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Etsy’s Transparency Reports Tell A Shocking Story

Etsy’s history is a tale of two Etsys.  There’s the Etsy of pre-2018 that was amazing at supporting creators.  Then there’s the Etsy of today that is amazing at making hefty profits on the backs of its creators.  It’s always interesting to compare and contrast the two, immortalized in the blog posts and reports they’ve put out over the years.

Did you know that Etsy used to be a corporation for public benefit – a Certified B-Corp?  It’s kind of like an accreditation program for corporations – a third party that exists to tell consumers, these are the good ones – these are the ones you want to support when you have a choice.  One of the things the folks at the B-Corp Lab require from their certified corporations is a high level of “transparency”.

Back when Etsy was a certified B-Corp, they issued a “Transparency Report” after the end of each year.  Their transparency reports shared some nicely nitty gritty data on policy enforcement.  Basically, proof-in-the-pudding on what Etsy was doing to tackle the reseller problem and keep it under control.

But that’s not the interesting thing.  Here’s the interesting thing.

When Etsy stopped being a B-Corp at the end of 2017, they kept releasing transparency reports every single year. And it took them a couple years to stop putting the data on policy enforcement in those reports.

Because of this, we have actual data – from Etsy – that tells us exactly why the reseller problem has gotten so bad over the years.

The graph I’m about to share below covers three metrics.

How many reports did Etsy receive on shops breaking their policies? 
They split this data in two sections – copyright-related violations, and non-copyright-related violations.  We’re ignoring the copyright portion for the purposes of this article.  That’s a whole other can of worms.  Instead we’re looking at non-copyright-related policy violations, which are mostly violations of Etsy’s policy on “handmade” – that each item sold in their “handmade” section must be made or designed by the shop owner.

How many shops did Etsy shut down as a result of those non-copyright-related reports?
Unless Etsy’s reporting system is a massive failure, you would expect it to be a decent percentage.  A few reports might be in error, but most would result in a shop closure, so long as there aren’t an excessive number of false reports.

And finally, how many of those reports were verified by humans? 
That will become important later on in this piece.

Here is the data. Four years of reports from the before-times, when Etsy was a public benefit corporation.  Four years of reports from the current version of Etsy.

Data shows increasing number of reports received for Policy violations, and proper enforcement from 2014-2017, with poor enforcement from 2018-19, and no data on enforcement afterwards.
Data from Etsy Transparency Reports, (2014) (2015) (2016) (2017) (2018) (2019) (2020) (2021)

When I discovered these reports, I spent a while staring at the numbers in shock.  I read over them again and again, each one open in a tab, to double check.  Triple check.  Was I really seeing this right?

I realized, up until that point, I had been giving Etsy the benefit of the doubt.  I figured the reseller problem was just something that had gotten out of hand over the years, as the platform grew faster and faster.  This was worse.  So much worse.

This looks like they just stopped enforcing their own policies, as soon as the corporate takeover of 2017 was complete.

You might have noticed that there are two versions of shop closure reports.  Shops “Closed”, and Shops “Permanently Closed”.  Current Etsy tries to explain the discrepancy, by claiming that before-times Etsy was untruthful in their reports.  They claim that the reports from Etsy’s public benefit corporation days showed shops “Temporarily Suspended”.  Except, that’s not what the reports say.  They say “Closed”.

I actually think current Etsy is telling the truth… technically.  You see, I was part of Etsy in the before-times, so I remember that back then you could appeal a shop closure.  An actual human being would help you re-open your shop, if you took the time to submit proof that it was closed by mistake.  So yeah, there probably was a tiny percentage of reinstated shops included in that “closed” number, from the people who successfully appealed.

I don’t see how it explains a >90% discrepancy.

And it looks even more suspect if you take into account the reports from 2020 and 2021, which are devoid of data, other than the numbers of reports received, which are staggering.  You would expect them to be, if they include all the shops that failed to get shut down in the two years prior.  All the shops that joined when it became known that Etsy was a place where you could sell stuff made in sweatshops at 3x the value, since selling on Etsy gives you the opportunity to trick buyers into thinking your items are handmade.

Another data point that I found very interesting.  You can see that from 2015 to 2017 the reports were manually reviewed by an actual human being more and more over time.  And then, after the switch you see less and less being done with people.  Etsy flat out says in the reports that they figured out how to do more and more with AI over time.

Did you know?  Etsy’s been “cracking down on resellers” after the fee increase, by siccing their AI bots on everybody on the platform!  The bots are shutting down handmade shops!  We even received a message from a vintage seller telling us that Etsy had removed items posted in their vintage category for being “Not Handmade”!

I really don’t think AI bots are capable of enforcing Etsy’s terms.  I think they need to hire humans.  And I think Etsy discovered that themselves back when they were actually being transparent, back when they cared about the experiences of sellers on their platform.

We polled our membership before the strike when we were just a tiny group of people on Reddit, to ask which of our demands was most important.  Even then, mere days after Etsy simultaneously announced record corporate profits and a fee increase, resellers won.  More people chose resellers as their #1 issue than chose the fee increase.

It makes perfect sense.  Anyone who is a part of maker culture knows this well – the happiness of our customers is really important to us.  We will bend over backwards to please them.  All the other things we’re fighting for affect us worse than they affect customers.  Star Seller and Etsy’s poor seller customer service – entirely on us.  The constant fee increases and extra costs imposed by things like fees on shipping and mandatory ads – partially on us, as we can (and many of us do) eat some of the extra costs instead of raising our prices.

The reseller problem can affect our customers worse than it affects us.  We’re losing business trying to compete with factory made items at handmade labor costs. But our customers are the ones in danger of getting scammed.

I feel it keenly in my personal place in the ecosystem.  You see, I make things that are very pretty, but also very impractical!  Because of this, I rank high in organic searches and get quite a lot of traffic to my shop – despite the fact that it’s always been a one-woman not-quite-full-time operation.  In 2018, my Etsy shop got 62 thousand unique visitors.  When you make things that people would only use for special events, though, the percentage of visitors that go on to make a purchase is pretty small!

In the before-times, those people would often go on to shop from other talented creative businesses with more practical products than what I make.  I loved that about the old Etsy.  Now, in a marketplace saturated with resellers, my pretty products are probably leading to at least a few people getting tricked into paying a handmade premium for something a reseller bought on Aliexpress.

I hate that.

Our demand about resellers reads:

Etsy needs to provide a comprehensive plan for tackling resellers (people selling mass produced goods that they have not even designed themselves) on the platform. This plan must be transparent so that sellers can hold Etsy accountable.

If the reseller problem was just something that got out of hand over time, it would be easier to take Etsy at their word when they claim they are cracking down on resellers RIGHT NOW as a result of our increased fees.  The data tells a very different story.

It tells us that the only way we CAN trust Etsy again is if they again release the exact numbers on all three metrics.  Reports received by the system.  Number of shops shut down.  Number of reports reviewed by humans.

Until they release legitimate meaningful data to us, we must assume they are merely playing lip service to the idea of enforcing their own policies.

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