Want to Start Selling on Etsy? What to Consider Before Opening Your Shop
Written for a blog post on a small business’ website.
According to SimilarWeb, Etsy is number 4 in the U.S. for ecommerce and shopping along with giants like Amazon and Ebay. Known as the hub for handcrafted products where a buyer can support small businesses all over the world, it is a common topic when speaking to someone who is interested in starting or already owns a small business.
In some ways, Etsy enables pretty much anyone to start their own business and to make money off of their passions. If there’s some niche hand made product that you want, Etsy’s got someone who sells it which opens up a lot of possibilities for both sellers and buyers. The site describes themselves as “a place where creativity lives and thrives because it’s powered by people” and highlights their ability to facilitate small business on a large e-commerce platform.
For a new small business it offers a lot of opportunities and dispels some of the mystique around running and owning a business. It helps handle shipping labels, offers opportunities for visibility on a global scale, and at a base level is free to sell on without paying any kind of subscription.
For customers, it provides an easy way to shop from multiple small businesses and offers safety in purchasing without being overbearing on sellers. If an order goes awry and the customer is not able to resolve it with the seller, Etsy will step in to figure out a problem.
Unfortunately, despite Etsy claiming to be at the forefront of support for small business the platform has begun rolling out features which bury smaller business and create difficulty due to high listing fees. They require a twenty-cent listing fee which lasts for four months or until sold, which is not altogether a bad deal.
The problem arises when customers actually make a purchase and Etsy claims a 6.5% transaction fee, and a commission of 3% + twenty-five cents per purchase. That’s almost 10% out of a seller's bottom line and this does not include shipping or taxes, so in order to make a profit Etsy sellers have had to increase prices.
When featured in CanvasRebel, our owner Amy Loyd-Williams explains that their choice to move to Etsy was choosing a lesser of evils and that and “their listing fee is far too high so [they] had to increase the prices of products” in order to make a profit.
Etsy will also do off-site advertising of any seller's products but any sales from those products require a 15% commission. So, if a seller is ‘lucky’ enough to have their product pushed without their consent, that creates a 24.5% fee for that sale. Sure, it is possible that such an ad creates visibility for a smaller store but the choice to be pushed off-site is not at the seller’s discretion.
Visibility and rising to the top can also be challenging for smaller businesses. Despite recently rolling out new search functions which are meant to help sellers “get discovered by more buyers, more frequently '' that supposedly implements newer ways to gain intrigue about the shops.
Photo by Julian Hochgesang on Unsplash.
Last November, the platform rolled out a video function similar to Tiktok claiming that video content has better conversion. This is no surprise, with the rise of TikTok most social media platforms have rolled out their own version of a video based algorithm. From the pandemic on, most small shops have had their success based upon the virality of content on TikTok.
The transition to video based social media content being king in advertising has been difficult for some shop owners but no one can fault platforms like Etsy for trying to keep up with trends. Owning a business means you must be flexible and ready to use these trends to your advantage.
However, Etsy has a problem with burying smaller businesses and making it near impossible for them to be seen. A feature deemed the Star Seller program causes some issues for smaller sellers.
It is intended to support businesses which have high reviews, quick shipping responses and high response rates to customers - essentially encouraging businesses to do more to create the best experience for their customers. This, on face value, is a great aspiration for sellers to meet and is overall encouraging the entire ecosystem of the site in a good direction
Photo by Tim Mossholder on Unsplash.
However, there is also a monetary requirement in order to make the Star Seller status. A shop must make a minimum of 5 sales equaling $300 within a 3 month period in order to qualify. For shops who are selling more budget friendly products, or just products which overall are not a huge investment, this is an almost impossible feat.
Amy, our owner has said: “I have a 100% rating in my response rate, shipping rate, and 5 star ratings, but I am still nowhere near becoming a Star Seller because of how difficult it is for me to meet $300 in profit so frequently.” Scully’s Stuff sells smaller products, of which the price of materials and labor have been calculated to also not be overpriced for customers.
The Star Seller which they describe as an “aspirational program that celebrates the best in customer service” does a good thing in showing buyers that a shop is reliable, and offers a special badge in listings. It is, however, quite apparent that there are financial gains to Etsy for requiring such a high monetary minimum.
Business is at its core about profit, so Etsy getting their share is understandable but the balance seems somewhat off for a platform that claims they focus on wanting people to “turn their ideas into successful businesses.”
Etsy claims that being a Star Seller does not affect the search results, but Star Sellers are pushed by ads in every search result. So new business owners and sellers who have budget friendly products should be sure to take these things into consideration
Small businesses are a great way to get unique products and support people rather than huge corporations, and some shops like ScullysStuff have included a “tip the artist” listing. This helps customers give some extra support to businesses to balance out the fees from Etsy, if they feel so inclined.
Etsy is a great place to find small shops to buy from, and while it is unfairly balanced in some ways, becoming a returning customer of these shops furthers their dreams. It is also a great place to start if you are making your first venture into selling your passionately made items, just be sure you know all the details so you can begin your business without being blindsided by fees.
Written June 12, 2023
