How to Start an Etsy Shop

You may be expecting one of those blogs that tells you how to start an Etsy shop and make a six figure salary…well, I’m sorry that this isn’t one of those. I started my Etsy shop eight years ago, but didn’t really stock it seriously for four years because I was too busy focusing on the website I was building. So really, I’m writing about an Etsy shop that has been running for four years and which I am about to close in April 2016. It hasn’t been making me a fortune, in fact, I’ve probably paid more to Etsy than I have taken in income. So is this what everyone can expect from Etsy, or is this just a reflection on my own incompetence? Read on to find out…

How to Start an Etsy shop: the basics

Before you consider how to start an Etsy shop, you might like to consider what Etsy is. Basically it is an online marketplace. It is focused on craft and it was set up to provide individual crafters with a place to sell their work. From the customer’s perspective, Etsy was marketed as a place where they could find hand-made work by talented designers, so not the mass-produced goods that are sometimes marketed as ‘craft’. Over the years, it is fair to say that the Etsy offering has been a little diluted, I think. As far as I am aware, at this point in time, Etsy management does not vet the products or sellers, so there isn’t anything to stop people from selling mass-produced goods.

This is good news when you consider how to start an Etsy shop. Basically, it’s very, very easy. Just head on over to Etsy places the information you have provided in place on your shop. Each shop on Etsy has the same set up, so there is space to tell the world about you, about the products you make, your contact details and your shop policies. It used to be the case that you needed to set your own policies, but in a recent re-vamp, Etsy has put together a list of standard policies to which you can adhere (just tick a box and they will appear in your shop), plus the option to add anything that is specialist to you. Finally, you will need to set some shipping options and of course give Etsy your bank details so they will be able to pay you, and take fees from you. All very simple.

This gives you the basic shell of your shop. You can then create listings to go in it. For each listing you will need up to five photos, a description of the product and then you have various options for adding ‘tags’ (these are key words that describe your product and allow it to be found in the Etsy search pages) and ‘materials’. Set the price, the shipping option and you’re pretty much done. You get to preview your product listing before it goes live, but that’s it. Add as many products as you like and low and behold, you have a shop.

Etsy Fees

So, how does Etsy do all this for you? In a few simple steps they’ve given you a professional looking online shop. Of course this isn’t out of the goodness of their hearts. They have invested in professionals to write all the code to allow you to complete those forms and turn them into a shop. They have all the usual overheads of a business as well. You may also have noticed that it’s free to set up an Etsy account. With that account you are able to use Etsy as a buyer, or as a seller. So how does Etsy pay for all this? Well, from seller fees. These are subject to change and new rules at any point in time, although you will be informed in advance of any changes, so you have the option to opt out or close your shop if you wish.

As I write, you are charged a fee of twenty cents (yes, although Etsy is available worldwide, it is a US company and fees are charged in $) for each product that you list. When you list a product, it remains in your shop for a few months, then if it hasn’t sold, the listing expires automatically. If you have multiple numbers of one product (for example twenty beading tutorials), then you can add them all as a single listing – just remember to fill in the ‘quantity’ box when you set up the listing. In that case, each time one of the products sells, the remaining products have their listing time extended. Once a listing has expired, you have the option to re-list it, but this will cost you an extra listing fee. You also have the option to ‘automatically’ re-list products, so you won’t have to pop over and do it manually, but beware, if you do this, your listing fees can spiral out of control. After all, ask yourself, if a product hasn’t sold, does that mean I should abandon it?

Then you will be charged a fee on each product that you sell. Please investigate the Etsy rules for the precise fees, but in essence, if you sell a pattern for $5, then Etsy will take their fee, so you will actually only receive a proportion of that $5. So, when you set your price, you might wish to remember this: it is a cost that you should be factoring into the price. For a handy blog on pricing, take a look here.

Finally, there is a set of optional fees that you can pay. Stop and think for a moment: Etsy is like an enormous shopping centre, or High Street, with millions of shops. Unlike a physical shopping centre, nobody can walk around it to see what’s there, so how will anyone find your shop? Firstly, you need to tell all your friends about it and ask them to tell all their friends as well. Secondly, if the tags on your products were smart, then people will find you through the search. Think about it: as a customer you might go and randomly browse pages on Etsy, but more likely you will use the search facility. So the customer might search for ‘pink bracelet’. If you had a listing with a tag of ‘bracelet’, then you may appear somewhere in that search, but most likely way, way down. There are a lot of bracelets on Etsy, so how does yours get to the top of the listings? If one of your tags was ‘pink bracelet’, then you might stand a better chance, but even so, I’m guessing there are still a lot of pink bracelets on Etsy. So what do you do? Well, Etsy have thought about this too and they have the option to advertise. You can set a daily budget and for this, your products will appear higher up in the search results. You are only charged once someone clicks onto your product, but remember, this still doesn’t guarantee that person will go on to buy the product. So, although the advertising is an option, in reality, if you don’t pay for advertising you can pretty much guarantee nobody will ever find your shop…unless you have a brilliant marketing machine outside of Etsy which tells everyone about your Etsy shop. You don’t have to set a very high advertising budget, but of course, the more you spend, the more your products will be seen.

How to Start an Etsy Shop and Make Money

This is the bit you’ve been waiting for right? You don’t just want to know how to start an Etsy shop – you want to know how to make money from it. Well, there isn’t a definitive answer to that. So I’m going to share the steps that you need to take care of.

1. Let everyone know about you: as I said above, you can have the best products in the world sitting in your Etsy shop, but if people don’t know it’s there, how are you going to sell any of them? So you need to use any means of advertising you can to get people to find you, but remember to be smart about it – think about how much you’re spending, or you will find you are spending more than you are earning
2. Once all those people have found your products, how do you make them buy? Again, there isn’t a simple answer to that, but you do need to make sure you have brilliant photos and a really helpful description. Put yourself in the buyer’s shoes, what would you want to know? Make sure you include that information
3. There is no magic formula to Etsy: it’s the same as any other business – do your research. Are the products you sell the sort of thing that people want to buy? Who, or what, are you competing with? Are your prices competitive. If you sell pink bracelets and five hundred other Etsy shops also sell pink bracelets, then why does a customer want to buy yours? What makes yours special or unique? (In business speak, this is your ‘Unique Selling Point’ or USP). How are you going to tell your potential customers about your USP? If you are trying to sell something that nobody wants to buy, or if you have too many competitors, then you’re simply not going to make sales.

Yes, Etsy has lots of blogs and tools to help guide you through the principles of selling and marketing, but at the end of the day, Etsy can’t do this for you. They only provide the environment in which you may be able to sell. In essence, they’ve done a couple of things for you: made it really simple to build a professional looking shop, and refined your audience, so instead of having to find the interested people across the entire internet, Etsy are bringing those potentially interested people into a confined space for you. The rest is up to you.

Why am I closing my Etsy shop?

Basically, for one simple reason: I pay Etsy more money than I make in sales and that is about to get worse. Let’s deal with the last bit first: why is that about to get worse? Well, Etsy is affected by the VAT mess that the EU put in place last year. I live in the EU, so Etsy are about to start charging me VAT on top of all the fees. That means every product listing fee increases by 20%, every time I sell something, I pay Etsy an extra 20% of their fee. All my advertising fees increase by 20%. What do I get for this extra money? Absolutely nothing. What choices do I have? Either to swallow the loss, or put my prices up to cover it, which means I risk becoming uncompetitive with all the US sellers who don’t have to pay VAT. If you are confused by this (who isn’t?), then you can find out a bit more about EU VAT in this blog that I wrote last year.

So, how come I end up paying Etsy more than I sell? Well, this could be a factor of my own incompetence. Perhaps I haven’t done my market research, so my shop is full of products that nobody wants to buy (not true: I have made around 100 sales and I have several hundred followers – these are all people who are ‘interested’ in my shop). Perhaps my product descriptions, photos or prices are wrong, so in spite of having a lot of admirers, I’m somehow not managing to convert these people to buy my products. This may well be true. Perhaps I’m just not getting enough people to look at my shop: after all, marketing is all about the ‘funnel effect’…of all the people that look at your shop, a small percentage will think about buying your product and an even smaller percentage will actually make the purchase. So it’s a numbers game really: the more people who know you are there, the higher the chance of making a sale. Or is it? Is it better to have just a few people, but have all those people genuinely interested in you? So, I could increase my advertising budget to try and get myself seen by more people, but that may be throwing good money after bad: it still doesn’t guarantee any sales.

I may be missing a trick, but as far as I can see, Etsy doesn’t allow me to ‘speak’ to my potential customers, beyond my shop description, personal biography and product description. Whereas on my own website, I can also write a blog, so people can follow my work and get to know me. I can build a list of people who subscribe to my newsletter because they are interested in me and my product. I don’t have to pay to list my own products, or pay anyone to sell them. I still have the option of paying for advertising through a third party (eg Facebook or Google), but I am much more in control of the process. Basically, Etsy makes money out of all its sellers whether they sell anything or not. As a seller, or potential seller, you may feel pressure to be on Etsy ‘because everyone who is anyone has an Etsy shop.’ There may be people out there who are willing to buy through Etsy because it is a ‘trusted’ brand, but who would feel a little unsure about buying direct from the crafter’s own website. I don’t know, but I do know that every rational business advice says it’s a really silly idea to pay out on anything for no return. So that’s why I’ve taken the decision to close my Etsy shop at the end of April 2016. My main focus has always been my own website and I make a lot, lot more sales through it than I ever did through Etsy. It costs me a lot less to run and yes, whatever forum on which you sell, you need to put in a lot of hours of marketing, so I don’t have time to do this on both sites, therefore Etsy will be the one to go because it costs me more to run.