Etsy Tests Capped Shipping Rates, Subsidizing Discounts For US Buyers
Etsy is testing capped shipping rates on some US orders, covering the difference between what buyers pay and sellers' calculated shipping charges in a new effort to reduce shipping costs without cutting seller earnings.
The company has begun notifying sellers about the limited test, which will apply to eligible US orders using calculated shipping.
We know that shipping costs can be a barrier for buyers. To see whether lower shipping costs can create more opportunities for sales, we're testing capped shipping rates on some eligible US orders. If one of your orders qualifies, the buyer may pay a lower shipping cost, but your standard item and shipping earnings will stay the same.
For example, if your calculated shipping rate is $10 and the buyer is charged the capped rate of $7.99, you’ll still receive the full $10. The buyer will pay $7.99, and Etsy will cover the remaining $2.01.
The subsidy will be identified as "Etsy-funded shipping" in Order Details, while sellers' Payment Accounts will continue to show their standard shipping revenue. No changes to listings or shipping settings are required.
The experiment is a limited, temporary, randomized test, so not every buyer, listing or shopping cart will qualify. The email does not specify whether the $7.99 rate used in the example is the actual shipping cap being tested or if different rates may apply depending on the order.
Etsy normally charges transaction and payment processing fees on shipping revenue, and the email doesn't specify whether those fees will be calculated on the original shipping rate or the discounted amount paid by the buyer. Sellers would pay their usual fees if Etsy uses the original rate, but could see a small additional benefit if fees are calculated on the lower amount.
Initial seller reactions to the test have been largely positive, particularly because Etsy is covering the discounts rather than asking sellers to reduce their shipping revenue.
"I got it and this heartened me a lot," one seller commented on Reddit. "They know buyers don't want to pay for shipping but that we sellers are also in a bad position with rates going up."
Some sellers also raised concerns about how the randomized discounts will work in practice, including whether buyers could see different shipping charges on separate orders from the same shop and whether sellers will have any way to identify eligible listings before a purchase is made.
Previous efforts to make shipping prices more attractive to buyers have largely relied on sellers lowering their shipping charges, often by shifting those costs into item prices instead. In October 2024, the company began prioritizing eligible US listings with shipping prices below $6 in search, saying its research showed buyers were less likely to make a purchase once shipping charges reached that threshold.
Etsy also introduced tools encouraging sellers to lower their displayed shipping prices while moving some of the expense into their item prices to recover their costs. Listings using calculated shipping were specifically excluded from the search change, with Etsy acknowledging that rates based on actual estimated shipping costs might not always meet buyer expectations.
At the time, Etsy said it was working on improvements to calculated shipping to help sellers offer more competitive rates in the future. The company continued its efforts to lower visible shipping costs in March 2025, removing the ability for sellers to add separate handling and packaging charges to calculated shipping and once again suggesting they incorporate those expenses into item prices instead.
Liz Morton
But Etsy has also experimented with paying for shipping discounts directly through its Insider buyer loyalty program, initially introduced in 2024 with paid memberships offering free domestic shipping on qualifying purchases, up to $20 per eligible item.
Those generous shipping benefits proved difficult to sustain. In August 2025, Kruti Patel Goyal, then Etsy's Chief Growth Officer and now CEO, acknowledged that Insider had helped increase buyer visits and purchases, but said the original program's economics were not sustainable long-term. The company subsequently reduced the shipping benefit to $6 on qualifying orders over $15, shifting more of the program's value toward Etsy credit rewards and other membership incentives.
Liz Morton
The new capped shipping test offers another way for Etsy to subsidize delivery costs, this time without requiring buyers to pay for an Insider membership and with discounts limited to qualifying orders.
If the test shows that lower shipping rates lead to more sales, Etsy could expand the subsidies or look for other ways to bring shipping prices down, potentially requiring sellers to make changes similar to those encouraged by previous shipping initiatives. The company says the results may inform future improvements to the shipping experience but has not indicated what those changes might involve.
Etsy isn't the only marketplace experimenting with subsidized shipping. Vinted has offered US shipping rates as low as $0.49, while Depop has tested promotions starting at $0.99 on qualifying purchases. Depop was owned by Etsy until July, when eBay completed its acquisition of the resale marketplace.
Liz Morton
Neither company discloses how much it pays to subsidize those offers, but the rates buyers see are well below publicly available commercial shipping prices. Unlike those platforms' discounted label programs, Etsy's test leaves sellers' existing shipping arrangements unchanged.
Etsy has not responded to questions about the test's scope, shipping caps and fee calculations as of publication.
