Starting An Etsy Business? The Top Pros and Cons | Fora Financial Blog
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Starting An Etsy Business? The Top Pros and Cons
April 21, 2021
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Starting An Etsy Business? The Top Pros and Cons

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 profitable option.

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.

Although starting an Etsy store can lead to lucrative opportunities, it isn’t for everyone. Running a successful Etsy store requires a lot of hard work and dedication, which is why you should make sure that it’s the right platform for your products.

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 81.9 million active buyers, making it a great place for entrepreneurs to sell their items.

Buyers come to Etsy seeking 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.

If you struggle to make sales on your business’s ecommerce website, listing your products on Etsy could be a great way to make additional sales.

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. Due to this, wholesalers or resellers can’t sell their products on the platform.

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.

Pros-Cons-Starting-An-Etsy-Business

Pro: Built-In Analytics

Business owners should always make decisions using data, and luckily, Etsy tracks many metrics for you.

Your Etsy dashboard will show you stats about your shop, such as:

  • Traffic to your page
  • The number of times that consumers have added your item to their favorites
  • Orders received
  • Revenue for each item in your shop
  • 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 an Etsy Store

Opening an Etsy shop is easy and only takes a few minutes. They have a step-by-step guide for shop owners that explains the process. In addition, it’s free to open a basic shop.

While premium features are available for an additional charge, they’re not necessary to start an Etsy shop. Etsy’s Seller Handbook answers almost any question you have about selling on Etsy, including information about legal, shipping, taxes, finances.

Once you open your shop, you’ll also have access to Etsy’s guides on topics such as:

  • Growth strategies, such as social media tactics and Etsy ads
  • How to write product descriptions that will attract potential customers
  • Productivity hacks
  • Optimizing search engine optimization (SEO), so that your listings show up in search results

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 and re-write the listing description if you have multiple duplicate items to sell.

Con: The Market Could Be Saturated

In 2020, more than 4.4 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 small business owners who are offering similar products.

Next Steps: How Can You Start Your Store Successfully?

If you think that selling your items on Etsy could attract new customers, it’s time to focus on setting up your shop. Here are some ways that you can prepare to sell items on Etsy’s platform:

  • Check out your competitors:

Before you open your shop, look at other Etsy storefronts to see how successful business owners are leveraging the platform. You can see how they photograph items, write listing descriptions, and price their items. By looking at what other sellers are doing, you can gain inspiration for your own store.

  • Fine-tune your offerings:

Before you listen items, make sure that you have ample inventory and that the items are ready to be shipped. Your inventory should be completely ready to go, so that once your store is open, all you have to do is focus on making sales.

  • Market your store:

Once your Etsy store is open, you’ll need to focus on attracting buyers. You can do this by writing listing titles and descriptions that include searchable keywords. That way, buyers will see your listings when they search relevant terms.

In addition, you should market your Etsy store on other platforms. Many Etsy business owners share their listings on Instagram, Twitter, their business’s website, and other popular platforms.

  • Pursue additional financing:

If you need additional financing to purchase inventory, materials, or other expenses, you may want to consider a business loan for your Etsy store. Once you receive a small business loan, you can use it to invest in your business.

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.

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Editor’s Note: This post was updated for accuracy and comprehensiveness in April 2021.

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].