Sellers boycott Etsy UK over hike in sales income held back on reserve | E-commerce

Etsy UK sellers have boycotted the online craft marketplace after it increased the amount of sales income it holds back from some vendors to ensure items are delivered as promised.

The UK’s small business commissioner, Liz Barclay, said she had contacted the site about a fortnight ago after an increase in complaints by sellers who had suddenly had as much as 75% of their takings held back for at least 45 days.

Etsy’s fees, which include a sales commission and advertising costs, are taken out of the remaining 25%, meaning many small businesses have little cashflow left to pay themselves or suppliers.

Barclay said one seller who had got in touch was receiving only 60p for every £43.99 item sold, making it difficult for them to continue trading.

Anger at the changes has led to calls to boycott the site, with vendors putting their Etsy page on “holiday mode” or switching to rival platforms.

A furniture seller who posted on the Facebook group Etsy Reserve Strike said they had had funds held back with “no warning, no explanation and no possibility of them engaging in any dialogue about it. They’ve kept several thousand pounds of my money, so I’ve had to borrow money to keep going. It’s shockingly bad.”

Alternative handmade goods websites, such as The British Craft House and Folksy, said they had experienced an increase in new signups as sellers looked for another way to advertise their wares. Folksy said signups had increased by 289% overnight after an article about the problems with Etsy appeared on the BBC website, which first reported the row.

However, these online marketplaces are relative minnows compared with Etsy, making it harder for sellers to make enough sales.

Alex Tutusaus, who sells 3D-printed replicas, said Etsy had long applied reserve measures to new accounts but from about the end of May had begun applying them much more widely without explanation.

“The main issue here is Etsy’s lack of total transparency. An AI-driven ‘chat support’ in the best case forwards your inquiry to a ‘second level’ support team that just pastes canned responses over and over with things that most of the time do not apply to most of the sellers being affected,” Tutusaus said, adding that he was planning to start selling to customers directly through Shopify.

Barclay said Etsy had promised to set up a new contact line for struggling sellers in the UK but that it was not clear how long this would take. She said she had no legal powers to force Etsy to take action as it was not a UK business and sellers had signed contracts with the US-based firm.

“More and more people are in danger of not being able to carry on trading, and for a lot of people this is their main source of income,” she said. “A lot of small businesses are run by women, or ethnic or neurodiverse minorities or those with disabilities. We are concerned that sections of the community will be particularly badly hit by this.

“I’m desperately worried that while Etsy is deciding how to address this, there will be businesses that go bust and people’s livelihoods destroyed.”

Etsy has told sellers it can apply a reserve system to their account if they are a new shop, if there is a sharp increase in orders or refunds, or if orders are consistently missing tracking information or not shipped on time. However, some star sellers who always track their shipments have still been hit with a reserve.

Etsy said that on average, funds held on reserve from most orders became available within two weeks of the order date, and fewer than 2% of active sellers had a reserve on their account at present. It added that for 70% of those sellers the funds on hold were worth less than $70 (£55).

A spokesperson said: “Etsy has long provided sellers with a generous payment schedule – the vast majority of sellers receive their funds when they make a sale rather than having to wait until the buyer receives the item, like they might with other selling platforms.

“In some cases, we will delay a portion of funds from a sale until we can confirm that the order has shipped. This enables us to continue paying sellers in a timely manner while taking the steps necessary to help keep our marketplace safe and protect our customers when there are unexpected issues with their order.

“As always, we will continue to iterate and improve upon our programmes, including payment reserves, in order to support our sellers.”