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Etsy thinks raising fees will lure sellers away from eBay

It sounds backwards, but there's logic to it.
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Jackie Molloy/Bloomberg via Getty Images

Normally, a company taking a larger cut of your sales is a bad thing. Etsy, however, thinks differently. As part of a sweeping set of changes, the craft marketplace is raising the seller fee from 3.5 percent to 5 percent (which now includes shipping) on July 16th as part of an effort to "invest even more in bringing buyers to Etsy." If there's more revenue, the company argued, it could dramatically hike its advertising outlay (spending is jumping 40 percent in 2018 alone) and attract more buyers. The company has even teamed with NBC on a competitive reality show, Making It, that might reel in people who have never heard of Etsy before.

Simultaneously, it's introducing a $10 per month Etsy Plus subscription that gives you the option of a custom web domain, a tailored "featured items" section and discounted custom packaging. An Etsy Premium plan for multi-employee businesses is coming in 2019 at an yet-to-be-determined price, although you can safely assume it will be more expensive than Plus.

The company isn't shy about its ambitions. More users would improve Etsy's bottom line, of course, but the firm is also hoping to offer more of a challenge to Amazon's Handmade store and eBay -- it noted to Fast Company that its 5 percent cut is still far below Amazon's 15 percent and eBay's 10 percent. If crafters get a deluge of new buyers while still taking more money from each sale, they may be more likely to stay put. This might have an upshot if you're a potential customer, too -- you might be more likely to consider a homemade Etsy item (and possibly save some money in the process) instead of buying the usual mass-produced fare.

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