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Etsy taking bigger cut from sellers on the online craft marketplace

Etsy will soon be taking a larger cut of every sale. The popular Brooklyn-based online marketplace for homemade crafts on Thursday said the transaction fee charged when a person or business makes a sale will rise to 5 percent from 3.5 percent, starting July 16. The increase, the first-ever by Etsy, will also apply to shipping costs.

In announcing the revised fee structure, Etsy said the increased fees would be offset by increased spending on marketing, customer service and digital tools for sellers. 

"Our revised fee structure will allow us to make more meaningful investments on behalf of our sellers while remaining what we believe is the best value for entrepreneurs looking to start, manage and grow a creative business, Rachel Glaser, Etsy's chief financial officer, said in a statement

Some Etsy sellers voiced their discontent with the higher fees on an Etsy seller forum, with one poster remarking that the development was "rotting Etsy away to the core."

Etsy Studio, a craft supply market 04:41

The 13-year-old company, which has 2 million active sellers and almost 35 million active buyers, expects an immediate boost to its revenue. Etsy now projects 2018 revenue growth of between 32 percent and 34 percent. It previously had forecast 22 percent to 24 percent growth.

Etsy's stock surged to a record after the announcement, at $42.71 on Thursday afternoon. Shares are up 29 percent so far this year.

Etsy has kept its seller fees lower than those of eBay or Amazon's homemade units, with that still the case after Thursday's move.

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