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I'm going to lose my star seller badge because I didn't provide a tracking number for a sale marked as a local pickup.
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Sorry but that is how it works, it does say that in the rules
https://help.etsy.com/hc/en-us/articles/4403058372503-How-to-Become-a-Star-Seller?segment=selling
What if I offer local pick-up or delivery for my items?
At this time, orders that don't have tracking because they are delivered or picked up in person will be considered shipped without tracking, and will not meet the Star Seller criteria for shipping.

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Re: Tracking Number for Local Pick-Up?
Yep
That's the way it works --and has done ever since Star Seller was introduced over 2 years ago
For Star Seller metrics all items must have a tracking number or you get dinged

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Sorry but that is how it works, it does say that in the rules
https://help.etsy.com/hc/en-us/articles/4403058372503-How-to-Become-a-Star-Seller?segment=selling
What if I offer local pick-up or delivery for my items?
At this time, orders that don't have tracking because they are delivered or picked up in person will be considered shipped without tracking, and will not meet the Star Seller criteria for shipping.