Etsy, the popular online marketplace known for its unique and handmade items, has recently come under fire for allegedly withholding payments from its sellers. The accusations, which have been widely reported in recent days, claim that Etsy has implemented a “reserve system” that holds back 75% of sellers’ earnings for a period of 45 days.
The controversy began when hundreds of small businesses received an email from Etsy notifying them about the implementation of this reserve system. Sellers were taken aback by the sudden change, with many expressing their frustration and concern over the impact on their livelihoods. One such seller, Rachel Collyer, a ceramics seller, revealed that Etsy was holding £899 of her money, leaving her unable to afford materials to continue production.
The reserve system has been described as a safety measure by Etsy, intended to cover potential refunds. However, the lack of transparency and communication regarding the system has left many sellers feeling frustrated and betrayed. Some sellers have even reported consecutive reserve periods being imposed on them, further exacerbating their financial strain.
The backlash against Etsy‘s actions has been significant, with sellers accusing the company of destroying their businesses. Many sellers rely on Etsy as their primary source of income, and the sudden withholding of funds has left them in precarious financial situations. In response to the situation, some sellers are planning a boycott or “strike”, organizing through various online groups.
Despite the outcry, Etsy maintains that the vast majority of sellers receive their funds when they make a sale. They also pointed out that the use of a reserve system is common among online sellers. However, it’s worth noting that other online marketplaces, such as Amazon, have much lower reserve levels, typically around 3% for established sellers until any disputes are resolved.
The situation has caught the attention of the Small Business Commissioner, Liz Barclay, who expressed concern over the number of complaints made against the US-based firm. She highlighted the fact that many small firms are owed several thousands of pounds, a situation she described as “heartbreaking”.