplace app Depop, also said it saw a “year-on-year decline” in its growth in the UK.
Its share price fell more than 5% in trading after the stock markets in the US closed.
Small business commissioner Liz Barclay told the BBC that sellers were “very disappointed” that the statement from Etsy about its treatment of seller funds was unclear.
“I have asked Etsy to explain what we tell sellers about the level of the reduction in reserves they might expect and when this will happen,” she said.
On Monday, the BBC reported that hundreds of Etsy sellers had received an email from the website notifying them it was actioning its “reserve system”.
Etsy told the BBC payment reserves were used to “keep the marketplace safe” and cover any potential refunds.
Dan, who sold made-to-order wood furniture told the BBC: “Etsy are holding around £7,000 of my money, leaving us to use credit cards and family loans to try and keep our business running and keep food on the table.”
Ceramics seller Rachel Collyer said Etsy was holding £899 of her money, which meant she cannot afford to buy materials to keep producing.
‘Pain points’
On Wednesday, in an update issued to sellers from head of payment policy Chirag Patel, Etsy said it was addressing the “pain points” of the reserve system for sellers.
Part of the changes, the company said, include “improving communications” to new sellers who are in reserve.
Ms Barclay said she had asked Etsy if sellers would have a direct contact for referring their complaints regarding the reserve.
“We are getting very anxious about the possibility that while we wait for resolution of these issues talented and crucial small and micro businesses are going to the wall,” Ms Barclay told the BBC.
Minister for Enterprise, Markets and Small Businesses Kevin Hollinrake wrote to Etsy’s chief executive Josh Silverman on Wednesday, asking for the company to address the issue after a “rising number of enquires and complaints” from sellers.
“It is critical that Etsy’s approach does not jeopardise the livelihood of reputable and otherwise viable small businesses,” Mr Hollinrake wrote in a letter seen by the BBC.
Furniture-maker Dan said he was “sceptical” that the changes would be implemented and that the notice from Etsy “lacked detail”.
“I don’t believe a word of it,” he said.
What is Etsy and who owns it?
Etsy is an online marketplace that allows independent sellers to set up their own shop. It specialises in bespoke items, handicrafts or things not usually available in High Street shops.
Etsy Inc. is a US-based company which trades its shares on the NASDAQ stock exchange in New York, where it listed its stock in 2015. Etsy’s shares currently trading at $99 each – a far cry from an all time high of $294 during the Covid pandemic in 2021.
Its biggest shareholders are major financial institutions such as Vanguard Group, BlackRock and JP Morgan.
The company is led by chief executive Josh Silverman who has worked at an eclectic mix of businesses such as online auction site eBay, the internet chat firm Skype and American Express. He has been chief executive since 2017.
It was originally founded in 2005 by Rob Kalin, Chris Maguire, Haim Schoppik and Jared Tarbell who started the business from Mr Kalin’s Brooklyn apartment. None of them remain with the firm.
A growing number of people were joining social media groups to discuss a strike or boycott of Etsy. This would entail sellers putting their store on holiday mode and effectively stopping people from buying.
On Wednesday, the Facebook group Etsy Reserve Strike had over 1,100 members – an increase from around 800 members in three days.
On Reddit, a thread known as a sub-Reddit, groups have been set up called r/EtsyStrike and r/IndieSellersGuild. The online group Not on Amazon has also become a place where Etsy sellers are airing their complaints.
It is not clear how many people in these social media groups are sellers and how many of them would join a strike.
But with just under a million users in the UK, a boycott could reduce the amount of commission and fees which Etsy received from each sale.
Etsy told the BBC it had six million sellers worldwide and that only 2% of those active had reserves on their accounts.
The recent change in its reserve system comes after the company started offering loans to sellers via a third party provider. One seller who was offered the loan told the BBC she was struggling due to her money being held in reserve “without explanation” and was “offended” that the same company was offering her a loan to build up her company.
