The Pros and Cons of Selling on Etsy

Pros and Cons of Selling on Etsy

I have been selling on Etsy since 2016, and in the last three years, my main shop has brought in over $300,000 in sales. This is not to brag, but just to say that I’ve learned a thing or two about selling on Etsy. And I would describe our relationship as the love-hate type. Here are some pros and cons to selling on Etsy based on my experience.

PROS TO SELLING ON ETSY

Etsy is amazing when you are just starting out and you aren’t really sure where you are going yet. It’s a great way to try your hand at making money online and running an ecommerce store.

It’s easy to get going

As long as you have a few dollars, an email address, and access to a bank account, you can start an Etsy shop in about an hour. It also helps if you have something to sell, of course, but the point is, it’s pretty easy to get going. The system itself is simple to understand and you don’t need to know how to do any coding.

Etsy is trusted by buyers

Etsy is becoming a household name. Buyers trust that purchases made on the Etsy platform are protected and secure. They don’t have to worry about purchasing a product from an unknown source and wonder if it is legitimate.

Etsy has both buyer and seller protections in place to lessen the chance of bad transactions happening.

Etsy provides the customers… sort of

We’ll get into the details of this later in the “cons” section, but the reality is that Etsy has over 96 million active buyers. In theory, if you have something to sell that someone is looking for, and you play by all of Etsy’s rules, then those customers who are shopping on Etsy looking for that thing, could find yours and buy it. And when it works, it’s really a dream come true.

There are built-in analytics

On the Etsy seller dashboard, you’ll get a snapshot of your views, visits, number of orders, and revenue for a certain time period. You can easily switch between different time periods, or click into the “Stats” page and get even more insight. There, you can find details on conversion rates, traffic sources, and keywords that have been searched to find your products.

The analytics Etsy has built in to their system can be very useful for figuring out what is working and what isn’t.

Etsy Shop Stats

U.S. state sales taxes

I’m from the United States, so I can only speak on my experience from dealing with state sales taxes. Every U.S. state is different in whether they require sales tax to be collected, and how much it needs to be. I’m from Maine, so I only have to collect sales tax from buyers who are also in Maine, but not every state is the same. Luckily, Etsy takes out the guesswork for the most part. At the time of this writing, they collect and remit sales tax for over 40 U.S. states, which means a lot of sellers don’t have to worry about that.

You pay less for shipping labels

If you ship physical products, the cost of the shipping labels can be one of the biggest expenses. If you use Etsy’s shipping labels, you get access to commercial discount pricing, which can save you some money as opposed to purchasing directly from USPS, UPS, FedEx, or other providers.

Etsy Discount Shipping Labels

CONS TO SELLING ON ETSY

Unfortunately, this list is going to be a bit longer. Etsy has a lot of things going for it, but there are definitely improvements that could be made. Let’s talk about it.

“I bought it on Etsy”

As I said above, Etsy is becoming a household name. This is great for making customers feel secure in their purchases, but unfortunately, it can mean that when you ask a person where they bought that beautiful handmade scarf, they will excitedly tell you “I bought it on Etsy!” The name of the individual shop that made the scarf is oftentimes forgotten or not recognized at all.

And Etsy doesn’t do much to help this. In fact, they kind of hide it. On the listing page for an item, the Shop Name is in smaller text than almost everything else.

Etsy Shop Name Hidden

And on the main browsing page, if you are using Etsy Ads to promote your product, no credit is given to the name of the shop. It simply says “Ad by Etsy seller.”

Etsy Shop Name Hidden on Ads

There is steep (and unfair) competition

Etsy is supposed to be a place for handmade products, digital creations, vintage goods, and supplies. In reality, there has been an influx of mass-produced items being listed and sold on the platform and it doesn’t seem like Etsy is doing much about it. It’s hard to compete as a handmade seller when other companies can create similar products for pennies on the dollar.

BS copyright claims

Let’s talk about intellectual property. Basically, stealing is bad and nobody should do it. However, I’m not here to talk about actual cases of copyright infringement, although it is a serious issue. I’m talking about bullshit cases that are used to “take down” competition.

I’ve heard from a lot of sellers that someone will report one or many of their products as “infringing on copyright” and Etsy will respond immediately by taking down the listing without any actual research or proof. The sellers then has a chance to appeal and can typically get the product relisted, but it can take days or even weeks for that to happen. In the meantime, that seller is losing out on potential sales.

If a shop gets too many violations, even if they are all reversed, Etsy can decide to just shut down the shop completely. That’s it.

And what’s worse is that the people filing the BS copyright claims are never held accountable.

Confusing financial recordkeeping

Etsy keeps records of all your sales, which you can access and download for your own recordkeeping. This is wonderful and very convenient. However, remember I said in the U.S., Etsy collects and remits sales tax for most of the states? The sellers never see that money, which is fine. The issue is that sometimes, the records show the numbers including the sales tax, and sometimes they don’t.

For instance, if you download the ‘Etsy Direct Payments” spreadsheet, the amount of sales tax collected is not included in the total sales. This is the amount needed for filing end-of-year taxes and other financial records (and for those shops who receive a 1099 from Etsy, this is the amount that will match that).

However, in the “Etsy Statements” downloads for each month, the sales tax is included in the total sales. And it is not shown separately anywhere, so you don’t know how much is actual sales and how much is the sales tax.

This is an even bigger issue if you use a software like Quickbooks that pulls the information directly from Etsy. The sales tax is included, which artificially inflates your sales numbers.

No customization, no email list

There is very little opportunity to brand your Etsy store, or show real ownership of it. Sure you can create product listings and a store banner that fit your vibe, but that’s about the extent of it. You don’t really own anything. You can’t ask customers to go to your website and you can’t ask them to join an email list. If Etsy decides to shut you down tomorrow, you can’t take your customers with you.

Fees, especially hidden fees

Let’s talk about the fees. Most people will tell you that Etsy has some of the lowest fees for an ecommerce platform out there. And on the surface, that is true. Here are the basic fees that you need to know about to get going:

  • Start up fee: $15 USD
  • Listing fee: $0.20 for every item you list for sale, that is paid again every time that listing expires or is sold
  • Transaction fee: 6.5% of the entire purchase price including shipping when an item is sold
  • Processing fee: In the U.S., it is 3% of the total sale price, plus $0.25

Now let’s get into the other fees that aren’t as obvious.

  • Etsy ads: These are optional, and not horrible. You can choose if you want to participate, which listings you want to include, and how much per day you are willing to spend. However, you have no control over which keywords your ads are going to show up for. It’s all based on your SEO and the overall algorithm. You are charged every time someone clicks on your listing from an ad, whether you make a sale or not.
  • Offsite ads: This is the one that really irks me. Every shop is immediately signed up for offsite ads (these are the ads that are shown on Google and other sites). If your shop sold less than $10,000 in the last 365 days, you can go into your settings and opt out of this program, if you want. If you stay in, you will be charged 15% of any sales that happen from a customer clicking on an ad. (You will not be charged if there is no sale, thankfully). If your shop is over the $10,000 mark, you are no longer able to opt out. You are required to participate and your percentage goes to 12%. I hate this. You have no control over what ads are shown, where they are shown, or who sees them. And you can’t opt out.

There are a handful of other fees that I won’t go into detail about because they are either optional, or only affect a small number of sellers. For more information, please see the Etsy Fees page on their website.

No digital product variations

Etsy is a great place to sell digital products, such as printable artwork, downloadable planner pages, or design templates. You can attach a PDF or other file type to a listing directly, so that when someone purchases it, they get a download link for immediate access without you having to do any extra work. This is super convenient, however there is one small problem.

There is no way to offer variations on digital downloads. So say you have a digital planner and you want to offer it in both a Sunday start day or a Monday start day. You can’t have that as a choice to purchase in the same product listing. You either have to create two separate listings for essentially the same product, or you need to just give access to both options. It would be much easier if you could have the customer select exactly which variation they want to purchase.

Hidden product description

One of the most common frustrations I see from other sellers is that customers don’t read the product description and then they are angry with the item they receive. When you look at a product listing on Etsy, there is a small line of text pretty far down the page that says “Item Details.” You have to click on the words “Learn more about this item” for the description to expand so that you can read it. This is the place where sellers are giving all the details about the product they are selling, including size, colors, and other important information. Etsy does not make it very obvious that the customer should click on this section to read this information prior to purchasing, so oftentimes, the customer just goes off of the pictures and doesn’t really know if what they think they are getting is actually true.

Etsy Item Details

If you build it, they will (not necessarily) come

Etsy has all the power. Like I said above, if you have a great, unique product, your SEO is on point, and you follow all their (ever-changing) rules, Etsy will probably give you customers. The problem is that things are constantly changing, their priorities are constantly changing, and you have to continually keep up with the next most important thing. You could have all the customers you could ever want today, and then they will change their algorithm or launch a new program and *poof* your customers are all gone.

In the last few years, there have been dozens of changes that affected how people on Etsy find different products. Every time a new change happens, Etsy decides your shop needs to adhere or it will begin hiding your listings behind the shops that do.

Here are just a few examples of changes they made recently that sellers had to keep up with to stay relevant:

Shit customer service in general

The last thing is just that Etsy’s customer service in general is pretty terrible for sellers. Like with the copyright infringement cases above, they can shut your shop down at any time, for any reason, and not even tell you why. In fact, I recently tried to open a new shop. I paid the $15 start up fee and got two items listed. Next thing I know, my show has been deactivated, I received no email stating that it was going to happen, and no explanation why. When I appealed, they simple said this:

Etsy Account Status Appeal

That’s it. I’m an Etsy veteran, and I still don’t know what’s wrong. My bank account and card information are correct, and I don’t own any fees.

It’s frustrating because it’s almost impossible to get anyone on the phone to have a conversation with them, and emails from Etsy seem to always be vague just like this one.

It’s pretty frustrating.

SHOULD YOU SELL ON ETSY?

All-in-all, I do believe that Etsy has some positives and for a new seller just starting out, it could be a great place to get your feet wet. But please, don’t make the same mistake I did for years and rely WAY too much on Etsy for your business. You want to own your own business and have control over how things are done. As soon as you are ready to take things more seriously, get your own website or shop page that you can control.

And if you need help with taking that next step, stick around because I’ll have plenty of ways to help you with just that!

Pros and Cons of Selling on Etsy
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