Why Etsy Shipping is so expensive?

Etsy is one of the leading eCommerce sites with around 23.76 million active customers and 378,000 sellers.  As a Canadian business, you can sell on Etsy Canada to maximise your eCommerce profits. 

What makes Etsy Canada ideal for both small and large eCommerce stores is that this platform can make doing business easier. Business owners often ask, “Why is Etsy shipping so expensive?” We need to understand these costs for both buyers and sellers.

In this blog, we will understand why is shipping so expensive on Etsy, including its fee structure and the factors contributing to these costs. 

This understanding of shipping costs will help buyers with their budgeting and make informed purchasing decisions. For sellers, it will be crucial for pricing accurately, managing profit margin, and eventually, staying competitive in the Etsy marketplace.

Understanding Etsy’s Fee Structure

To get an answer to the question why is shipping on Etsy so expensive, business owners need to understand Etsy’s fee structure and pay the following fees to sell on this platform:

• Account Setup Fee: To open an account and do business on Etsy Canada, you may need to pay a one-time non-refundable setup fee. Not all sellers are required to pay this. 
• Listing Fee: There is a listing fee of CA$0.28 (even when you are running a business from Canada). Listings are active for four months or until they sell out. 
• Transaction Fee: For selling products on Etsy, there is a transaction fee of 6.5 per cent of the item price you display together with shipping and gift wrap costs. 
• Advertising & Promotional Fees: These fees include Etsy ads fees per click, and offsite ads of 15 percent for businesses earning below $10,000 annually. For shops earning more than $10,000 per year, it will be 12 percent.
• In-Person Selling Fees: You can take payments for your items in person by syncing your listing with Square Reader. For synced items, you will pay a $0.20 renewal fee and for non-synced listings, there is a transaction fee of $0.20. Either way, you way $0.20. For payments via Square, Etsy does NOT take the 6.5% transaction fee.
• Payment Processing Fees: There is a payment processing fee of CAD 0.25 + 3 percent for domestic orders and 4 percent + 0.25 CAD for international orders.
• Delivery Fees: Sellers in certain locations can purchase postage labels to fulfill their orders. The delivery fee is the cost of the postage label, and it is decided based on the origin, destination, weight, and dimensions of a parcel, and also on the delivery company.
• Regulatory Operating Fees: This fee is a set percentage of the price you display for every listing plus the postage charges. This however applies to sellers in certain countries only.
• Currency Conversion Fee: For converting fees from USD to your currency, there is a 2.5 percent currency conversion fee.
• Pattern Fees: Pattern fees are for the pattern tool used to create a website for free for 30 days. After that, the subscription fee is $15 per month.

Factors Contributing to High Shipping Costs on Etsy

Factors that contribute to high shipping costs on Etsy are below: 

1. Product Size and Weight: Larger, bulkier products will usually have higher shipping costs. 

When calculating shipping costs on Etsy, you need to accurately enter the dimensions and weight of their items.  

2. Shipping Method: As a seller, you can choose from various shipping methods, each with various cost implications. 

Some of the examples are standard postal services, overnight delivery, priority mail, and Etsy’s shipping labels, which are often available at discounts. Using Etsy’s shipping labels can save you postage costs and potentially reduce shipping costs.  

3. Destination: Domestic shipping is generally less expensive than international shipping. 

Conversely, why is Etsy international shipping so expensive? Because the shipping process can be more complex due to factors like customs duties, taxes, and longer delivery times. You need to consider these factors when setting up your shipping profiles and calculating costs. 

4. Seller’s Shipping Rates: Etsy allows sellers to set their own shipping fees, whether calculated or fixed. 

You can choose to offer free shipping, but this may affect your profit margin. You may charge a high estimated shipping cost and refund any overpayment, or they can encourage buyers to contact them for a more precise quote. You can use Etsy’s shipping calculator to help figure out their shipping rates. 

5. Additional Factors to Consider:

• Handling and Packaging: The time and materials required in preparing an order can also increase shipping costs. 
• Delivery Insurance: You may choose to offer delivery insurance to cover potential damage or loss during transit, which will add to the cost.
• Etsy Fees: Etsy also charges fees for transactions and listings, which can impact the overall cost of shipping. 
• Currency Conversion: For international sales, sellers may need to factor in currency conversion fees.

Etsy’s Shipping Calculation Methods

How much does Etsy charge for shipping?  Etsy’s shipping calculation methods allow sellers to calculate shipping costs based on the product weight, dimensions, and the buyer’s location. It ensures accurate and transparent pricing. 

As a seller, you set up your shipping profile in their shop settings, which include options for fixed prices, calculated shipping, and delivery upgrades. Subsequently, these profiles are assigned to individual product listings. 

Setting up Etsy Shipping Profiles

Access Shipping Settings: Go to the Shop Manager, then Settings, and choose “Shipping Settings”. 

Create Shipping Profiles: Create profiles for different products or shipping strategies. 

Configure Shipping Options: Select between domestic and international shipping, and choose fixed prices or calculated shipping. 

Input Item Details: Enter accurate product dimensions and weights for accurate calculations. 

Select Shipping Carrier and Rates: Select a carrier and set shipping rates based on your carrier and destination. 

Test Calculations: Verify the accuracy of your shipping costs by testing the calculations. 

Assign Profiles to Listings: Apply the created profiles to the relevant product listings. 

Monitor and Adjust: Regularly review and adjust shipping settings as required. 

Calculated Shipping: Etsy’s calculated shipping method uses the buyer’s address, product dimensions, and weight to determine shipping costs. Sellers can also add handling fees to the calculated cost. 

Fixed Prices: Sellers can set fixed shipping prices for all products in a profile or assign different fixed prices to individual items, offering a simplified approach to shipping costs. 

Delivery Upgrades: Sellers can offer delivery upgrades, such as express shipping, and charge a fee for these upgrades, which is added to the initial shipping cost.

Comparison with Other E-commerce Platforms

Etsy and other platforms like eBay, Amazon, and Shopify have different fee structures and shipping approaches. Etsy charges a $0.20 listing fee and a 6.5% transaction fee on sales. eBay has a $0.30 fee per order plus a percentage based on the category. 

Amazon’s fees are higher, ranging from 8% to 15% depending on the product, with a potential $39.99 monthly fee. 

Shopify has a monthly subscription starting at $39 and lower transaction fees. Shipping options vary, with Etsy offering discounted labels. 

eBay encourages free shipping, and Shopify provides built-in order management. 

eBay:

Insertion Fee: Varies based on monthly listing limits, with free listings available. 

Final Value Fee: 30 cents per order plus a percentage based on the category. 

Amazon:

Referral Fee: Ranges from 8% to 15% depending on the product category. 

Monthly Subscription: Possibly a $39.99 fee for some sellers. 

Fulfillment by Amazon (FBA) Fees: Additional fees for storage and fulfillment services. 

Shopify:

Monthly Subscription: Starts at $39.

Transaction Fees: Varies depending on the plan, starting at 2.9% + $0.30 per transaction.

Third-Party Payment Gateways: Additional fees may apply. 

Shipping and Fulfillment:

Etsy: Offers discounted shipping labels through carriers like USPS, FedEx, and Canada Post. 

eBay: Encourages free shipping and has a global shipping program. 

Amazon: Offers Fulfillment by Amazon (FBA) for storage and fulfillment, including international shipping. 

Shopify: Provides built-in tools for order management and fulfillment. 

Combined Shipping and Seller-Managed Rates:

Etsy: Provides built-in shipping profiles for easy shipping cost calculation and discounted shipping labels.

eBay: Offers a shipping calculator and allows sellers to print labels at home.

Shopify: Sellers can set their own shipping rates, manage fulfillment, and offer combined shipping options.

Strategies for Sellers to Reduce Shipping Costs

To reduce shipping costs, sellers should optimize packaging, negotiate rates with carriers, and explore alternative shipping methods like local delivery or prepaid options. 

Here’s a more detailed strategy for reducing shipping costs:

1. Optimizing Packaging:

Reduce package size and weight: Use appropriate packaging for products and minimize filler materials. 

Use lightweight materials: Use poly mailers or corrugated boxes instead of traditional cardboard boxes. 

Optimize packaging for dimensional weight: Keep in mind the “dimensional weight” (DIM weight), which is calculated based on the size and weight of a package, and can increase shipping costs. 

2. Negotiating and Selecting Carrier:

Negotiate with carriers: Get better shipping rates by negotiating with carriers based on shipping volume or other factors. 

Use multi-carrier shipping: Compare rates from different carriers to find the most cost-effective option for each shipment. ShippingChimp works great for eCom businesses in Canada. 

Consider prepaid shipping: Prepaid labels can sometimes offer discounts and reduce shipping costs. 

3. Alternative Shipping Options:

Offer local delivery or pickup: You can reduce shipping distances and costs by offering local delivery or pickup options. 

Try hybrid shipping options: Blend different shipping methods to minimize costs and speed for different destinations. 

Use fulfillment centers or regional warehouses: Store items closer to customers to reduce shipping distances and costs. 

4. Data Analysis and Automation:

Analyze shipping data: Track shipping costs, analyze trends, and identify areas for streamlining your shipping process. 

Implement smart shipping automation: Use tools to automate rate comparisons, label generation, and other shipping tasks. 

Use a transportation management system (TMS): A TMS can help manage and streamline your entire shipping process. 

5. Other Cost-Saving Strategies:

Offer free shipping when possible: Set minimum order values or limit free shipping to specific regions to offset costs. 

Use third-party insurance: Think of using third-party insurance for cost-effective coverage. 

Find discounted packing supplies: Look for discounted or free packing materials offered by carriers. 

Highlight shipping policies: Clearly communicate shipping policies to customers to minimize returns and related costs. 

Use warehousing services: If shipping a large volume of items over long distances, use warehousing services to store products closer to customers. It will possibly reduce transportation costs.

To get a detailed idea, check out our complete blog post on selling on Etsy.

Tips for Buyers to Manage Shipping Costs

To effectively manage shipping costs as a buyer, focus on:

1. Optimize Package Dimensions and Weight:

Use Appropriate Package Sizing:

Ensure packages are not unnecessarily large, as carriers may charge based on dimensions (dimensional weight) even if the actual weight is less. 

Minimize Packaging Material:

Use minimal packing materials and opt for lightweight options like air pillows. 

Consider Custom Packaging:

Customizing packaging to fit the item exactly can reduce wasted space and air. 

Negotiate Rates:

Negotiate with carriers for bulk shipping rates, especially if you’re shipping large volumes. 

Utilize Flat-Rate Options:

Flat-rate shipping options are advantageous, as they simplify pricing structures and lower overall shipping costs. 

2. Shipping Strategies:

Explore Multiple Delivery Options:

Offer customers various delivery options (standard, express, local pickup) to cater to different preferences and budgets. 

Offer Local Delivery or Pickup:

Local delivery or pickup can significantly reduce shipping costs by minimizing the distance products need to travel. 

Consolidate Shipments:

Consolidating multiple orders into a single shipment can lower per-unit costs. 

3. Additional Tips:

Create a Shipping Policy: A clear shipping policy can help manage customer expectations and provide transparency. 

Review Shipping Costs: Regularly review order history to identify areas for improvement and potential cost savings. 

Consider Third-Party Insurance: Third-party insurance can sometimes be more affordable than traditional carrier insurance, especially for high-value items. 

Look for Discounted Supplies: Sourcing discounted packaging and shipping supplies can significantly reduce overall expenses. 

By implementing these strategies, businesses can effectively manage and reduce their shipping costs.

Conclusion

Etsy’s shipping prices are expensive, but you need to check out the pros and cons before deciding whether to sell or not on Etsy. Some people also think that the high shipping costs of Etsy are justified due to the availability of quality customers.  

Etsy is also an excellent platform to find unique items that customers may not find on any other portal. The customer service on Etsy is also quite good. Conversely, some people think that the high shipping costs are not worth it because price comparison is difficult on Etsy. 

For not having a search engine, it can be difficult to find products that have the same price as on other sites. Additionally, you may find it difficult to locate products that are in stock on Etsy. Overall, the pros and cons of Etsy’s shipping prices are up to you to decide.

FAQs

Q1. Why are Etsy’s shipping costs higher compared to other platforms?​

Ans: Etsy’s shipping costs can often be higher compared to other platforms due to various factors, including individual sellers’ pricing, the complexity of calculating shipping for multiple items, and the lack of access to discounted shipping rates for some sellers.

Q2. How does Etsy calculate shipping fees for sellers and buyers?

Ans: Your location and the shipping address for the buyer determine the cost of shipping for you. The shipping price the buyer sees is based on the settings in your shipping profile. On Etsy, you can offer fixed-price shipping or calculated shipping if you purchase USPS or Canada Post shipping labels through Etsy.

Q3: Are there ways for sellers to reduce shipping costs on Etsy?

Ans: Etsy sellers can reduce shipping costs by optimizing packaging, utilizing shipping zones, offering discounted shipping for multiple item purchases, and negotiating with carriers. They can also consider consolidation of shipments and offer free shipping options to attract buyers.

Q4: Can buyers combine items from different sellers to save on shipping?​

Ans: Buyers generally cannot directly combine items from different sellers to save on shipping. Each seller typically handles their own shipping independently, and buyers are subject to the shipping policies and settings of individual sellers. While some sellers might offer combined shipping discounts for multiple purchases from their store, combining orders from different sellers usually isn’t possible.

Q5. How can buyers find sellers with lower shipping rates on Etsy?

Ans: To find sellers with lower shipping rates on Etsy, buyers can use several tools and search filters. They can check for free shipping options, search for sellers who offer discounted shipping when purchasing multiple items, and look for sellers using Global Postal Delivery options which can potentially offer more competitive shipping rates. Additionally, buyers can sort search results by price (including shipping) to find the best deals overall.

Q6: Are there any shipping discounts available for bulk purchases on Etsy?

Ans: Bulk purchase discounts, including shipping discounts, can be available on Etsy, but they are not automatically applicable. Etsy sellers can choose to offer discounts, and buyers may find them when browsing listings or through shop policies.