Etsy is an e-commerce retail site where artisans can set up their own boutiques to sell craft goods for a profit. While it is free to set up your own boutique shop on Etsy, the seller must pay $0.20 for each listed item, and Etsy receives 3.5% of the profits for each product sold.

I have a friend who has had an Etsy shop running for some time. At one point she was in touch with the customer through the Etsy message boards and realized that the customer wanted to purchase a large quantity of an item. She quickly realized that it would be much more profitable to bypass Etsy and sell privately to the buyer. By doing so, she circumvented the seller agreement with Etsy and simply used the site as a means of advertising and depriving Etsy of any profit.

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About John Hooker

T. Jerome Holleran Professor of Business Ethics and Social Responsibility Tepper School of Business Carnegie Mellon University

One response »

  1. John Hooker says:

    This is an easy one. If all Etsy users were to bypass Etsy in this way, your friend would not have found the customer in the first place, because Etsy would have to shut down. So this behavior is not generalizable and therefore unethical.

    It may also be a breach of contract, which is likewise ungeneralizable when done merely for personal profit. Oddly, I couldn’t find a clause in the Etsy Terms of Use that specifically prohibits a side deal, but even if there is none, the side deal remains ungeneralizable for reasons I just explained.

    It may be ethical, however, to take advantage of a business contact made through Etsy for future transactions. In a similar case, an Uber driver learned that one of his passengers made regular trips to the airport. He arranged subsequent trips directly with the passenger. I don’t know whether this is consistent with Uber’s driver contract, because I couldn’t find it online. However, if it is, it seems generalizable. A service like Etsy or Uber can continue to operate if users take advantage of business contacts in this fashion.


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