Etsy-Owned Depop Testing Buyer Fees, Payouts Delayed As Revenue Pressure Builds

As Etsy continues to face pressure to make House of Brands strategy pay off, are they turning to new fees and payment shenanigans to boost revenue at Depop?

Sellers report their payments are being delayed more and more over the last few months, with little help or explanation from Depop support.

Other sellers have taken to Reddit, expressing the same frustration and looking for answers in the face of receiving none from Depop directly.

I don't know what has been going on lately but Depop has been acting up and they keep pushing back my payout date and I can't even post more listings? What do I do?

My payout was suppose to be today and it got pushed out to tomorrow :/ been doing this since last wednesday

Reporters at TechCrunch reached out to Depop about the ongoing payment delays and were initially told the company’s support team has had a longer ticket queue than usual, but they did not know why sellers were having trouble getting paid.

After further requests for comment, Depop finally told TechCrunch that it had uncovered an issue that caused these delayed payments.

We’re really sorry that some sellers have been experiencing payout delays over the last week. We identified an issue in our automated payouts system that has now been fixed, and all pending payments have been sent out to affected sellers.

These should be received within the next few days, depending on bank processing times.

That story will likely sound all too familiar to Etsy sellers too as payment delays and holds have becomes an increasingly reality either due to similar "technical issues", intentional changes to the payment reserve policy, or impacts from larger financial system issues like the collapse of Silicon Valley Bank last year.

TechCrunch also revealed that Depop appears to have been testing a 5% buyers service fee - ostensibly added on to "“upgrade features, improve security, and optimize performance.”

This fee would be in addition to the 10% commission fee Depop already takes on the selling side of the transaction plus the ~3% payment processing fees and/or any additional advertising fees, like the 8% fee for Depop Boost.

The buyers service fee was disclosed in a page on Depop's Zendesk help site but that page has since been made private and TechCrunch says a Depop spokesperson suggested it might be a test being applied unequally across the app, meaning that some buyers may have been charged the extra fee while others were not. 

Luckily, YouTuber Just Old Things was able to capture a screenshot of the page before it disappeared.

The help page explained the fee as follows:

The buyer service fee is a small charge applied to the purchases for buyers whose shipping address is in the UK and US and making a purchase using Stripe via the Buy Button.

We use this fee to reinvest in the platform, allowing us to continue to enhance and grow the many benefits we offer to our community.

Advantages named to justify the new fee included Depop Protection, 24/7 customer support, new features and community growth but the page did not offer any details about how those areas would be improved to add value to the buying experience worth paying an extra 5% for the privilege.

Depop was acquired by Etsy in 2021 as part of their "House of Brands" strategy which also included the acquisition of musical instrument marketplace Reverb in 2019 and Brazilian handmade marketplace Elo7 in 2021.

The strategy has had questionable results for Etsy, as these smaller sites have yet to add significant growth to the bottom line, and Etsy sold off Elo7 last year for an undisclosed sum.

The sale led to speculation about whether Etsy may spin off Reverb and/or Depop sometime in the near future as well and that possibility has only grown as notorious activist investor Elliott Management has taken a 13% stake in the company and a seat on the board.

Etsy Gets New Board Member As Elliott Management Takes 13% Stake In The Company

Etsy is getting a new board member this month as Elliott Management partner, Marc Steinberg, is set to join on February 5, 2024.

Value Added ResourceLiz Morton

Elliott is well known for pressing companies it takes an activist interest in to cut costs, increase revenue, and sell off parts of the business - like in 2019 when they brought their influence to bear on eBay, resulting in the sale of StubHub and their Classifieds business, as well as other changes at the company.

We may already be seeing that influence as Reverb is hiring for new team focused specifically on growing revenue, pointing to the urgency for Etsy to make these smaller marketplaces start pulling more weight in the overall House of Brands strategy.

Reverb Gets New Revenue Team As Etsy Faces Pressure To Make House Of Brands Pay Off

Reverb is getting a new team focused on growing revenue as parent company Etsy faces pressure to make “House of Brands” pay off.

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Etsy has also recently surveyed seller sentiment about listing fee increases and the possibility of paying a monthly subscription for a set amount of listings, indicating the company is looking for potential levers to pull to boost revenue quickly for their main marketplace as well.

Etsy Tests Seller Sentiment On Potential Listing Fee Increase, Monthly Subscription In New Survey

Etsy seller community buzzing with speculation as leaked survey raises possibility of listing fee increase, subscription plans for listings.

Value Added ResourceLiz Morton

Unfortunately, it appears likely that users across Etsy, Reverb and Depop can expect to see fee increases, greater pressure to provide fast and free shipping, and ratcheting up of required participation and investment in various seller-paid advertising programs as activist pressure puts CEO Josh Silverman under the gun to increase revenue across the board.

Reaching into buyer and seller pockets may provide some short-term revenue generation, but if it doesn't come along with improvements to the sites that actually add value for users, Etsy will likely still find themselves looking at breaking up the House of Brands and perhaps making more drastic changes to the core marketplace as well.

What do you think of Depop testing adding a buyer service fee on top of the selling, payment and advertising fees they already take? Would you stop shopping on Depop if they roll this fee out to everyone? Let us know in the comments below!