Etsy is running a randomized test that caps shipping charges on some qualifying US orders that use calculated shipping, with Etsy paying the difference so that sellers still receive their full rate.
For example, on a $10 calculated rate with a $7.99 cap, the buyer pays $7.99 and Etsy pays the remaining $2.01, which appears in Order Details as “Etsy-funded shipping.” Etsy hasn’t said whether $7.99 is the actual cap it’s testing or if it’s just a number for the example it provided in the announcement, or whether its fees on shipping revenue apply to the full rate or the lower amount buyers pay.
Either way, Etsy won’t stop trying to subsidize shipping.
In August 2024, the company began covering shipping up to $20 per eligible item as part of its Etsy Insider membership. At the time, I criticized them heavily for the move:
“Are they aware that Amazon effectively loses money by offering free shipping with its Prime Membership? And we’re talking about Amazon here — meaning they do things to scale like no other. Plus they run their own warehouses and fulfillment network. Are we about to see brightly colored Etsy trucks delivering to neighborhoods nationwide this year? Of course not!”
I predicted that the shipping subsidization would be a “money pit” — which turned out to be exactly what it was. About a year later, Etsy cut the perk to $6 after current CEO Kruti Patel Goyal, then its chief growth officer, said the original version “didn’t provide scalable economics.” A calculator and a spreadsheet could’ve told them that!
Etsy can’t seem to figure out that they’re not Amazon and don’t own a fulfillment network. Go partner with Stord if you want to give sellers an Amazon-style fulfillment option. Quit trying to recreate it on your own by subsidizing shipping.
