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How to Make Money on Etsy: 5 Tips + 3 Big Mistakes

How to Make Money on Etsy
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While the COVID-19 pandemic has been hard on many businesses, others have thrived. Etsy, for example — which was already one of the leading e-commerce platforms — experienced monumental growth in 2020.

As a result, there’s been a surge in entrepreneurs looking for ways to set up shop on the platform.

In this article, we’ll explore exactly how to make money on Etsy — whether you’re looking to bring in extra cash on the side or grow an Etsy store into a full-time business.

How Etsy Works

While there are many major e-commerce websites that sell just about everything under the sun, Etsy takes a much different approach. Although you can find a wide variety of products for sale on the site, almost everything has a handmade, crafty or vintage feel to it. 

Customers have come to recognize Etsy as the go-to marketplace for these types of items. Instead of doing a Google search or heading to Amazon, customers go directly to Etsy because they know it’s the best place to buy the type of product they’re after.

The products for sale at Etsy are offered by third-party sellers, mostly individuals and small businesses. According to Seeking Alpha, 80% of Etsy sellers are individuals

Shopping on Etsy presents a much different experience than shopping on some other sites, like Amazon. Although most of the products listed on Amazon are also sold by third-party sellers, the sellers there generally have no face or personality; Amazon shoppers aren’t choosing a product because of the seller, and Amazon doesn’t give them much space to brand themselves.

Etsy is different and has a much more personal feel. Shop owners are able to create a profile, and since many of the sellers are individuals or small businesses, shoppers are more personally connected to the sellers they’re buying from. In some cases, that connection plays a big role in the products the customer chooses to buy.

As an Etsy shop owner, you can benefit from the site’s reputation and the way it stands out from other e-commerce websites. If you create and sell the types of products that are a good fit for the platform, it’s possible to get your items in front of a massive audience.

The items you can sell on Etsy include:

  • Handmade items produced by you or an approved outside manufacturer who complies with Etsy’s ethical manufacturing process and handmade policy.
  • Personalized handmade items, which includes custom orders for one-of-a-kind products.
  • Vintage collectibles (an item must be at least 20 years old to qualify as vintage on Etsy).
  • Art and photography
  • Beauty and personal care items
  • Digital downloads and printables
  • Craft supplies
  • Clothing and accessories
  • Home decor
  • Jewelry

How to Start Selling on Etsy

If you’ve decided to pursue selling on Etsy, you’ll want to understand the basics of how the platform works and what you need to get started.

Etsy Costs and Fees

There is no cost to create an Etsy shop. But like other popular selling platforms, there are some fees related to selling your products. 

  • Listing fee: 20 cents per listing. You’ll pay this fee for each item you list, whether it sells or not. Listings expire after four months, and if you want to re-list an item that didn’t sell, you’ll pay the fee again. If you list multiple quantities of the same item (including digital downloads), you’ll pay the initial 20-cent listing fee and the listing will be automatically renewed at a fee of 20 cents for each sale.
  • Transaction fee: 5% of the selling price, including the cost of shipping and gift wrapping (if applicable). 
  • Payment processing fee: 3% + 25 cents. This applies only if you’re using Etsy Payments to process transactions. This is the fee for sellers in the U.S., but the fee varies for sellers in other countries (details here).

Etsy also charges an outside advertising fee in some situations. They advertise products on search engines and on other websites, and if one of your products sells as a result of one of those ads, you’ll be charged a fee of 12-15%. 

All sellers are automatically enrolled in offsite ads, which means Etsy may be advertising your products and you may be subject to this fee on some sales. Sellers who have made less than $10,000 in the past 365 days have the option to turn off these ads in order to avoid the fees.

If you were to sell a product for $20, here’s how the fees would break down:

Listing fee$0.20
Transaction fee$1.00
Payment processing fee$0.85
Total fees$2.05
Total fees as a percentage of sale~10%

In this scenario, you would be keeping $17.95 from the $20 in sales. This is assuming the sale is not made through an outside advertisement, which would add an additional $2.40 to $3.00 in fees.

Compared to some other platforms, the fees for selling on Etsy are not too bad. 

The Skills You Need to Succeed on Etsy

Some of the skills you’ll need in order to have success with an Etsy shop will depend on the types of products you’re selling. Of course, you’ll need to be crafty or have a strong sense of style with certain products. But regardless of what you’re selling, there are a few skills that will be needed for any Etsy shop owner.

  • Attention to detail. Etsy shoppers are looking for special items. They’re not simply looking for the lowest-priced product or shopping for commodities that can be bought anywhere. Your shop, your listings, your product photos and your products themselves will need attention to detail in order to stand out and convince shoppers that yours is the product they’ll love.
  • Communication. Your listings should effectively communicate the details of your product so customers know exactly what they’re getting and why they’ll love it. You’ll also need to communicate very well with customers that reach out to you before or after a sale. Etsy customers place a lot of weight in user reviews when making purchasing decisions, so you’ll want to do whatever you can to earn a five-star rating.
  • Organization. Running your own shop will require you to manage inventory (if you’re selling physical products), handle sales and shipments, and all other details related to your shop and your products.

Etsy Capital Requirements

How much money will you need to invest in order to start your Etsy shop? The answer to this question totally depends on the types of products you’re going to be selling. 

If you don’t have much money to invest in getting started, there are some low-cost options. You could create and sell digital products, such as printables, which wouldn’t require you to spend any money on inventory or materials. You can even use free software like Canva to create your products. In this case, your only start-up costs will be the listing fee of 20 cents for each product. So if you launch with 10 different products, your start-up costs would be just $2 to get all of your products listed on the site.

Aside from printables, there are some other low-cost options. One example is to design, print, and sell stickers. To do this, you could invest in a printer, sticker paper and a cutting machine, or you could outsource the printing. When you’re just getting started, it may be more practical to outsource the printing. The prices for a service like Sticker Mule will depend on the types and size of the stickers, as well as the quantity you order. But for example, the current price for 100 four-inch circle stickers is $102. 

Of course, there are also plenty of other products you could sell that would require a much more significant upfront investment. If you’re going to be selling vintage items, you’ll need to buy the items first. If you’re making handmade goods, you’ll need to invest in the materials and tools needed to create the products. In some cases, start-up costs could be a few thousand dollars or more.

The nice thing is, there are options for any budget. A lack of capital is not a legit reason to refrain from starting an Etsy shop.

How Much You Can Make on Etsy

The big question you’re asking that may determine whether you decide to start an Etsy shop or pursue some other venture is, “How much money can I make?”

Of course, the amount that an Esty seller makes varies from one shop owner to the next. For many sellers, it’s a fun way to make some extra money on the side. For others, it’s a huge business that expands well beyond a one-person operation. 

Let’s take a look at a few real-world examples to see what’s possible.

  • Kelan and Brittany Kline of The Savvy Couple make about $100 per month selling only downloads. 
  • Ben Hawes started his shop UpskilledSwag about a year ago. As a result of the pandemic, he began selling Zoom humor and work humor merchandise. In his first year of operation, his shop has generated over 300 sales and $10,000 in revenue.
  • Snocca Nails sells luxury reusable nails and has generated more than $15,000 in revenue in less than a year on the platform.
  • Taylor and Katie Smith of ShopStudioSisters started their shop in March 2020 and made $117,000 before the end of the year by selling stickers.

Of course, there are also some well-established shops that have been around on Etsy for several years and are making larger amounts. Marketplace Pulse has a list of the top 100 Etsy sellers based on the number of sales made in the past 30 days.

At the top of the list is PlannerKate1, currently with 60,000+ sales in the past 30 days. With most products listed at a few dollars, this shop is presumably generating low-to-mid six figures in revenue per month.

One of the nice things about Etsy, at least for anyone who is considering starting a shop, is the fact that you can see the number of sales made by any shop on the platform. While you can’t see a dollar amount for the sales or profit, many shops have products that are priced in a similar range, so you can get a ballpark estimate of how much money they’ve made.

Keep in mind that the sellers listed here are success stories. There are also plenty of sellers who are making just a few sales, or no sales at all. Starting a shop certainly doesn’t come with any guarantee.

It’s also important to remember that most of the numbers you’ll see for Etsy sellers are presented in number of sales or revenue, not profit. The profit margin on digital products is typically very high, but physical products have a much larger cost to produce, resulting in a much lower profit margin.

What Sells Best on Etsy

If you’re trying to decide what types of products you should sell on Etsy, statistics on the top-selling categories may be helpful. According to both Statistica and MarketplacePulse, hand-made goods account for 85-90% of sales on Etsy. 

And according to the same reports, here are the most popular categories among Etsy hand-made sellers worldwide as of June 2020:

  • Home & Living – 25%
  • Art & Collectible – 21%
  • Jewelry – 15%
  • Clothing – 11%
  • Accessories – 8%
  • Bath & Beauty – 6%
  • Toys & Games – 4%
  • Bags & Purses – 3%
  • Weddings – 2%
  • Books, Movies, & Music – 2%
  • Pet Supplies – 1%
  • Electronics & Accessories – 1%
  • Shoes – 1%
  • Vintage – 0%

There’s no separate category for digital downloads. Each product is placed in the most appropriate category by the Etsy seller, so digital downloads could be included in many of the categories listed above.

Helpful hint: If you want to find out what category a product is listed in, scroll all the way to the bottom of the listing and you’ll see “Explore related categories & searches.” The first one listed is the primary category for that product, as shown in the screenshot below.

How to find the primary category of an item on Etsy.

How to Do Etsy Market Research

As you’re working to decide which products to create and sell, there are a few techniques and tools that can be very helpful.

1. Use Etsy’s Public Details 

You can get a good idea of the types of products that are selling and the shops that are doing well simply by looking at seller profiles. Etsy displays the number of sales each shop has made. While they don’t show the amount of revenue these sales have generated, being able to see the number of sales is still really helpful.

How to find a shop’s number of sales on Etsy.

You can also see how many customer reviews have been left. Shops with hundreds or thousands of reviews are probably doing a lot better than shops that have three reviews. 

To see the number of reviews, click on the stars next to the number of sales (as shown in the screenshot above). You’ll be led to the reviews section, which shows the overall rating, along with the number of reviews received by that seller.

2. Use eRank for Thorough Market Research. 

eRank is currently the best tool available for Etsy sellers who want to do thorough market research. 

There are many different features including:

  • Keyword Explorer: Discover keywords and view search volume estimates to see what people are looking for.
  • Keyword Lists: Save and organize keywords that you find.
  • Listing Audit: Get suggestions that can help your listings rank better in search.
  • Rank Checker: See where your products are ranking in Etsy search for specific keywords or phrases.
  • Competition Tracker: Track the estimated daily sales volume of your competitors.

There’s a free plan available from eRank that offers a limited set of features, or you can upgrade to a paid plan for $5.99 or $9.99 per month.

3. Use Your Own Internal Data

Once your site is up and running and making some sales, you can also use your own sales data to know what products are in demand. Create more products that are similar to your most popular products.

Five Tips For Making Money on Etsy

Creating an Etsy shop is the easy part. Making sales, on the other hand, will be more challenging. 

There’s a lot of competition on the marketplace. According to MarketplacePulse, there are currently about 103 million products listed on Etsy and about 33 million items have been sold in the past 30 days

That means the average listing makes roughly one sale every three months. If you’re hoping to have success, you’ll need to be well above average.

I don’t include that statistic to discourage you from creating an Etsy shop, but it’s important to recognize that selling on Etsy requires a lot more effort than simply creating a shop and listing some items.

Yes, Etsy does provide a tremendous platform with a large audience, but there are also more than 100 million other products on the platform that could be taking attention away from yours. 

You’ll need to be prepared to work in order to grow your shop. Here are some specific tips that will help get you on the right track.

Tip #1: Optimize Your Listings for Etsy’s Search Engine

With so many products competing for attention, getting your listings to rank at or near the top of the Etsy search results for the most relevant keywords is critical. If your listing is buried several pages deep, it probably won’t get enough exposure to make sales organically.

While there are other ways to generate sales aside from organic search rankings, having success with Etsy search is key to long-term success and sales that come in day-after-day without any promotional work or expense on your part.

Ben Hawes, side hustle coach and creator of UpskilledSwag, says, “If folks can harness the power of SEO on Etsy, they will unlock new sales to strangers across the country and across the world. It’s not easy, but if you can master it, it will create powerful change in your Etsy journey.” 

Specifically, Ben highlights these five SEO tips:

  • Fill out every single text field available on your shop profile so Etsy can learn what your shop is about and start to recommend it to shoppers. This means shop description, shop owner bio, policies and procedures, and so on.
  • Use all 13 tags available to you for every product. If you leave them blank or only use a few, you are minimizing your chances to show up in search. 
  • Use “long tail tags” on your products. These are tags that are both longer and more specific than simple one-word tags. A long tail tag might be a few words long like “Zoom Employee Gift” compared to just “Zoom.” This makes it more likely that you will show up earlier and be more relevant for those who search on Etsy. 
  • Maximize your product titles and descriptions. In addition to tags, Etsy reads your titles and descriptions for your key search terms.
  • Offer free shipping on your items if you can. Etsy is more likely to recommend your products if you offer free shipping. 

Tip #2: Use Etsy Ads

Etsy offers advertising options that will help to get exposure for your listings. The ads are displayed on search results as well as other pages throughout the site. You’re able to target specific keywords in order to get your products in front of the right customers.

As a new seller, one of the biggest challenges is getting momentum. Buyers notice things like the number of sales your shop has made and the reviews that customers have left. Advertising can help you get some momentum that produces sales and leads to customer reviews, which will in turn encourage more visitors to purchase your products.

You don’t need to spend a huge amount of money in order to have some results with ads. Even just a few dollars per day may be enough to get the push you’re looking for.

Ruth Lee from Snocca Nails said, “For us, a $20-30 daily budget works great. In total, we’ve spent $3,470 on ads and the return has been $6,755 in revenue.” 

According to Lee, Etsy’s advertising program has produced a better return on investment than the ads her company runs on Google, Bing and social media for its own website, SnoccaNails.com, and also better than the ads it runs on Amazon for its Amazon shop.

Tip #3: Take a Personal approach

Etsy is a much different platform than Amazon, Walmart, eBay and other leading e-commerce sites. Likewise, the shoppers who buy things on Etsy are looking for something different. Etsy allows sellers to have a more personal touch with their shops.

When it comes to selling online, many individuals and small businesses try to look like big businesses. On Etsy, that can be detrimental. Etsy shoppers like to buy from small sellers. 

As a shop owner, you can give your site a personal touch through your profile, the images you use, and even the details of your listing. You can also provide customers with much better, faster, and more personal customer service than they would get from a larger business.

Buyers also enjoy leaving positive reviews for small sellers that have provided a great experience. They know they’re helping a real person by leaving that review.

Tip #4: Drive Traffic to Your Shop from Other Sources

One of the perks of selling on Etsy is the fact that the platform already has millions of customers, and you can get your products in front of those customers. But that doesn’t mean that you shouldn’t work to promote your products in other ways.

Suzie Finch, who runs multiple Etsy shops including introDuice and has made more than 20,000 sales on the platform, says that doing your own marketing is a key to success. 

“Although Etsy is a self contained marketplace with its own search engine, it can be difficult to gain visibility and traction as it’s really crowded and competitive. The real gains are made outside of the platform, driving traffic from external sites like Instagram, LinkedIn and Facebook,” Finch said. “The best shops create a lot of noise and are a buzz of activity across the web. This is essential if you want to have a successful Etsy shop. Posting your listings and just leaving them is a big mistake; you have to constantly tweak, research and refresh what works until you find the winning formula. It’s hard work but the rewards are amazing.” 

You can use social media platforms, build an email list, run ads on other sites, or use your own website or blog to send traffic to your product listings and make more sales. 

An Etsy shop could be a great complement to an existing website or blog. Danielle Mühlenberg started her Etsy shop PawLeaks as essentially an extension of her blog by the same name.

Read our guide on how to start a money-making blog.

Tip #5: Provide Detailed Listings

Don’t rush through the process of creating your listings. Provide as much detail as possible so customers know exactly what they’ll be getting, how they can use it and why they’ll love it. If you’ve done some keyword research, you should have a list of keywords and phrases to include in your listing and your product titles, which will help with SEO. 

“As Etsy owners, we know our products like the back of our hand,” said Keighty Noreen, owner of the Etsy shop Paper Everyday. “But for customers, all they have to go off of is what’s included in the listing. Just to be safe, always assume that the customer needs to be walked through each part of the process to ensure nothing gets misunderstood.” 

The Three Biggest Etsy Mistakes

Be sure to avoid these common mistakes.

Mistake #1: Inconsistent Activity

Although selling on Etsy provides a lot of flexibility, you’ll need to treat it like a serious business if you want to get results — and that involves being constantly and consistently active.

“You can’t set it and forget it,” said Taylor Smith of ShopStudioSisters. “You need to be active in your storefront every week just like a regular business.” 

Along the same lines, you simply need to get started and work to move forward. Don’t expect to be an expert right away or feel the need to master selling on Etsy before you start your shop, or you’ll never get around to it.

Lauren Delaney, whose shop LDelaney has made more than 30,000 sales, says, “Again and again, I hear people talking about how they are not ready to start their Etsy shop. They are missing the point. Success is an ongoing process of failure and revision.” 

Mistake #2: Bad Photos/Images

The photos and images for your product listings will be crucial for making sales. With competition on Etsy being so fierce, the quality of your photos and images can make or break your shop. 

Ruth Lee from Snocca Nails says your photos “must stand out from the photos of endless search results.”

You also need to consider how visitors will be viewing your listings and photos. “With more and more customers shopping on the Etsy mobile app or their phone browsers, having flawless landscape-oriented photos is crucial to success on the platform and converting views to sales,” said Katie Smith, the owner of ShopStudioSisters.

For some tips, see Etsy’s Ultimate Guide to Product Photography.

Mistake #3: Not Researching

It’s great that you can sell a wide variety of products on Etsy, but you shouldn’t simply pick random products to create just because you want to. You should be researching product ideas using the tips and resources mentioned earlier in this article to verify there is demand for the products before you create them. 

“Too many Etsy sellers create products with no strategy,” said Cody Berman from Gold City Ventures, whose company sells printables on the site. “Make sure to understand your target buyer’s intent before creating and listing a product. Do your keyword research and make sure there’s an audience before creating a product. You could create the best-looking product in the world, but if there’s no search intent for that product, you’ll never make any sales.”

How to Make Money on Etsy: Wrap-Up

Etsy presents an outstanding opportunity for sellers who want to get their handmade, crafty, or vintage products in front of a massive audience. 

The costs of starting your own Etsy shop can be very low (depending on the products you’re selling) and it’s possible to run a shop as a fun side hustle or turn it into a full-time business. 

However, there’s a lot of competition on the platform and you’ll need to be willing to put in the work to get visibility for your products and grow your shop. 

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Marc Andre is a personal finance blogger at Vital Dollar, where he writes about saving, managing and making money. He lives in Pennsylvania with his wife and two kids, and has been a full-time blogger and internet marketer since 2008.

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