Etsy is the ultimate online marketplace for sharing your crafts with the world or purchasing unique gifts for loved ones. This global ecommerce platform was designed to give artists an avenue to display and sell a wide variety of items for sale, such as personalized clothing, vintage items, organic self-care products, handmade items, and digital products.
Etsy is your chance to become an entrepreneur and improve your quality of life. This platform makes it possible for sellers to own successful shops as it provides them access to consistent marketing resources to grow their Etsy stores. You can earn a steady income running an online business on Etsy. If you’re interested, read on to find out how you can make money as an Etsy seller.
What Is Etsy?
Etsy is a global marketplace that enables people from all parts of the world to create, display, and trade unique physical and digital items. With a mission to optimize automation in promoting human development, Etsy empowers sellers to transform their creative ideas into successful online businesses at low start-up costs by providing premier access to active buyers.
Etsy’s website was founded in 2005 by three friends with a vision to provide a creative outlet for artists to gain exposure and sell their products. It became a public company in 2015. According to Statistica, it is home to 4.37 million active sellers who have access to 81.9 million active buyers worldwide as of 2020.
According to the third-quarter results from September 2021, Etsy Inc. made a consolidated revenue of $532.4 million, which was a 17.9 percent increase from the third quarter in 2020. Currently headquartered in Brooklyn, New York with a 2,338 employee base, Etsy makes it easy to become a shop owner who can define creative and financial growth.
How Does Etsy Work?
Etsy facilitates the relationship between buyers and sellers by ensuring Etsy shoppers receive product updates and recommendations. To get started, you would need to create an account on the platform. The registration doesn’t cost you, but you’ll initially get signed up as a buyer. To become an Etsy seller, you first have to be familiar with their seller policy, especially fees and payments.
As a seller, you’re allowed to sell popular items like accessories, art, collectibles, jewelry, clothing, beauty products, books, tools, electronics, home items, toys, games, and wedding items. You can’t list weapons, drugs, or any other unlicensed product on their platform. Etsy helps sellers advertise their products through Etsy ads and off-site ads, which you pay for only when you make a sale.
Etsy sellers are paid through an Etsy payment account. However, you’ll be required to verify your bank account before you receive payment. Sellers get permanent reviews for sales made on the platform to know how to improve their customer experiences. These reviews determine your seller score. You can send messages to buyers who gave you poor ratings and report reviews that violate Etsy policies.
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How Much Can You Actually Make on Etsy?
According to the 2021 seller survey carried out by Etsy, 55 percent of Etsy sellers use the platform as their primary source of sales, and 30 percent consider it their only business. Based on the 2020 integrated annual report, the average growth merchandise sales per active seller in the 2017 to 2020 seller cohort was $1,641 in the first year and grew to $6,538 in the fourth year.
This analysis is based on the aggregate records of active sellers on the platform from 2017 through 2020. The amount of money you can make on Etsy depends on what you sell, the time and effort you dedicate to the success of your store, and the rate of demand for your products. You can make between $5,000 to $50,000 or more in your first year.
The Pros and Cons of Working on Etsy
Etsy has had many success stories as well as failures. Below, you’ll find a compiled list of the advantages and disadvantages of using Etsy for ecommerce.
Pros of Working on Etsy
- Easy to Get Started. As a beginner, you can quickly get started on the platform. You don’t need to pay to set up an account, and customizing your Etsy store doesn’t involve many technicalities. You don’t also need a business license. You can even run your store from your mobile device, using the Etsy app.
- Low Cost. Owning and running an Etsy store is free, and you alone determine your final sale price for an item. However, if you want access to more tools and resources, you need to make a monthly payment of $10 for Etsy plus.
- Access to Seller Tools and Resources. Etsy ensures its sellers have access to all they need to succeed. As an Etsy seller, you have the Etsy newsletter, seller handbook, templates, promotional and marketing tools, seamless payments processes, shop analytics, real-time support service, and a community of sellers for networking.
- Access to Many Potential Buyers. As a beginner, you can start earning without stressing about marketing. Etsy makes it easy as it provides you access to a large pool of over 80 million active buyers. In quick searches, you can be discovered by these buyers and quickly begin making impressive average sales.
- Seller Security. Your payments are secure with Etsy. Etsy has a security system for detecting fraudulent charges, so you don’t have to worry about incurring bad debts. Also, you’re protected during conflicts. Etsy provides a resolution system to resolve disputes and enables sellers to report inaccurate reviews from buyers.
Cons of Working on Etsy
- Many Selling Costs. While selling on Etsy is quite affordable, you can incur a lot of business expenses. The seller policy on Etsy requires you to pay $0.20 as a listing fee for each item, five percent of profit as the transaction fee, a processing fee, currency conversion, a subscription fee, and an advertising fee, including Etsy on-site and off-site ads.
- Lots of Competition. With the huge volume of Etsy sellers, you’ll have to deal with competition. This may require you to price your products lower than they are worth. This isn’t ideal for sellers in the handcraft space who spend long hours and lots of resources creating a piece.
- Limited Shop Control. As a seller, Etsy hosts your shop. In terms of your website interface, you have no control. This can be a significant disadvantage when it comes to competition. Many online businesses attract buyers through customized user experience (UX) and user interface (UI) design.
- Limited World-Wide Access. Even though membership is open to everyone, you must reside within a specific location that accepts the Etsy payment system. Currently, there are 45 countries listed as eligible for Etsy’s payment system, which excludes products from and sellers in much of the world.
- Effect of Buyer Reviews. Like most ecommerce platforms, the success of your business depends on the reviews you get. Etsy uses a simple five-star rating method that provides a seller score based on aggregate ratings per buyer. If buyers inaccurately rate your store, your sales will likely pay the price.
How to Become an Etsy Seller
Ecommerce has become an industry of its own, which is why starting an online business has never been more rewarding. Starting an Etsy shop can allow you to break away from the traditional nine-to-five routine or expand your current physical shop. Below are the steps you can take to become an Etsy seller.
1. Learn About the Seller Policy
Before setting up your Etsy account, make sure that you’re within the eligible Etsy payment countries and that you’re comfortable with the terms and conditions of running your business on the platform. There are certain important factors you should be aware of, including the legalities of listing a product for sale.
2. Sign Up and Create Your Shop
To sign-up on Etsy, you’ll need a computer. You will need to provide a valid email address, first and last name, and password. You can use your Google, Facebook, or Apple account to sign up. Once you’ve made an account you’ll need to open an Etsy shop. You’ll need to choose your language, shop name, currency, and country. Lastly, list your products for sale.
3. Set Up Payments and Billing
As part of your seller-account setup, you need to provide all of the necessary details for payments and billing. This involves connecting and verifying your bank account on the platform.
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Within a few days of enrolling in Etsy payments, you will be sent a small amount of money to confirm that the account is functional. You can also add your debit or credit card details.
4. Customize Your Store
5. Protect Your Store
A significant aspect of setting up your store on Etsy is ensuring it is legally protected. To achieve this, you should consider your business structure, intellectual property, and tax obligations. You should ensure you state whether your business is a sole proprietorship, a partnership, or a limited liability company. Ensure your brand icons and designs are also protected.
6. Sell Your Products
Now that you’ve finished setting up your shop, it’s time to sell your products. You can advertise your products through Etsy ads. All you have to do is select your advert budget and pick the items, and Etsy helps you promote them. Etsy also allows sellers to advertise using off-site ads, which allows you to pay the advertising fee once you make a sale.
How to Make More Money on Etsy
Making money on Etsy takes effort, discipline, and creativity. In addition to those things, the tips listed below will help you increase your sales and make more money.
Use Attractive Visuals
The product photos you use will be the first thing buyers see. For this reason, it’s important that you have attractive graphics that will encourage potential customers to click on your store and shop. You can learn graphic design and photography tips online to help you with this process.
Use Keywords in Your Listings
In order for your shop to be easily discovered through a simple buyer’s search, you’ll need to use strong keywords in your item description, title, and tags. You also want to use strong keywords to strengthen your search engine optimization (SEO) value. This would allow potential buyers to find your shop through a simple search engine search.
Create an Optimal Sales Strategy
For every business to thrive, there has to be a sales strategy in place. A business strategy gives you direction and enables you to effectively channel your marketing efforts. To succeed on Etsy, your sales strategy should involve linking your shop to other social media platforms, using SEO, and providing incentives that attract buyers to Etsy.
Utilize Your Shop Analytics in Decision-Making
A significant part of being a successful shop owner is monitoring your business performance. Etsy provides you with built-in Google Analytics and Etsy statistics to support your decision-making. Make sure to take advantage of this data, as it provides you with important information about your shop’s performance and customer base.
Take Advantage of Etsy Resources
As a new seller, you should optimize Etsy seller resources offered on the platform to gain the knowledge you need to run a profitable store. Etsy gives sellers access to social media marketing toolkits to optimize their presence on social media platforms. You have access to marketing research, business reports, SEO tools, sales map, and support.
Is Working on Etsy Worth It?
For a beginner with little to no resources or experience running an online business, Etsy is an excellent place to start. It saves you the start-up costs that a traditional business would require. Etsy gives you access to millions of buyers that you wouldn’t otherwise have access to. Additionally, it offers resources and support that allow you to develop a brand identity and build your customer base.
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Making Money on Etsy FAQ
Can I really make money on Etsy?
Yes, you can, although it does require consistent effort. Many Etsy sellers have reported their sales on this ecommerce platform as the majority of or their sole income. There are also tips that can help you increase your sales, including the use of keywords, attractive visuals, sales strategies, analytics, and Etsy resources.
Do I have to report Etsy income?
Yes, you do. Selling on Etsy makes you a business owner, which means you have some legal obligations to fulfill. You’ll be sent a 1099-K form to complete as a US citizen. You’re still expected to report your Etsy income on your tax returns even if you don’t receive a 1099-K from Etsy.
Do you need a business license to sell on Etsy?
You don’t need a business license to sell on the platform. However, you should comply with relevant laws related to your daily transactions as an online seller. This is especially important concerning your business structure, intellectual property rights, and income taxes.
Is it difficult to sell on Etsy?
As a beginner, it can be challenging to make sales on Etsy. As with any other ecommerce platform, you need to put in the effort. Etsy provides sellers with lots of resources and support to begin and become successful.
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