How to Start an Etsy Business

By | October 12, 2021

Etsy is the marketplace for selling handmade items and craft wares. If you’re looking for a side hustle or a jump-off point for your future brand, Etsy is ideal.

The platform grows year on year, which is fantastic in terms of reaching customers. But it also means that there are over 4.3 million active sellers on Etsy, an increase of 2.7 million from the previous year. So, clearly, there’s a lot of competition that will likely get even fiercer in the years to come. 

Don’t be frightened away! In this guide, we’ll teach you how to research and plan for success, set up an Etsy shop the right way, and promote your products effectively to increase sales.

The Easy Parts of Starting an Etsy Business

Starting an Etsy business is easier than building an ecommerce store from scratch. With Etsy, you have a ready-built platform on which to list your items and a built-in audience. It’s also simple to get started and affordable. You can sign up for free, and it’s just $0.20 to list an item on Etsy. 

After that, you should note that Etsy takes 5% of the displayed price plus a payment processing fee of 3% + $0.25 per sale.

The other thing about Etsy is that you have a ready-made audience that you can tap into. Consider the fact that if you created an ecommerce website from scratch, you’d have to put in the time and money to build traffic.

Etsy also has a particular target market that you can easily reach through social media. The typical buyer on Etsy is aged 18-35 and identifies as female. Etsy also carries some aspects of culture in that it started as and largely remains a crafting community.

This gives you so much to work with to identify viable products, understand the target audience, and sell to them.

The Difficult Parts of Starting an Etsy Business

Everything has its downsides. Etsy’s limitations may mean you’d prefer to use it to set up a side hustle or a starting point from which to grow a brand.

Given the generally low price point of items on Etsy, you’d need to make a ton of sales to come out with a sufficient annual income. This also means that your Etsy venture could be labor-intensive. 

Unless you’re a vintage seller, you’ll need to put in a lot of blood, sweat, and tears to craft all of your items. In some cases, you’ll be able to create items in bulk. But that means you’ll need to invest in equipment. And it doesn’t work in other cases, say if you create bespoke, handmade jewelry.

You’ll also need to manage the business side yourself. This includes tasks such as tracking products and sales, managing finances, and promotion.

There are, however, automation tools that will help you speed up such processes. Buffer, for example, is a social media management tool you can use to plan, schedule, and post content.

Buffer has a forever-free plan with which you can manage up to three social media channels. Or you can get access to the full suite of publishing, analytics, and engagement tools for $5 per channel per month.

Step 1: Get Ready to Start an Etsy Business

If you want to create a successful Etsy business, you can’t go in with a haphazard approach. Proper research and planning lay the foundations for success. So, here’s what you need to do before you dive in:

Come Up with a Product Idea

Etsy products fall into three main categories: handmade items, craft supplies, and vintage goods. The platform is bursting with creativity and uniqueness. So, when it comes to generating ideas for your Etsy shop, you can use your imagination and get creative. 

Consider your hobbies and interests to come up with a great product idea. Perhaps you want to share your passion for collecting vintage buttons, craft one-of-a-kind ornaments, or sell custom stationery for others to use in their unique creations.

Research Your Idea

Given that most items on Etsy are custom or unique, it’s difficult to say for sure if your product(s) will be a great success. However, there are some things you can do to gauge if there are willing customers for your product.

Find five to ten Etsy shops that sell items similar to your idea. You’ll be able to see how many items each shop has sold. For example, here you can see that this handmade soap seller has made over 8,400 sales:

Find their earliest review to work out how long it took to make this many sales:

This seller has been operating since 2015. When you crunch the numbers, you can see that they sell over 100 items per month.

This, of course, doesn’t indicate that you’ll sell over 100 items per month because there are lots of variables. But it does prove that there’s demand for this type of item on Etsy.

Create a Prototype

The biggest part of whether you’ll be successful or not comes down to the product. Great products equal great reviews and, therefore, more sales.

So it’s a good idea to create a prototype of your product and gather feedback. If it’s not a handmade item, you can work with a typical product that you’ll sell, e.g., a set of vintage buttons. 

One way to gather feedback is via relevant communities on forums and social media platforms. Be sure to take all types of feedback on board. If certain requests or criticisms come up over and again, tweak your product or strategy accordingly.

Price Your Product

Even if you’re having a ton of fun doing the whole Etsy thing, the end goal is to create a profitable business. If you don’t weigh the costs correctly, you may underprice your items.

That being said, new sellers must price their items competitively to make those first sales and start building a good reputation for their Etsy shop. So you have to find the right balance.

Here are the costs you need to consider when pricing an item:

  • Materials
  • Equipment
  • Packaging
  • Shipping
  • Etsy fees
  • Your time and expertise

As you add up how much it really costs to make and sell each item, calculate how much you need to sell it for to make a profit. You don’t want to break even or only make a few cents per order, as that will not be sustainable.

Look at competitors on Etsy to see their pricing and consider ways you can either speed up the process of making your items or cut costs (but not quality). You want to be competitive in your pricing–not significantly higher or lower than similar sellers.

Consider Branding

You should build a memorable and professional-looking brand from the get-go. This will help you acquire and retain customers.

One of the first steps is to come up with a name for your Etsy shop. You have 20 characters to work with. 

The name should appeal to potential customers and reflect your products and brand. For instance, if being eco-friendly is at the core of what you do, you may wish to express that with your shop name.

You also want to consider how the name will look on packaging, thank you notes, stickers, and any other item you plan to print your logo on. And check to see if associated social media handles are available. You may want to have a dedicated website in the future, so consider how it looks as a domain name and if one is available with your desired name.

Most importantly, check to make sure that no other sellers on Etsy already have that name.

You can create a logo and other design assets for your brand when you have your name using a  free tool like Canva

Step 2: Set Up an Etsy Shop

Opening an Etsy shop isn’t difficult per se, but there are a lot of boxes to tick. Add all pertinent information, and you’re more likely to start making sales off the bat. So here’s your step-by-step guide to setting up an Etsy shop: 

Create an Account

If you don’t already have an account, you’ll need to register with Etsy. Then, click on your profile icon and select Sell on Etsy to get started.

You’ll then be asked to set a few preferences, including the shop language, country, and currency. Next, you must enter your shop name and check its availability. If another seller already has the name, you’ll need to tweak yours or go back to the drawing board.

Add Items

The next step is to list your items. Click Add a listing, and you’ll be taken to a page where you enter a bunch of details about the product. These include:

  • Photos: Add at least five clear, attractive, high-res images that showcase your product from different angles.
  • Listing title: You have up to 140 characters to describe the product. You should make the title SEO-friendly.
  • Product type: Is it handmade? Is it a finished product? How old is the item?
  • Category: Select the category you want your product to appear in when users browse the site.
  • Item description: Add as much detail as possible, not only about the item but the purchase process, e.g., when and how it will be delivered.
  • Tags: Use all of the 13 tags available to make it easy for customers to find your product. Think carefully about the keywords customers will search for in the category.
  • Variations and personalization: Add variations for different colors and sizes, if appropriate. Also, switch on the personalization function if you need to collect customer info to personalize the product, such as names, engravings, etc.
  • Price and delivery options: Etsy can calculate shipping costs for you if you enter the size and weight of the package.

Set Up Payment Preferences and Billing

To receive payments for your sales, you must enroll in Etsy Payments with integrated PayPal. This allows customers to choose from a variety of payment options when they check out. 

You don’t need to have an account with each payment provider, such as Apple Pay. You just need to enter your bank details and address to receive deposits from Etsy.

You’ll also need to add your debit or credit card details to pay the selling fees. US sellers can set up auto-billing, which means Etsy automatically charges fees to your card, and you don’t have to manually take care of your monthly statement.

Open Your Shop

Once you complete the setup, you simply need to click Open Your Shop to go live. The final step is to customize your storefront.

Add your logo as the account photo to make your shop look professional. You also have the opportunity to create a short bio that describes your shop. Here’s an example:

Next, add your shop’s policies on manufacturing, shipping, payments, and returns and exchanges. Include estimated shipping times and accepted payment methods.

In the policies section, try to add as much information as possible along with helpful instructions. Again, you want to make it easy for visitors to buy from you.

At this point, you also have the opportunity to reorder listings and group items if you sell multiple products. Doing this may help shop visitors find what they’re looking for quickly and easily, which, of course, helps with sales.

Step 3: Grow Your Sales

The “if you build it, they will come” policy doesn’t make for a successful business. Unless you’re extremely lucky, you’ll need to put the effort in to grow your Etsy shop. Here are some useful strategies you can implement to increase sales:

Promote Your Wares

Get the word out to attract more potential customers to your store. 

Given that Etsy centers on crafts and handmade items, Pinterest is the perfect platform for promotions. This is where you’ll find your audience as the communities overlap.

Create a business account on Pinterest with a link to your Etsy store. Create boards that contain not only the items you’re selling but also other relevant content. Users want to follow authentic, interesting accounts, not brands just trying to make a buck.

Etsy integrates well with social media. You can share updates, listings, reviews, and so on from directly within the platform. Or, if you want to take your social media marketing up a level, you can use a scheduling and publishing tool, such as Buffer.

Buffer lets you schedule social media posts in advance and gives you analytics to see what is working. It also identifies the most important comments and engagements and prioritizes them so you can respond to those faster. You can see your social media content calendar in Buffer to view all scheduled posts for multiple channels, including Instagram, Facebook, Pinterest, Twitter, and LinkedIn.

Using a social media tool like Buffer lets you create social media campaigns and stay in front of your audience while you focus on creating your products.

Monitor Your Shop

Track essential metrics to figure out what you’re doing right and where there’s room for improvement. Use the information you gather to make adjustments that increase sales.

For instance, if you notice that a particular item receives many views but few sales, there’s something preventing visitors from making a purchase. 

Test one solution at a time. For example, you might alter the product description. If you don’t see a change after the test period, you can try another solution, such as adding more photographs, and so on. By making only one change at a time, you’ll identify exactly what is and isn’t working in your shop.

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