Are you a creator of handmade and vintage items? Looking for a global audience for your quirky products? Etsy is the platform for you. Etsy offers an ecommerce platform to increase your reach and tap into new markets. Our beginner’s guide on how to sell on Etsy lists everything to know before starting.
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Table of Contents
- What Is Etsy?
- Why Use Etsy?
- How Etsy Works
- Selling Fees
- How Much Can You Earn?
- Pros and Cons
- Alternatives
- Final Words
Small business owners and creators often have high-quality niche products but compete with established brands and platforms with more traffic and customer confidence. Most creators register on Etsy to address this problem. So, how do you sell on Etsy?
Etsy lets you turn your talent into a thriving business with reviews on a platform trusted by customers. We’re going to discuss how you can sell on Etsy and succeed.
What Is Etsy?
Etsy is an eCommerce platform headquartered in New York that connects buyers looking for handcrafted items to sellers of unique products. Targeted at creators of vintage and handcrafted items like art, toys, furniture, jewelry, paper goods, artisan foods, craft supplies and more, it gives artists a platform to display their items and reach a global audience with low start-up and overhead costs.
Simply put, it’s an Amazon for handmade and niche products. Like Amazon, it supports various shipping and payment methods such as Google and Apple Pay, gift cards, and credit and debit cards.
Even as it competes against Amazon Handmade and Shopify directly and with other large retailers such as eBay and Amazon, it is noteworthy that 80% of its sellers are women.
Why Etsy?
Three friends founded Etsy in 2005 with the vision to help artists display and sell their products to a global audience, and now, it’s in a category of its own. According to the SEC filing for 2021, Etsy’s annual report shared the following data points:
- Etsy listed over 120 million products on December 31st, 2021.
- In 2021, goods worth $13.5 billion were sold on the platform.
- It made $2.3 billion in revenue.
- Net income equaled $493.5 million.
- Its revenue rose 35% year on year.
Some data points from Etsy’s Press Release for its 2nd quarter of 2022 (April-June, 2022):
- By June 30th, 2022, its consolidated gross merchandise sales (GMS) equaled $3 billion.
- It acquired 6 million buyers in the second quarter of 2022.
- Its net income was $73.1 million.
- Earnings per share came in at $0.51%.
- It had 933,947 active buyers and 7,403 active sellers on its platform.
- Etsy’s buying community is nearly 90 million buyers.
With a global presence, it’s a force to be reckoned with.
- 43% of its GMS was from outside the United States.
- Over 66% of its users bought on mobile devices.
- 81% of its GMS was via organic channels as many buyers come to Etsy directly and from organic channels like push notifications, email, social media and search engines.
- Only 58% of its sellers were located in the US, while the remaining 42% were located outside the US.
Predictions for Q4 stated in the Q3 (third-quarter), 2022 earnings report published on November 2nd, 2022:
- Expected revenue of $700-780 million
- GMS of $3.6-4 billion
It makes revenue in two ways:
- Marketplace revenues like listing fees, payments processing charges, offsite ads transaction fees and transaction fees.
- Optional value-added offerings such as shipping labels, on-site advertising and others.
It also features craft fairs where sellers can create personal storefronts and list their products for $0.20 per listing.
How Etsy Works
Etsy is for sellers and creators. If you’re a seller, follow the steps below to open your digital store.
Step 1: Click Sell on Etsy on the Homepage.
Click ‘Sell on Etsy’ on the Etsy homepage footer. Source
Step 2: Open an account with your email address.
Enter your email id and password. Source
Step 3: Choose a username.
Name your storefront. Source
Step 4: Click “sell” to open your storefront.
Step 5: Add a profile picture and description.
Step 6: Add your inventory to list your products.
Opening a shop on Etsy is free, but you pay for every product you list and a transaction charge per sale.
If you’re a buyer or are just browsing, you can create an account or view products as a guest. You can browse through products by category or search if you are looking for something specific.
You can read detailed descriptions and check product and seller reviews, shipping charges and timelines. While sellers may offer varying payment modes, PayPal and credit cards are the standard.
You can also message a seller if you want more information, such as product information, order tracking and more. Often, sellers request a review as well.
Do Sellers Need a Business License?
Etsy’s policies don’t require a business license to open a storefront. However, you must check your country, state and city’s regulations and see if they issue permits to conduct business. Many areas need licenses and permits if you sell plants or food. To be sure, it’s a good idea to check with a lawyer and a business CPA.
That being said, a business license offers considerable benefits such as tax savings and personal asset protection. It’s best to speak to a CPA or a local lawyer to assess the best course for you.
Selling Fees
Opening a storefront is free, but selling isn’t. New pricing was released on October 19th, 2022 and will become effective from December onwards.
- Listing Fee: Listing charges are $0.20 per item for renewing or new listings. There are no charges to edit listings.
- Transaction Fee: Etsy charges 6.5% of the display price plus gift wrapping and delivery. Users can list their products in other currencies. Sellers in the US don’t need to pay a transaction fee on sales tax. For locations other than the US, transaction fees are calculated on the listing price.
- Advertisement Fee: Sellers can advertise their products on the platform with offsite and Etsy ads.
Etsy advertises your listings on social media, apps and search engines. While you don’t pay an upfront fee, you pay for the advertising at sale.
Etsy attributes its sales to offsite ads. You pay the following only if your order is attributed to an offsite ad.
If your Etsy shop pulled in under $10,000 in the last 12 months, Etsy charges you 15% of the gross sale amount for offsite ads. If your revenue exceeds $10,000, offsite ad charges stand at 12% and cap at $100, irrespective of how many orders are attributed to them.
For Etsy sellers with shops with other currencies, revenue converts to USD with exchange rates as the sale processes.
Etsy advertises on channels like Facebook, Google, Pinterest, Instagram and Bing. Other publishing partners include Buzzfeed, Real Simple, Shape and more.
- Monthly Subscription Fees: Etsy offers Etsy Plus with extra tools sellers can use to grow their brand presence. It charges $10 monthly plus sales tax/GST/VAT.
- Payment Processing Charges: Etsy allows eligible shops to accept payments via Etsy and charges a transaction fee based on the seller’s bank’s location.
Who Pays for Shipping?
Technically, buyers pay for shipping because shipping charges are included in the price of the product. Etsy doesn’t get involved in shipping, as the seller is in charge of the process.
If the seller uses a fulfillment service, it’s their responsibility to ensure that the order gets delivered and that they comply with customs and delivery regulations.
You can buy the following from Etsy:
Postage Labels: Etsy lets sellers from India, the US, Australia, the UK and Canada who accept PayPal and Etsy Payments buy postage labels.
Price of Postage Labels: Cost will vary depending on dimensions, package type, mail class, weight, destination and origin.
Delivery Insurance: When sellers buy postage labels from Etsy, they can also purchase parcel insurance.
For detailed information on shipping and postage, visit this link.
Does Etsy Charge a Monthly Fee?
Etsy offers an optional subscription called Etsy Plus. Etsy Plus costs $10 per month plus local taxes like VAT or GST.
Etsy Plus includes a set of supporting tools that make it easy to grow your brand.
Is Etsy Plus Worth It?
Sellers have varying opinions about this. A few think that they can earn back what they spent on advertisements and listing credits, while others say that personalized domains and marketing materials don’t add value.
We suggest you start without an Etsy Plus subscription and add it later after reviewing the terms and conditions and assessing your business’s needs and direction.
How Much Can You Earn?
It’s a tricky question because the answer will vary depending on the type of product, shipping charges, effort you put in, per-product cost and advertising.
You probably won’t make $50,000 by selling in a saturated Christmas decoration market.
According to the US Bureau of Labor Statistics, the median income of fine and craft artists in 2021 was $49,960, and over 52,300 vendors are available. Contrary to what others say, no official data is available about how much Etsy shop owners earn.
That being said, according to a Statista report, in September 2022 alone, AcornandCrowStudio made over $40,400, CaitlynMinimalist sold pulled in $37,900 and Beadboat1 over $26,700.
Etsy’s marketplace autumn trends show very seasonal markets. Also, the year-on-year growth is quite high and ranges between 20-50% across categories.
Pros and Cons
Deciding on a platform to sell your products is a big decision; you should know the advantages and disadvantages before going all in.
Some advantages of selling on Etsy are:
- Audience: While Etsy may not be the biggest fish in the pond, it’s a profitable option if you offer unique, high-quality products. Products that stand out rapidly draw a following.
- Features: To start selling, open a shop with a description, banner, logo and social links. Etsy lets you personalize your shop and add a URL or choose one for a fee. You can share discount coupon codes to reward customers as well.
- Global Reach: Etsy shops give sellers global visibility and opportunity. Sellers in the UK find markets in Australia and the US, while those in India receive orders from the UK and the US. Since the items are custom-made, buyers generally aren’t in a hurry to receive items overnight.
A few disadvantages include:
- Fees: As you saw above, Etsy has a variety of charges that can be difficult to track. Many sellers in their initial days consider what they made as profit, while that’s actually not the case.
- Slow payments: Sellers can choose the frequency of their payments from daily, weekly and monthly, but it takes time for the money to show up, which may not be suitable.
- Control: As with most other eCommerce platforms, sellers don’t have control over all aspects of their store and its design, making it harder to develop and promote your brand. Most sellers feel that a personal website makes converting your Etsy shop into a business easier.
Etsy is a great way to start and see what vibes well with audiences, but it’s better to migrate to your own website when things take off.
Alternatives
It’s also possible that Etsy isn’t the right place for you. There are other digital marketplaces that your customers may frequent. The alternatives may give you access to bigger audiences and charge less per transaction.
Those just starting out will likely have sales volumes lower than $10,000. You’ll need to advertise on other platforms, which increases your cost.
Check out the top Etsy alternatives below:
Amazon Handmade
Yes, it’s a platform by Amazon that’s specifically for those wanting to sell to a bigger audience. It requires that all products are handmade or altered by you or your organization.
To sell on Amazon Handmade, you have to apply, and once they approve your application, you can list your items. The cherry on top is that there is no limit on the number of articles you can list.
The cost is a flat fee of $39.99 every month and a transaction fee of 15% per transaction.
Big Cartel
It promotes creativity and identifies itself as a platform for artists, by artists. It comes pre-loaded with themes and templates that you can edit.
The platform doesn’t charge a platform fee. There are three pricing plans according to the number of products you list. You can track your inventory and integrate with Google Analytics.
Facebook Marketplace
It has a Marketplace for Business platform that supports inventory and advertising features. Some businesses may even be eligible for hosted shops where users can buy from within the platform. It also lets buyers send you direct messages.
You can list your products for free, and there are no sales charges. However, Commerce Manager, used to manage sales for both Facebook and Instagram, may incur fees.
It’s a great platform because it doesn’t charge listing or account fees. If you want to promote your products, you’ll end up paying for ads. You can sell on Instagram with a free Instagram Business account.
All you have to do is set up a shop and list your products.
IndieMade
IndieMade manages everything for artists, like web hosting, support and marketing tools. It offers a 30-day free trial and has no listing fee.
It offers four plans for product listing, from Basic at $4.95 to Plus at $19.95 per month. Each pricing plan adds more features like unlimited products, coupons, images and more.
Shopify
With Shopify, you can set up your online store on your custom domain. The platform is fairly easy to use, with over 70 themes. If you accept payment via Shopify, it costs 30 cents plus 2.4-2.9% of the total transaction value.
It estimates shipping costs and generates shipping labels. Pricing tiers range between $29-$79 per month. It offers a free 14-day trial.
Misi
Based in the UK, Misi is a marketplace for handmade, vintage and craft supplies. It features products like homeware, wedding items and more.
Its commission is 3% on every sale, and its listing fee is 0.2 pounds (26 cents). Opening a shop is free.
eBay
You can create as an individual or business. The advantage of the business account is that it offers branding tools and lets you track inventory, sales and orders.
The first 250 product listings are free. After that, it’s 30 cents per listing. There is also a fee eBay charges for total sales. For the first $1,000 worth of sales, you pay 15%, 6.5% for sales of $1000-$7500, and for any sales above $7,500, you pay 3% and a 30-cent flat fee.
Additionally, the subscription fee is $4.95 for the Starter plan. It also offers an Enterprise and Anchor plan.
Final Words
The challenges of selling on Etsy are the same as they are on any other platform. Reviews, photos and communication matter. While it offers a global marketplace and the opportunities that come with it, it also takes time, effort and planning. An eye for detail, great graphics and excellent customer service can make your business profitable.
Let us know in the comments below about the challenges you’re facing selling on Etsy.