Pros and Cons of Starting an Etsy Store | Fora Financial Blog
Pros and Cons of Starting an Etsy Store
February 04, 2019

Pros and Cons of Starting an Etsy Store

Whether you’re looking to start a handmade craft business or add another distribution channel to your current business, opening an Etsy store might be a great option for you. Etsy is an online buying and selling platform that started in 2005 and became a publicly traded company in 2015. It’s similar to eBay  or Amazon Marketplace, but you can only sell handmade items and vintage goods. Etsy’s revenue has grown extensively in the last five years, from 26 million in the first quarter of 2013, to 150 million in the third quarter of 2018.

In this post, we’ll list the pros and cons of starting an Etsy store, so you can decide if it’s right for you.

What Are the Pros and Cons of Starting an Etsy Store?

Pro: Market to a Large Audience

Etsy has more than 35 million active buyers and analysts project their revenue will continue to grow in 2019. Buyers come to Etsy looking for specific handmade items, so you already have a built-in audience that’s looking for your products. Listing your products on Etsy will allow you to potentially get sales from organic search traffic on the Etsy homepage, which can complement your outside marketing efforts.

Con: You Can Only Sell Handmade Items

Etsy’s marketplace includes craft supplies, handmade items, and vintage goods. You must fit into one of these categories to sell on Etsy. In addition, according to Etsy’s reselling policy, you can only resell items in the craft supplies or vintage categories. Etsy prohibits the sale of repackaged commercial items or other’s handmade items that you didn’t design or make. For instance, if you own a fashion boutique and sell clothing, you cannot sell these items on Etsy unless you made the clothing, or they’re vintage (at least 20 years old). If your items don’t fit into these categories, you won’t be able to open an Etsy store.

Pro: Built-In Analytics

Business owners should always make decisions using data and Etsy tracks many metrics for you. Your dashboard will show you stats about your shop, such as traffic to your page, the number of favorites, visits, orders, and revenue for each item in your shop, and which customers are interested in items from your store. Also, there’s a guide that teaches you how to track web analytics using Google Analytics, and Etsy has its own Search Analytics system which tracks the main drivers of your sales.

Con: Etsy Charges Listing and Transaction Fees

Etsy charges $0.20 to list an item and takes five percent of your sale (including shipping and gift-wrapping fees) as a transaction fee. In addition, if you choose to use Etsy payments, which allows customers to pay by credit card, you’ll be charged an additional fee of three percent plus $0.25. Even if your customers choose to pay through PayPal, they payment is processed through Etsy rather than PayPal, so you’ll still be subject to the fee.

Pro: Easy to Setup and Maintain a Store

Opening an Etsy shop is easy and only takes a few minutes. They have a step-by-step guide to walk you through the process and it’s free to open a basic shop. While premium features are available for an additional charge, they’re not necessary to get started. Etsy’s Seller Handbook answers almost any question you have about selling on Etsy, including information about legal, shipping, taxes, finances.

They also give advice for success such as growth strategies, seasonal tips, productivity, and optimizing SEO. Once your store is setup, Etsy has an option to automatically renew your listing after an item is sold, so you don’t have to relist the same item if you have multiple to sell.

Con: Market Could Be Saturated

In 2018, more than 2 million sellers sold items on Etsy and that number is projected to keep growing. The top-selling categories are home décor, jewelry, clothing, toys and games, and crafts and supplies. Unless you sell extremely unique items, you’ll be competing with thousands of other selling who are offering similar products.

Conclusion: Consider Your Business’s Future

If you have the right product, selling on Etsy can be lucrative. In fact, one Etsy seller reports making $70,000 per month selling socks, scarves, headbands on Etsy. Although most Etsy sellers don’t make this much, it’s possible to have a profitable Etsy store if your products are unique and you have a comprehensive marketing strategy. However, it takes time to start and maintain a profitable Etsy business and you must decide if the revenue you’ll get is worth your time and effort.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].