Etsy says it is raising its fees in part because the marketplace plans to increase its marketing spending to attract new buyers by at least 40% in 2018.

Etsy Inc. today announced it is releasing two new tools for sellers on its marketplace, in addition to raising its transaction fees from 3.5% to 5%. The new rate will go into effect on July 16.

The marketplace for handcrafted goods credits this rise in transaction fees to a new focus on marketing to attract buyers to the marketplace. Etsy in 2017 invested $78 million in marketing to bring buyers to Etsy. It was “…the most we’ve ever spent,” the marketplace said. It also said it plans to increase its digital marketing spend by at least 40% to more than $110 million in 2018.

One of its marketing plans includes its first television ads to air in the U.S. during the new NBC crafting competition show “Making It,” on which Etsy trend expert Dayna Isom Johnson will be a judge. The show premieres July 31, but an Etsy spokeswoman wasn’t sure when Etsy’s television ads will run alongside the show.

In addition to television ads, Etsy will continue to invest in Google Product Listing Ads, since the marketplace has seen a positive return on investment, the Etsy spokeswoman said. “It’s a combination of continuing to do what we are doing and testing some new things,” she noted.

Etsy also announced two new optional monthly subscription packages to support its sellers in addition to its standard free package—Etsy Plus and Etsy Premium. The $10 per month Etsy Plus package—launching in July—will provide an expanded list of seller tools, including more tools to help sellers customize their shops, discounts on customized shipping boxes, business cards and other marketing materials, a custom web address and restock notifications for shoppers interested in products that a seller is currently out of. The monthly fee for Etsy Plus will increase to $20 per month in January 2019.

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Etsy Premium will include tools in the standard and plus packages, as well as management tools for larger Etsy shop owners that have multiple employees and require dedicated customer support. It will be available in 2019, and Etsy has yet to determine its monthly price.

“Our two million active sellers have individual business goals and aspirations, and we want to support them no matter where they are on their journey,” says Etsy CEO Josh Silverman. “By listening to the needs of our sellers, we designed our new subscription packages with a combination of tools to help them succeed at each phase of their business lifecycle.”

The number of active Etsy sellers increased to 1.93 million in 2017 from 1.75 million in 2016. Active buyers also increased to 33.4 million in from 28.6 million.

Etsy’s gross merchandise sales were $3.25 billion in 2017, up 14.4% from $2.84 billion in 2016. In the fourth quarter 2017 ended Dec. 31, gross merchandise sales crossed $1 billion, growing 17.9% to $1.02 billion from $865.2 million in the same period a year ago.

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Etsy is No. 13 in the Internet Retailer 2018 Online Marketplaces.

 

Fareeha Ali contributed to this report.

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