Pros and Cons of Selling on Etsy

In my last post, I wrote about my thoughts on the Star Seller program on Etsy. I thought it would also be valuable to bring the topic up a level and share my overall pros and cons of selling on the platform. I have been selling on Etsy for about 4 years – seriously for the last 2 – and I am working on opening my own retail website. To be clear, I am not closing my Etsy shop – I’m simply adding another selling channel. Since that was a big decision that involved me taking a serious look at Etsy and how it is and is not working for me, I’ve been reflecting on this topic quite a bit recently. I’ve learned a lot from my years as an Etsy seller that have led to a clear point of view on the pros and cons.

I can sum up all of Etsy’s pros with one sentence: Etsy is ideal for makers who want to start selling their products for the first time.

The platform. Etsy is extremely beginner-friendly and built with makers in mind. Listing products is relatively simple, and Etsy does a nice job of guiding you through the process. Etsy also provides tons of resources, tips, and other content to help sellers optimize their shops.

Compliance made simple. From legal and financial compliance perspectives, Etsy does almost all the work for you. Your shop is covered under Etsy’s Terms of Service, and they have a plug-and-play shop policy template that all shop owners can use. Etsy also charges and remits sales tax where and when applicable. (Note: You still need to report your Etsy earnings when you file your income taxes. Consult a tax professional for help.)

Etsy itself is a marketplace; its role is to connect buyers with sellers. It’s in Etsy’s best interest to have good sellers on their platform – thus, Etsy has a vested interest in ensuring sellers are compliant and law-abiding and provides sellers with the tools to do so. That gets us sellers out of needing to hire legal counsel or accountants, or be experts in that side of business ownership. That said, using Etsy does not absolve you from any and all legal or financial responsibility, so bring in the professionals when needed – for example, hiring an accountant to prepare your tax return. My point is, you’ll need them far less often, and maybe not at all, than if you were to create your own e-commerce platform from scratch.

TRAFFIC. Perhaps most importantly, Etsy brings traffic to you. Again, Etsy’s entire business model is connecting buyers with sellers. Etsy is successful when it connects the right buyer with the right seller. Thus, Etsy does a ton of marketing, promoting, and other efforts at the top of the conversion funnel to get sellers to Etsy and to you. This takes the weight off sellers to attract traffic, which is a huge deal. People know Etsy and trust Etsy – thanks in part to sellers, and thanks in part to Etsy itself – so they’re going to go to the website, and even find your products and your page, without you needing to guide them. Etsy does that for you. You can advertise – both through Etsy and on your own – but you don’t have to in order for customers to find you, like you would need to with your own site.

The fees. Etsy takes a large (in my opinion) chunk of your sales in the form of various fees. On one hand, I understand this – as you may have gleaned from the above, Etsy does a lot for sellers. All of those things – content, advertising, technology, support – cost money to sustain and to do well.

I won’t go in-depth on all of the fees, but in a nutshell, Etsy takes a 6.5% (up from 5% in early 2022) service fee from every purchase – including the shipping line item, a credit card processing fee, and a fee each time a new listing is added or a listing is renewed. It adds up quickly. While I know Etsy needs to keep the lights on somehow, Etsy is a public company that boasted over $2B in revenue in 2021. Especially given the recent fee increase on the heels of a great year, I question how much Etsy *really* needs to take from its sellers and whether those dollars are being used to benefit us sellers, or shareholders.

Dilution of handmade and vintage. Etsy was created for the purpose of selling handmade, vintage, and craft supply items. Recently, Etsy has started to become overrun with mass-produced and dropshipped items that aren’t in any of those categories – think things you’d find on Amazon or Ali Express. While mass-produced items themselves aren’t inherently a bad thing necessarily, when you’re seeing them on a platform intended for handmade and vintage items, it does create confusion, saturate the site, and devalue the actual handmade and vintage products. That issue is probably worth an entire separate blog post itself, but for now, I’ll just say it’s a major con of Etsy.

The Etsy SEO learning curve. Etsy maintains an algorithm that determines which products come up in search results, and in which order. It looks at a number of factors, like how well the search terms match the words in your product listing, a shop’s review rating, and more. Thus, appealing to Etsy’s algorithm through SEO is a significant factor in ensuring your products reach the people searching for them. Algorithms are also proprietary information, incredibly unique, constantly changing, and extremely dependent on the products available on the site. Due to this complexity, learning Etsy’s version of SEO is basically a full-time job itself. (It’s true – there are countless ‘coaches’ and ‘consultants’ that sellers pay to optimize their listing titles and tags for “the algorithm”.) For as much as Etsy is built for makers who are unfamiliar with the retail industry, they throw in a major learning curve with needing to learn how to appease its search function.

Of course there are plenty more bits and pieces of good and bad with Etsy, as with anything, but I’ve covered the major ones from my perspective. All in all, I completely recommend it for any makers, artists, craft suppliers, and vintage enthusiasts who are new to selling. But once you have some tenure and experience under your belt, the cons will more than likely start to outweigh the pros.

I would love to know your thoughts on selling on Etsy – do you agree with my pros and cons? Have others that I didn’t mention? I’d love to hear it!

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