10 ms·

Etsy accused of 'destroying' sellers by withholding money

64 points by aligray 3y ago

rightbyte 3y ago
This is the problem with all these middlemen platforms. If you base your business around them you are at their mercy.
- A4ET8a8uTh0 3y ago
  Agreed. I actually thought about it a lot lately mostly because I occasionally sell stuff on Ebay and the fees make me extra annoyed each time. Running a big enough market itself is a difficult task ( and if you want to sell in the entire US, this is effectively what you do ). Add to this taxes, refunds, fraud mitigation and all of a sudden you realize it is a big ask. Still, I keep thinking about it, because I am sure it can be done in a way that does not make me want to start a new online marketplace each time..
- derbOac 3y ago
  I agree with you but also feel there should be enough competition in these services that a vendor can switch without undue cost if they feel wronged. I sort of feel as if we're collectively deluding ourselves about the extent and number of monopolies in our current economy.
  - rightbyte 3y ago
    I think Etsy brings in the customers too. It is like a YouTube channel, right? Etsy have control over the consumer relations you build up. I.e.much more screwing possibility than say Shopify or PayPal.
- lockhouse 3y ago
  I agree with you to a point, but what’s the alternative? Running your own storefront online is a huge undertaking, even more so if you want to accept international orders. Processing payments securely while also properly accounting for things like taxes, customs, and other laws is a huge undertaking. This is just not something that would be realistic for most of the people on sites like Etsy to implement properly.
  - arp242 3y ago
    Ideally there should be a few storefronts you can viably choose from as a provider of goods or services. For example, I can walk to a Tesco, Lidl, Aldi, SuperValu, and Spar from where I live, there are a bunch of clothing shops relatively close, phone shops, off-licenses, computer shops, etc. etc. And all that in a town of ~25,000 people. It's kind of unusual that for a lot of online stuff there's so little choice, especially from the seller's perspective: it's "Etsy or bust" (or "Amazon or bust", "YouTube or bust", "Android or bust", etc.)
- JohnFen 3y ago
  Indeed. I view the risk as being unacceptable. If I had the choice of having to use these services or not go into business, I'd certainly opt for not going into business. Other people's risk tolerances are different, of course, but I really hope everyone that does business with these companies understands that they are taking risk in doing so.
- pengaru 3y ago
  Unless you're doing strictly cash transactions or bartering, there's always a middle-man of some kind who can create friction at will. https://www.forbes.com/sites/dariosabaghi/2023/07/27/mastercard-cracks-down-on-marijuana-transactions-on-its-debit-cards/ https://www.forbes.com/sites/dariosabaghi/2023/07/27/masterc...
custom-pros 3y ago
Adyen provides payment services for Etsy, and it is highly likely that Adyen charges for storing the deposit.
- NoZebra120vClip 3y ago
  > Etsy partners with Worldpay, PayPal, Adyen, and other licensed payment providers to facilitate card payments and other payments and the disbursement of funds to sellers. The provider and processing time for your payment will vary based on the country in which you're located. Adyen is a Dutch bank of some sort. PayPal, however, is definitely not a bank, and so the rules around their storage of funds are more obscure.
justinclift 3y ago
> Etsy told her it "isn't able to give... [a] specific reason" Sounds like it's probably some newly implemented "black box" (either AI or external vendor) solution that can't be probed or debugged. :(
- MertsA 3y ago
  That's pretty standard for any sort of fraud prevention. You never tell people what triggered it because when it's not a false positive you're telling scammers what to avoid next time.
  - justinclift 3y ago
    Yeah, that gets repeated a lot as if it's acceptable. Pity about the whole "destroys legit businesses" result that entails. :( Because who needs customers right? /s
  - _aavaa_ 3y ago
    Ahh yes, the old security through obscurity.
    - NoZebra120vClip 3y ago
      No. The security in fraud protection (or any detective control) is in the thresholds and triggers being activated and protecting the system. Protecting the values of those controls is common sense. This is on a need-to-know basis. Users don't need to know. If you advertise that your system will permit 9,999 transactions per minute, then every client will calibrate to max out at 9,999, malicious or not. Then, you adjust that up or down, and not everyone follows suit. Whoops!
      - 6510 3y ago
        What fraud? The dictionary says: "wrongful or criminal deception intended to result in financial or personal gain." Accusing people of fraud for personal gain seems like fraud to me. If it is beneficial for you to not disclose how the fraud works it seems we are talking about both deception and a false accusation - for personal gain? aka fraud?
sleepytimetea 3y ago
Would Shopify custom shopfronts be the alternative to using Etsy ? Will custom shopfronts be searchable via Google or Pinterest - how do they submit them for indexing ?
- LanternLight83 3y ago
  Maybe something like https://artisans.coop https://artisans.coop will be able to take off.
- Nmi2osv7 3y ago
  not "the" alternative but yes they are competitors
- pcdoodle 3y ago
  Can confirm, shopify will rank in searches but typically if you also sell on these other platforms, the majority of the traffic goes to them. Recently lost amazon due to hoop jumping lockout, sales down on a certain product 80% but that's better than losing 100%. My main complaint is amazon won't let you sell your product cheaper on your own website.
- arp242 3y ago
  The big advantage of a platform like Etsy is just discoverability: it's like walking into a store and browsing to see what they have. Everything I bought from Etsy was by "browsing" like this. It's the same as YouTube in this regard. Sure, you can set up "https://sleepytimetea.video https://sleepytimetea.video" and start posting videos, but attracting an audience will be so much harder, and it was never easy in the first place. This kind of thing only really works for people who already have an audience.
SenAnder 3y ago
Such things will always happen when the difference in power is too great. Either organize (politically, economically, or both), or suffer. Right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must.
reneberlin 3y ago
And what does that last sentence mean? "The BBC understands that a representative of Etsy has met with UK government officials."
- mst 3y ago
  It almost certainly means that (some part of) the government delivered a polite but mildly menacing "what the fuck?" message and Etsy sent somebody with a suitably fancy sounding title over to reassure them.
villgax 3y ago
Stripe is of a similar trajectory
handmadeta 3y ago
My fiancee has a handmade women's and children's cloth business here in Germany where I help out with IT, software, customer support and back office. We are affected by this as Etsy is currently holding about 4000 of our Euros. I am glad we are not totally dependent on Etsy (and on this business) because otherwise it might well wreck us financially. I would say that our account is a good citizen. We have been on Etsy for two years fullfilling over 1200 orders and garnering a 5 star ratings from hundreds of reviews. In all the time we operated we had a single, unjustified case against us that was quickly withdrawn by the counterparty. Not a single Etsy order was lost during shipping, and we have managed to maintain a positive account balance without any issues related to fees or refunds. Our return rate is also below the industry average for our niche. Now, we are not perfect. Often we run over the promised delivery date by a few days simply because we get swamped with orders. We also don't ship single items with tracking. Rather we send it as a German Post "Big Letter" which is quite reliable and has the benefit that people can receive it in their mailboxes and don't have to sign for it. This works quite well and is "the way" that we handmade / second hand people usually send around stuff. This lack of tracking is, I think, the crux of this whole matter. Etsy really wants sellers to add tracking and it states in the "reserve" that you can get your money at once if you just add valid tracking. To me this leaves a bad taste. I really resent being "nudged" by platforms like this especially if there isn't even a problem. The fact that they can simply change the rules out from under you is also disconcerting. The first time we noticed that this was even happening was when they already had withheld 2000€ (1). The worst thing about it is that we raised a support request for this, for which you have to jump through really stupid hoops, and have not even heard back from them in weeks. Not even a boilerplate response. This is really a scary prospect, to have your income be at the mercy of literally a faceless entity that'll happily take your fees but CBA to connect you with a real person when you run into trouble. I also want to mention that I think a "reserve" is generally reasonable. But it's not really reasonable to hold 75% over 45 days. I think if it was 25% for 15 days from shipping then, generally, seller would be able to handle it financially. (1) I am necessarily not blaming Etsy here, we are all just very busy and I just expect for this stuff to keep working like it did.

64 points by aligray 3y ago

rightbyte 3y ago

This is the problem with all these middlemen platforms. If you base your business around them you are at their mercy.

A4ET8a8uTh0 3y ago
Agreed. I actually thought about it a lot lately mostly because I occasionally sell stuff on Ebay and the fees make me extra annoyed each time. Running a big enough market itself is a difficult task ( and if you want to sell in the entire US, this is effectively what you do ). Add to this taxes, refunds, fraud mitigation and all of a sudden you realize it is a big ask. Still, I keep thinking about it, because I am sure it can be done in a way that does not make me want to start a new online marketplace each time..
derbOac 3y ago
I agree with you but also feel there should be enough competition in these services that a vendor can switch without undue cost if they feel wronged. I sort of feel as if we're collectively deluding ourselves about the extent and number of monopolies in our current economy.
- rightbyte 3y ago
  I think Etsy brings in the customers too. It is like a YouTube channel, right? Etsy have control over the consumer relations you build up. I.e.much more screwing possibility than say Shopify or PayPal.
lockhouse 3y ago
I agree with you to a point, but what’s the alternative? Running your own storefront online is a huge undertaking, even more so if you want to accept international orders. Processing payments securely while also properly accounting for things like taxes, customs, and other laws is a huge undertaking. This is just not something that would be realistic for most of the people on sites like Etsy to implement properly.
- arp242 3y ago
  Ideally there should be a few storefronts you can viably choose from as a provider of goods or services. For example, I can walk to a Tesco, Lidl, Aldi, SuperValu, and Spar from where I live, there are a bunch of clothing shops relatively close, phone shops, off-licenses, computer shops, etc. etc. And all that in a town of ~25,000 people. It's kind of unusual that for a lot of online stuff there's so little choice, especially from the seller's perspective: it's "Etsy or bust" (or "Amazon or bust", "YouTube or bust", "Android or bust", etc.)
JohnFen 3y ago
Indeed. I view the risk as being unacceptable. If I had the choice of having to use these services or not go into business, I'd certainly opt for not going into business. Other people's risk tolerances are different, of course, but I really hope everyone that does business with these companies understands that they are taking risk in doing so.
pengaru 3y ago
Unless you're doing strictly cash transactions or bartering, there's always a middle-man of some kind who can create friction at will. https://www.forbes.com/sites/dariosabaghi/2023/07/27/mastercard-cracks-down-on-marijuana-transactions-on-its-debit-cards/ https://www.forbes.com/sites/dariosabaghi/2023/07/27/masterc...

custom-pros 3y ago

Adyen provides payment services for Etsy, and it is highly likely that Adyen charges for storing the deposit.

NoZebra120vClip 3y ago
> Etsy partners with Worldpay, PayPal, Adyen, and other licensed payment providers to facilitate card payments and other payments and the disbursement of funds to sellers. The provider and processing time for your payment will vary based on the country in which you're located. Adyen is a Dutch bank of some sort. PayPal, however, is definitely not a bank, and so the rules around their storage of funds are more obscure.

justinclift 3y ago

> Etsy told her it "isn't able to give... [a] specific reason" Sounds like it's probably some newly implemented "black box" (either AI or external vendor) solution that can't be probed or debugged. :(

MertsA 3y ago
That's pretty standard for any sort of fraud prevention. You never tell people what triggered it because when it's not a false positive you're telling scammers what to avoid next time.
- justinclift 3y ago
  Yeah, that gets repeated a lot as if it's acceptable. Pity about the whole "destroys legit businesses" result that entails. :( Because who needs customers right? /s
- _aavaa_ 3y ago
  Ahh yes, the old security through obscurity.
  - NoZebra120vClip 3y ago
    No. The security in fraud protection (or any detective control) is in the thresholds and triggers being activated and protecting the system. Protecting the values of those controls is common sense. This is on a need-to-know basis. Users don't need to know. If you advertise that your system will permit 9,999 transactions per minute, then every client will calibrate to max out at 9,999, malicious or not. Then, you adjust that up or down, and not everyone follows suit. Whoops!
    - 6510 3y ago
      What fraud? The dictionary says: "wrongful or criminal deception intended to result in financial or personal gain." Accusing people of fraud for personal gain seems like fraud to me. If it is beneficial for you to not disclose how the fraud works it seems we are talking about both deception and a false accusation - for personal gain? aka fraud?

sleepytimetea 3y ago

Would Shopify custom shopfronts be the alternative to using Etsy ? Will custom shopfronts be searchable via Google or Pinterest - how do they submit them for indexing ?

LanternLight83 3y ago
Maybe something like https://artisans.coop https://artisans.coop will be able to take off.
Nmi2osv7 3y ago
not "the" alternative but yes they are competitors
pcdoodle 3y ago
Can confirm, shopify will rank in searches but typically if you also sell on these other platforms, the majority of the traffic goes to them. Recently lost amazon due to hoop jumping lockout, sales down on a certain product 80% but that's better than losing 100%. My main complaint is amazon won't let you sell your product cheaper on your own website.
arp242 3y ago
The big advantage of a platform like Etsy is just discoverability: it's like walking into a store and browsing to see what they have. Everything I bought from Etsy was by "browsing" like this. It's the same as YouTube in this regard. Sure, you can set up "https://sleepytimetea.video https://sleepytimetea.video" and start posting videos, but attracting an audience will be so much harder, and it was never easy in the first place. This kind of thing only really works for people who already have an audience.

SenAnder 3y ago

Such things will always happen when the difference in power is too great. Either organize (politically, economically, or both), or suffer. Right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must.

reneberlin 3y ago

And what does that last sentence mean? "The BBC understands that a representative of Etsy has met with UK government officials."

mst 3y ago
It almost certainly means that (some part of) the government delivered a polite but mildly menacing "what the fuck?" message and Etsy sent somebody with a suitably fancy sounding title over to reassure them.

villgax 3y ago

Stripe is of a similar trajectory

handmadeta 3y ago

My fiancee has a handmade women's and children's cloth business here in Germany where I help out with IT, software, customer support and back office. We are affected by this as Etsy is currently holding about 4000 of our Euros. I am glad we are not totally dependent on Etsy (and on this business) because otherwise it might well wreck us financially. I would say that our account is a good citizen. We have been on Etsy for two years fullfilling over 1200 orders and garnering a 5 star ratings from hundreds of reviews. In all the time we operated we had a single, unjustified case against us that was quickly withdrawn by the counterparty. Not a single Etsy order was lost during shipping, and we have managed to maintain a positive account balance without any issues related to fees or refunds. Our return rate is also below the industry average for our niche. Now, we are not perfect. Often we run over the promised delivery date by a few days simply because we get swamped with orders. We also don't ship single items with tracking. Rather we send it as a German Post "Big Letter" which is quite reliable and has the benefit that people can receive it in their mailboxes and don't have to sign for it. This works quite well and is "the way" that we handmade / second hand people usually send around stuff. This lack of tracking is, I think, the crux of this whole matter. Etsy really wants sellers to add tracking and it states in the "reserve" that you can get your money at once if you just add valid tracking. To me this leaves a bad taste. I really resent being "nudged" by platforms like this especially if there isn't even a problem. The fact that they can simply change the rules out from under you is also disconcerting. The first time we noticed that this was even happening was when they already had withheld 2000€ (1). The worst thing about it is that we raised a support request for this, for which you have to jump through really stupid hoops, and have not even heard back from them in weeks. Not even a boilerplate response. This is really a scary prospect, to have your income be at the mercy of literally a faceless entity that'll happily take your fees but CBA to connect you with a real person when you run into trouble. I also want to mention that I think a "reserve" is generally reasonable. But it's not really reasonable to hold 75% over 45 days. I think if it was 25% for 15 days from shipping then, generally, seller would be able to handle it financially. (1) I am necessarily not blaming Etsy here, we are all just very busy and I just expect for this stuff to keep working like it did.