Etsy Shipping & Handling Shuffle: Desperate Bid For Gross Merchandise Sales Bump

Etsy is removing the option for sellers who use calculated shipping to add handling and packaging costs to the shipping price, claiming it will improve the buyer experience while conveniently leaving out it will also likely boost an important financial metric for the company with no extra sales needed.

The change will be going into effect March 3, 2025 and will automatically remove handling and packaging fees from calculated shipping prices at that time.

Updates to Handling and Package Fees
Starting March 3, 2025, we’re removing the option to charge handling and package fees. If you use calculated shipping, you won’t be able to add these fees as part of your shipping prices.

To account for these costs consider moving them into your listing prices while keeping the total price the same. This keeps the profit you make on your item the same while helping better meet buyer expectations.

These changes only apply to sellers using calculated shipping. Your handling and package fees will be removed automatically, so you won’t need to remove them yourself.

Review your pricing strategy on your shipping profiles that have handling and package fees in advance of this change.

Interestingly, the email notice sellers received leaned heavily on the idea that the change is being made because buyers are averse to seeing high shipping prices and having handling and packaging fees added in could discourage shoppers from completing purchases.

But that would seem to contradict Etsy's own statements in the policy page about the change which encourage sellers to "consider moving them into your listing prices while keeping the total price the same."

If the total remains the same, the impact on whether or not buyers make a purchase will likely be barely noticeable - unless Etsy believes consumers are too stupid to be making purchasing decisions based on the total price, in which case I would suggest they have completely missed the basic psychological lessons every ecommerce operation has learned about "free shipping" in the last 2 decades.

So what's really behind this handling and packaging fee shell game?

Some in the Etsy Seller subreddit have suggested the company could be looking to mitigate costs they have to cover under the Etsy Insider buyer loyalty program.

I wonder if this has to do with Etsy Insider. Since Etsy is covering shipping for those purchases.

I was wondering about their costs on this. I just had an Insider customer order an item from me. Then a day later order again. Two shipping costs Etsy has to pay for. Can see this kind of stuff adding up real fast for them since customer no longer cares

I wonder if they are doing this so that they can save on shipping when they reimburse the sellers for shipping fees when a customer has the Etsy Insider Club.

I bet Etsy didn't care about what we charged to cover our packaging until they had to start paying higher shipping fees due to those fees we can price and have. I hate how they spin it as a way to help the sellers, when in fact it's to help themselves.

That's certainly a plausible theory and could be one contributing factor.

But it's also important to note that this simple change will allow Etsy to boost a very important metric in their financial reports to investors - Gross Merchandise Sales - without having to do anything to actually increase sales!

Etsy defines GMS in their quarterly and year end reports as "the dollar value of items sold in our marketplaces, excluding shipping fees and net of refunds, within the applicable period."

That means package and handling fees added into the shipping price are currently not counted in GMS....but they will be once sellers have to shift that amount to the product price to still cover their costs.

And as Etsy seller and ecommerce consultant Cindy Baldassi points out, sellers with many listings to change will likely start editing their prices early to avoid being caught out when the change happens - which may allow Etsy to start to see that GMS bump even before March 3rd.

It's a desperate move that will muddy year over year GMS comparisons for at least the next year, which should raise alarm bells for Etsy's investors - if CEO Josh Silverman is resorting to the tactics to goose numbers, that does not bode well for the company's future ability to grow GMS authentically be increasing sales on the platform.

How will this change impact your Etsy business - will you shift the package and handling cost to the item price or eat them as a cost of doing business? Let us know in the comments below!