Pros and Cons of Etsy

Etsy Pro: Your products are given a large audience, and you easily sell your merchandise. Etsy Cons: You can only sell handmade or vintage merchandise, and there are many competitors.

By: Brad Nakase, Attorney

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Selling on Etsy Example

For years, Lottie has created custom jewelry for her friends and family. One day, when she gifts her friend Annie a gold and emerald bracelet, Annie suggests that Lottie open a store on Etsy. She explains that the online platform is a great way for craftswomen like Lottie to make decent money, and she will have a larger audience for her work. Lottie likes the idea of selling her jewelry online, but she is concerned about the potential difficulties of managing an online store. Before she jumps into creating an account on the platform, Lottie is sure to review the pros and cons of creating a store on Etsy. When she finds that the platform suits her type of business, and that she has a unique, marketable product, Lottie decides to take her friend’s advice and open a shop and contacted a business attorney to start a small business.

What Is Etsy?

Similar to eBay and Amazon Marketplace, Etsy is an online platform for buying and selling. It began in 2005, becoming a publicly traded company in 2015. It is unique in that business owners may only sell goods that are handcrafted, as well as vintage items.

While creating and operating a store on Etsy can make a business owner a lot of money, it is not the path for everyone. This is because running an Etsy store demands a lot of hard work and determination. An entrepreneur should make sure that it is the right platform for his or her business prior to opening a store on the site.

This article will review the major advantages and disadvantages of opening an Etsy store.

What Are the Pros of Starting a Store on Etsy?

  1. A Business Owner Has Access to a Big Audience

Etsy is a large platform that boasts 82 million active buyers, which means it is a fantastic place to market handmade and vintage products. Buyers go to Etsy looking for certain handmade items, so in a sense a business owner has a built-in audience. By listing products on the site, there is also the possibility of getting customers from search traffic on the homepage or from similar pages.

If a business owner has trouble with selling online, Etsy can be a great way of easily finding buyers for one’s items.

  1. Etsy Has Built-In Analytics

A savvy business owner will use data to make decisions about his or her company, and Etsy can help with this by providing analytics. A user’s dashboard on Etsy displays the following stats about his or her shop:

  • Page traffic
  • The number of times an owner’s items have been favorited
  • Orders received
  • Revenue for each item in the shop
  • Which customers show interest in items from the shop

Etsy’s analytics platform can help a business owner improve various aspects of their online store as well as capitalize on the successful aspects. For instance, if an owner observes that his or her customers are favoriting a particular item, he or she might consider offering free shipping. This could be the little push they need to make a purchase.

Etsy’s analytics can also help a business owner figure out their inventory requirements. If a business owner sees that one item in particular is selling well, then he or she can focus on producing more items similar to that one.

  1. It Is Easy to Open and Maintain a Store on Etsy

It is actually very simple to open an Etsy shop; in fact, one can begin selling their goods within minutes. The platform offers a step-by-step guide that explains the process of opening and maintaining a store. Also, some good news: it is free to begin a basic shop on Etsy.

There is an additional charge if one wants premium features, but they are not necessary for someone just getting started selling on Etsy. The platform’s Seller Handbook is useful in that it answers a lot of common questions about selling, including legal information and advice regarding taxes, shipping, and finances.

After a business owner opens his or her Etsy shop, they will also be able to review the platform’s guides on the following subjects:

  • Growth strategies, including social media and ads
  • How to write attractive product descriptions
  • Productivity tricks
  • Search engine optimization (so listings pop up first in search results)

After a store is set up, Etsy allows an owner to automatically renew their listing after a sale. This option means that owners will not have to relist the same item, doing the description all over again. This is a great option for an owner that sell items which can be reproduced. However, if a shop owner sells vintage items, then he or she may need to write a new listing every time they put up something to sell.

What Are the Cons of Starting a Store on Etsy?

  1. Only Handmade or Vintage Items Are Allowed to Be Sold

On Etsy, a business owner may only sell items that fit into one of the following categories: craft supplies, handmade goods, and vintage items. Because of this limitation, resellers and wholesalers cannot sell their goods on the platform. Rather, these types of business owners will have to go to a site like Poshmark, eBay, or Facebook Marketplace.

Etsy’s reselling policy states that a business owner can only resell goods that may be defined as craft supplies or vintage. Etsy does not allow individuals to sell repackaged commercial goods or handmade products that one did not make or design themselves.

  1. Etsy Has Listing and Transaction Fees

As is the case with most selling platforms, Etsy charges business owners fees in order to make a profit from their platform. Etsy charges a $0.20 fee for listing an item, and it takes 5% of any sale as a transaction fee (including shipping fees). If a business owner uses Etsy payments, which permits customers to use credit cards, then there will be a 3% fee. The owner will also be charged an additional $0.25. In fact, even if customers select to pay via PayPal, the payment will be processed through Etsy. Thus, the owner will still be subject to the platform’s transaction fee.

While having a shop on Etsy can attract customers that may otherwise not have found one’s store, these fees can add up over time. If a business owner makes more in sales on his or her own website or another selling platform, then Etsy may not be worth the trouble. In addition, if a business owner sells items that are hard or expensive to make, then selling on Etsy may result in the owner losing money. It may be a better investment to sell on one’s own website.

  1. The Market Might Be Saturated

As of 2020, almost 4.5 million business owners sold goods on Etsy. As the modern gig economy expands, more and more entrepreneurs are starting online business ventures. The most popular categories include the following: home décor, clothes, jewelry, toys and games, and crafts and supplies. No matter how unique a business owner’s items, he or she will still face competition from thousands of sellers offering the same products.

How to Successfully Start a Store on Etsy

If a business owner believes that starting a store on Etsy will be an effective way of gaining new customers, then he or she should review the following ways to prepare to sell on the platform:

  • Study Competitors

Before opening a shop on Etsy, a business owner should research and study other similar Etsy shops to see how those entrepreneurs are making use of the platform. One should examine how they present their items, write descriptions of products, and price their goods. By studying what other sellers are doing on the site, a business owner can come up with inspiration for their own shop.

  • Prepare Etsy Listings

Before posting his or her items on the platform, a business owner should ensure that they have enough inventory and that their goods are ready to be shipped. The inventory should be ready to ship to customers so that the shop, upon opening, can focus on making sales. If a business owner sells custom made items, he or she should ensure they have enough supplies and materials so that turnaround times will be accurate.

  • Market the Etsy Store

After the Etsy store has been opened, a business owner will need to prioritize attracting buyers. As a start, he or she should write listing descriptions that include SEO, or keywords for searching. This way, when a buyer searches for a particular item, they will come across the owner’s products.

Also, a business owner should be sure to advertise their Etsy account on other platforms, such as Twitter, Instagram, and other social media sites.

After a business owner makes a sale, he or she should make sure to have buyers write a review about the product or store.

  • Look Into Additional Business Financing

If a business owner succeeds in making their Etsy store profitable, then he or she may wish to pursue funding to meet bigger goals. For instance, a shop owner may need money to hire employees, buy more inventory, or improve their marketing reach. For these reasons, an Etsy shop owner may want to take out a business loan to invest in their small business.

Conclusion

Etsy is a great selling platform for a business owner with the right product and marketing know-how. While not every entrepreneur will find success on Etsy, it is possible to do well if one sells unique items, markets effectively, and offers top-notch customer service.

Of course, it takes time to make an Etsy business successful, so a business owner must consider whether they want to invest the time and energy. Some owners may find it to be too much work and stress, while others may not want to pay all the fees that come with selling on the site. In the end, much will depend on the type of business and the business owner’s particular goals.

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