Etsy is facing criticism from sellers for placing 75% of their earnings on hold for a period of 45 days.
According to the BBC, hundreds of small business owners received emails from the online marketplace, informing them about the implementation of its “reserve system”.
Ceramics seller Rachel Collyer told the BBC Etsy is withholding £899 of her funds, leaving her unable to purchase materials to maintain production.
In response, Etsy said payment reserves were used to “keep the marketplace safe” and cover any potential refunds.
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The retailer’s payment policy states the reasons for putting money on hold include a sudden increase in sales, a shop having only made its first sale recently, the shop committing a “policy violation” or “other risk factors”.
Some sellers told the BBC that two reserve periods were imposed on them in a row.
Dan, who sells made-to-order wood furniture on the site, told the BBC he had no idea why his money was being held.
“Etsy are holding around £7,000 of my money, leaving us to use credit cards and family loans to try and keep our business running and keep food on the table,” said the 44-year-old from Buckinghamshire.
His partner Sam said: “There is no ability to have the reserve lifted within the 90 days, you must see out the full period. It’s destroyed my business.”
Various sellers have spoken to the BBC regarding the matter, with many choosing to remain anonymous for fear of having their shops taken off the platform.
“If you challenge them or speak out, or don’t accept their terms and conditions, your account becomes disabled,” one independent UK seller told the BBC.
Although Etsy disputes this and says that it wouldn’t retaliate against a seller for voicing their opinion. It says it takes seller feedback very seriously.
Hundreds of affected Etsy sellers are planning a “strike”, organising on various online groups.
An Etsy spokesperson said that the vast majority of sellers receive their funds when they make a sale. They added that the reserve system was used by many online sellers.
However, Amazon‘s level or reserve is much lower, at around 3% for established sellers until any disputes are resolved.
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1 Comment. Leave new
Applying a reserve system across all sellers, at some token level (some platforms hold 3% or 5% to allow for disputes etc), and doing so with several months notice, might be excusable. But slapping a 75% retention(!), without notice, and without proper explanation, is appalling behaviour – the kind of desperate move a company makes when in trouble. ETSY invested heavily in buying a Brazilian company 2 years ago, with big promises of expanding throughout South America. That has failed and this month announced they were scrapping that plan after spending a fortune trying to make it work. They have ‘allowed’ it to be known that they have written off a sum measured in $billions – but haven’t disclosed the total loss and are not obliged to do so until after completion later this year.