How to actually support small businesses on Etsy
With Christmas approaching and people starting to look for gifts, I thought it might be useful to let people know how to best support Etsy sellers, since we get a lot of sales this time of year! Etsy has a lot of policies that affect sellers which they don't really disclose to customers, and often there's a communication gap that can be damaging to sellers without customers intending them to. Hopefully this post helps more people avoid this kind of thing.
A while ago Etsy implemented the Star Seller program. When you go to an Etsy store, you can see badges at the top of the page, denoting if the seller has done well in three main categories:
- Speedy replies
- On time dispatch with tracking
- Good reviews
If you clear the bar for all three as a seller, you're a Star Seller. This is an important badge for sellers, which I'll get to in a bit. Etsy evaluates your stats monthly, and bases them on three months' worth of data:
Each has specific determining factors, which also advantage large operations like dropshippers over small businesses, but we'll get to that too:
As you can see, the criteria is really demanding. You have to respond to 95% of first messages (ie. the first time someone contacts you) within 24 hours or you lose your Star Seller status. This can be really damaging to a small store.
You also have to dispatch 95% of orders on time, ie. within the set timeline you've chosen for an item listed, and you have to give tracking info. This, by the way, is frustrating and disingenuous; I ship my product in envelopes because they're small and thin, but the mail service in my country doesn't offer tracking for envelopes. I'm not going to spend up to 3x as much on shipping just to have a tracking number (shipping would cost half the price of my product if I did), but if I don't include tracking info I don't get a Star Seller badge even if I ship all my orders on time. I get around this by writing "unavailable" in the field where tracking info goes, but this still poses a transparency issue to customers and rightly so. I end up compensating by issuing a lot of replacements for delayed orders, which I can recoup costs of through my mail service which is a lot of extra work and time.
You also must have an average of 4.8 star reviews or higher. There are no adjustments made for small stores, and this is a big one where dropshippers have an advantage.
As you can see in my stats here, I had 11 reviews in 3 months. That means if just one person gives me a 4 or 3 star review, I lose my Star Seller status for 3 months unless I get a ton more reviews quickly. A dropshipper who makes hundreds of sales a week won't be affected by one middling review. And you'd be surprised how often people who leave 3 or 4 star reviews actually meant to leave better ones but clicked the wrong button without noticing, or just don't understand how the system works.
Because Etsy doesn't explain this to customers. So people will leave a damaging review in perfectly good faith. The number of times I've gotten an "excellent product, would buy again!" review with 3 stars is astounding. I always message customers to ask what I could do better and explain the system, and the response is almost always that there was nothing wrong, they just usually don't give anything higher than 3 out of 5 stars unless the product radically improved their lives or was transformative (and to their credit, most customers change their reviews after this exchange but again, it takes time and effort).
3 stars is average, and what customers rate is their experience receiving and using a product. What Etsy uses these ratings to gauge, however, is whether a customer was satisfied dispatch timelines, craftsmanship, and if a product met the expectations set in the listing.
As an added bonus, Etsy hoses money off sellers by offering to advertise for them. The way this works is that if a seller opts in, Etsy will advertise their store in relevant searches on search engines like Google, and in exchange they take a percentage from any sales made from clicks on these links. And then some. Because if a customer clicked an advertising link once, then Etsy will keep taking that cut from any further purchases from that IP address. So if you click a Google link to an Etsy store and then purchase from that store, and then bookmark that store and go back six months later to get another item, Etsy will keep taking their advertising cut with each purchase you make.
Depending on whether or not you opt in to advertising, Etsy can take up to 30% of your earnings in fees alone. That means if I sell, say, bookmarks for $10, I only get to keep $7. Hopefully that covers my operating costs, but if I charge more for an item that takes me a lot of time and work to make, I have to factor in that Etsy offers free shipping on orders over $35 whether or not sellers agree to give it. So if I sell a product that costs $35, not only do I only get to keep $24.50 of what I was paid after Etsy takes fees, I also have to cover the cost of shipping. And if I'm selling a product for that much, it's likely shipping will cost $5-10, so now my profit is down to $15-20 for an item I sold for $35.
Why is the Star Seller status so important? Because it's the main way the average Etsy store gets onto the algorithm and has visibility, and without visibility you don't have sales. Drop shippers can afford to purchase advertising space, so they'll always show up in searches. They can also afford to have a variety of products, high-end professional photos of their products, and because they have a lot of sales, the occasional bad review or delayed shipment won't cause a blip on their rating system. In comparison, the average Etsy store who makes, let's say, 50 sales a month (and that's a small store that's doing well), is going to feel the impact of a handful of 4 star reviews and one day of delayed orders/message replies due to a family emergency. If you contact Etsy customer service to explain your legitimate reason for having a delay, they're unable to intervene. They can't give you back your Star Seller status, which means you're dropped from the algorithm for the three months it takes for those delays to stop counting towards your averages, and you then have to work your way back up into the algorithm once that time passes, which is even harder to do. (And while you can put up an auto-reply, there's a time limit on how long it'll be up, which is usually 24-48 hours. Which may not work if you have a personal emergency that the average small business would understand and give you time off for in ways Etsy refuses to accommodate.)