Is Etsy going out of business in 2023: Why they shutting down shops?
Is Etsy going out of business in 2023? Several Etsy sellers have announced that they are temporarily closing their shops. This is to reduce the possibility of not getting paid for their goods. As Etsy struggles to recover from the effects of the Silicon Valley Bank disaster, several Etsy sellers have made this new decision.
Etsy stated in a statement that merchants would experience delays in getting paid. This is so because certain merchants’ payments to Etsy were processed through the Silicon Valley Bank.
Etsy is an online marketplace that caters to small business owners and creators of handmade and vintage goods. Brooklyn, New York, was where it all began, and it spread across the US and into Europe.
Etsy stood out in the competitive US e-commerce sector against Amazon and eBay. It’s due to the uniqueness of the things sold and the emphasis on quality. Early on, the editorial staff of Etsy also prioritized showcasing artistic creations over manufactured goods. As a result, millions of sellers who use Etsy as a side business have created a thriving creator economy. Some of these vendors have been able to go full-time because of the money they receive from Etsy.
DiscontinuedNews is impartial and independent, and every day, we create distinctive, world-class programs, news, and content that inform, educate and entertain millions of people worldwide.
Overview of Etsy
An e-commerce company that links both buyers and merchants is called Etsy Inc. (ETI). The business sells party materials, paper products, mobile accessories, craft supplies, home and lifestyle items, clothes, accessories, and collectibles. Body jewelry, jackets and coats, photo frames and displays, comics and graphic novels, and collectibles are a few of the items.
ETI offers a comprehensive range of tools and services to sellers. Thus, it will assist creative business owners in starting, running, and growing their enterprises. The business operates in the US, the UK, Canada, Australia, France, Germany, and India. ETI’s US headquarters are in Brooklyn, New York.
As of December 31, 2022, Etsy has over 100 million products available for purchase. The handmade and vintage goods online marketplace linked 7.5 million merchants with 95.1 million customers. Since its initial public offering (IPO) in 2010, Etsy has seen growth in both revenue and usage. But the coronavirus pandemic has accelerated this growth, from $818 million in sales in 2019 to $1.72 billion in 2020. In that time, the number of active purchasers on Etsy also doubled.
Reverb is a marketplace for musical instruments. It was acquired by Etsy in 2019 for $275 million. Its greatest acquisition to date is Depop. It is a clothing retailer that shares similarities with Etsy regarding its vintage community. It was purchased by the company in 2021 for $1.63 billion.
Etsy has made it plain that it wants a collection of apps that serve specialized and, in some cases, higher-value e-commerce businesses. Soon, it’s reasonable to expect more acquisitions or the release of new apps designed to fill specific niches.
Etsy had 2,790 employees as of December 2022. Etsy reported total platform sales, or Gross Merchandise Sales (GMS), of US$13.3 billion in 2022. Etsy had an income of US$2.6 billion and a net loss of US$694 million in 2022.
Silicon Valley Bank’s failure hurts Etsy Vendors
Moms and other small business owners selling products online on Etsy are affected. It is due to the bankruptcy of Silicon Valley Bank. Because of the failure of Silicon Valley Bank, some Etsy sellers claim they are closing their stores. They closed them until the market removed any risk of non-payment.
The Brooklyn-based e-commerce platform informed store owners that the anticipated payments would be postponed. It claims, “Because of the recent developments of Silicon Valley Bank, which Etsy uses to promote payments to some sellers, it happened.”
According to the platform, seller payments would be made “within the next few days of business via our other payment partners.” After the firm released its statement, Etsy vendors began advising one another to put their shops in “vacation mode.” Customers cannot temporarily place new orders due to this setting on Etsy.
The Federal Deposit Insurance Corporation closed Silicon Valley Bank. It happened after a devastating bank run. The fall of Silicon Valley Bank was the biggest bank disaster in the US since the financial crisis of 2008.
Requests for comment from Insider on Liv Rainey-Smith, Renee Donohue, and officials for NewMoonAscension and The Suburban Farmhouse were not immediately answered. Additionally, Insider contacted Etsy representatives for comment outside of usual business hours. But they did not answer right away. Some business owners “freaked out” about the news, while others thought about temporarily closing their doors.
Camp is a New York City-based retailer with locations in Manhattan and Brooklyn. It was also affected by a rapid bank collapse that was the second-largest in US history. It offered a 40% discount on products in an email to consumers to boost sales and stay alive.
The Fed ought to do this right away!
The representative told Fox News Digital that just a few sellers were affected by this problem. “On that particular day, about 0.5% of our active seller base experienced payment.
Delays. We have already begun processing payments through another partner as we seek to pay these sellers today.”
The worst financial institution failure in the United States since the Great Recession occurred when the Federal Deposit Insurance Corporation (FDIC) announced it would close SVB. It was, until that point, the 16th-largest bank in the country.
The bank was a go-to source for several Silicon Valley businesses and startups. Y Combinator frequently refers to entrepreneurs. Y Combinator is an incubator startup that created Airbnb, DoorDash, and DropBox.
Even hours before SVB’s demise, several business analysts believed the bank was still a great investment. After seeing a similar decline the day before, the bank’s shares had dropped by 60% by the next morning.
According to Y Combinator CEO Garry Tan, the bank’s failure may be “an extinction-level event for startups.” It was because anxious depositors raced to withdraw their money. They did it out of concern for the institution’s well-being.
Etsy has joined the list of businesses affected by the closure. It also includes coffee brand Compass Coffee, kids shop Camp, and cryptocurrency firm Circle. In certain instances, the companies themselves might not have been affected. The problems at Compass Coffee were caused by the payroll service provider, who was “severely affected” by the bank’s closure.
Etsy shops transactions, putting pressure on sellers
Etsy is the latest company to express worries following the announcement of a transaction freeze in response to the collapse of startup financier Silicon Valley Bank.
On March 10, 2023, a customer was seen in front of the Santa Clara, California, offices of Silicon Valley Bank (SVB), which has since closed. California officials closed Silicon Valley Bank on Friday morning and turned it over to the US Federal Reserve.
A lady who goes by the TikTok username amgeee1 has been selling on Etsy since 2015. She said that the delay could have a disastrous effect on her money.
She continued, “I realized today that the money that was supposed to be deposited and sent to my checking account to be available tomorrow was never sent.” “Then I received an email informing me that my deposit cannot be issued due to Silicon Valley Bank.”
She continued, saying, “My money, that I worked hard for, they can’t send to my bank account,” adding that the transaction freeze prevents her from paying her mortgage.
Another “mompreneur” named Amber claimed to be “freaking out” about the information. “I’m a mom of three, I run a small business, and I do this within my home,” Amber stated about her Little Miss Lovely Creations. “Those funds support my family and cover my expenses.”
Amanda Nielsen, who mostly uses Etsy to run her business, Flower and Earth, said she is still receiving orders. But she cannot predict when she will be able to fill them. She said, “you can’t do much for two days, so it’s the worst time to get this email.”
Small business owner Renee Donohue sells bath products with a lavender aroma. She tweeted that customers can purchase her goods through her website rather than her shut-down Etsy store.
A Texas-based crystal vendor named NewMoonAscension vented on TikTok. She said that they are also suspending orders placed through Etsy. They continued by saying they might also need to cancel some existing orders.
A small firm, The Suburban Farmhouse, sells wooden stove worktops and home decor. They announced on TikTok that they would complete orders through Shopify rather than Etsy. They explained the reason as the marketplace worked out its payment concerns.
Nina Bissett, a native of Washington, DC, runs the “Nina Loves Fun” Etsy shop. She claimed that she would be receiving $700 on Friday. She offers vintage jewelry and disco balls for sale. “It’s currently my only source of income,” said Bissett.
Instead of their Etsy shopfronts, some merchants have been redirecting customers to their websites.
A representative for Etsy stated that a small percentage of its sellers experienced temporary payment delays on Friday. He said that as of Monday, the transactions had been settled.
Conclusion
A representative for Etsy stated, “Our teams have been working around the clock to come up with a solution. They expect to pay sellers through other payment partners within a few business days.
Etsy stated, “We are working with our other payment partners to issue your deposit as quickly as feasible.” The total number of affected merchants is yet unknown. But those affected have turned to social media to share their experiences.
As much as we feel for individuals who have left Etsy, the marketplace is working to improve the experience for sellers and shoppers. Etsy is well worth the effort and time if you have something to offer and want to build a brand.
