Etsy: What it is and How it Works? Is it good for Passive Income? – Reviews

You probably have heard about Etsy. It has grown its popularity among the small and big business owners who want to change their creative skill into a business. The online platform promises its users to effectively reach authentic buyers and increase their sales. However, how much of these are true? And what is Etsy behind its big brand name? We will try to find answers to all of these questions.

Whether you are an art- entrepreneur or small business owner, Etsy has something to offer you all. The platform is not only for sellers but buyers too. The business is in the market for 12 years and with every passing year, it is growing its roots.

How does it manage to compete with some big brands? How to sell on Etsy? Is it best for the business owners? Read till the end to find out.

Etsy- A Brief Description

Etsy.com. Etsy is an American eCommerce company that majorly deals with arts, crafts, vintage, and handmade items. It was founded by Robert Kalin, Chris Maguire, Haim Schoppik, and later Jared Tarbell on 18 June 2005. The eCommerce site deals with a large number of items clothing, bags, jewellery, furniture, toys, art, etc. In 2018, it generated gross revenue of $603.7 US Dollars. Now it has over 1.8 million active sellers according to the record of 2018.

Its uniqueness from the other eCommerce platform helps it to stand out and makes it a special place within artistic sellers. Etsy makes money by collaborating with the sellers and charging them when they sell products. To list your items on Etsy, you have to pay $0.20. Your products will then be listed on the site of Etsy for four months. If you succeed to sell any product during that period, Etsy would take a commission of 3.5% of the selling price. The sellers who want to promote their products have to pay extra.

How to Begin Side Hustle with Etsy?

If you are looking for easy money, Etsy is not the right place for it.

To grow your business on Etsy requires time and then eventually grows. But do not lose hope for that. With the right amount of dedication and great art, you will surely carve your way.

No entrepreneurs would know when they will taste success, but patience will guide you to that point. However, with good research and understanding your target audience well, you can surely make progress much faster.

The competition to sell the product is growing more and more with every passing year. Therefore, to make your mark you need to make a good and clear strategy to reach your buyers. Find out what makes you unique? Why should your buyers buy from you? How to present your product out there? Who are your competitors? How are you different from them?

Answering these few questions will help you to draw a clear picture of your strongest area and the areas you need to work on.

Is it a good career option?

Etsy has a wide range of sellers who cover all spectrum from side hustler or full-time sellers. There’s a simple rule in business, the more time you invest the more you can earn.

There are many shops on this eCommerce site that earn a reasonable amount from their business. However, there are more side hustlers than full-time business who are connected with Etsy.

Keep in mind, Etsy is for passionate artists, not for the ones with faint hearts.

How to Sell on Etsy? Easy Steps to Setup a Business

If you are planning to start your business with Etsy, then the following points are very important for you. We have explained all the important details that one entrepreneur might need while starting his/ her business.

• Passionate Towards Business Idea

Passion is very important for any business.

No entrepreneur ever knows whether they will succeed or not and the same is the deal with Etsy. Setting your business with Etsy gives one no guarantee that their start-up will immediately grow. Therefore, do proper research about your plan, understand the targeting market and keep faith in your business plan. A well-drawn plan would help you to come up with a unique approach to reach your target buyers.

Next, you should also plan the pricing, direct and indirect both. The pricing involves packaging costs, shipping costs, direct labour costs, etc.

Listing Fee:

Sellers are charged $0.20 per listing by Etsy. This price is fixed for sales.

Multiple Quantity Fee:

For multiple quantities listing, they have to pay $0.20 each.

Payment Processing Fee:

The sellers also have to pay 3% of the total sale to Etsy.

Transaction Fees:

Etsy also charged its sellers to make a sale.

• Best Business Entity Type

There are four business types in Etsy that would help you to find the best entity for your business and target market. The business structure you choose will affect your personal liability and tax obligations. If you are not sure about it, then taking consultation from a legal advisor is always best.

Below we have discussed all the four business entity in brief:

Sole Proprietor

According to the Sole Proprietor, there is no legal separation between the business and the owner’s personal assets. This means that the owner of the business is completely responsible for any debts of the company.

Limited Liability Company

This business model provides a much simpler sole proprietor by building up a shield between the business owners and the business. The Limited Liability Company and the members connected with the separate legal entities. So during any legal dispute with LLC, the owner’s personal assets are safe.

C Corporation

The C Corp allows separating the tax-paying and legal entity from the shareholders. It offers protection. Double taxation is a term used in this business entity. Under this business plan, you would get profited by tax twice. One at the corporate level and another at the shareholder’s level.

S Corporation

S Corp is not a business entity rather it is a special tax election LLCs. in this business model, the owners do not have to pay the taxes for Medicare or Social Security, but only for self-employment taxes.

It is best to consult with someone who has profound knowledge in this field before investing your money in any eCommerce site like Etsy.

• Choose the Name of the Business

The name of the Business is very important because it is the first thing that has the responsibility to catch buyers attention. It will also increase the branding value and marketing assets. Ensure that the name reflects the personality of your business and also tells about your service or product.

However, also check if the name is already available or not. It is a wise step to verify first before going for any name. As two or more same names might confuse the buyers, which eventually leads to decreasing your potential customers.

To make sure that your name is unique try to conduct a search in trademark search in 50 states. It is essential for spreading your business in more than one state. 

You can only use 4 to 20 characters to assign the name of your business.

• Appoint an Agent

If you are planning to operate the business of Etsy as C Corp, S Corp, or LLC Corp, then make sure that you have designated it from a registered agent. The role of a registered agent is to accept the “service of process.”

Make sure that your agent is registered and up to the state’s standards.

• Register your Business with State

If you want to make the business official with the State then you need to fill the registration paperwork. Generally, for C Corporations, the business must file Articles of Incorporation, and for LLCs, it is the file of Articles of Organization. Some states have different rules, so go through the procedure yours too.

After qualifying as the C Corporation or LLC, if you want to step up for the S Corp for Federal income, then fill the form of IRS Form 2553. And if you want to change as Sole Proprietor then file a DBA form.

• Open a Bank Account for Business Purpose

It is important to open a bank account for business, it will help you to keep your business-related transactions separate from your personal expenses. For the business models LLC, it is imperative to decide the separation.

• Apply for Business Permits

You need to apply for a business license to sell your service or products using the platform Etsy. Apart from that the local municipality, or state, or country where you want to run your business also might require your legal permit for doing business.

The sale tax policies have majorly changed over the past few years. Therefore, it is important to take professional guidance and go through the guidelines properly.

• Create an Etsy Account

1. First of all, go to the official site of Etsy and create an account.
2. If you already have one then sign in.
3. Then use your account to run your business on Etsy shop.
4. To attract potential buyers to your account and product upload attractive and good quality pictures.
5. Along with the picture describe the product well in the bio.

Make sure that you have considered the below points before uploading a photo:

• The pixel of the image should be at least 400 x 400.
• Make sure that the image you are using is less than 100 MB.
• The image file should be in the format of .gif, .jpg, or .png.
• The eCommerce site also offers some do and don’ts on its official page, go through all of them at once.

• Etsy Shop

Before starting your own Etsy shop, you will need to open and set up the Etsy shop. To open your own Etsy shop, go to the Etsy website of etsy.com, then follow the below steps:

• On the top right corner of the Etsy website, look for the button Sell on Etsy.
• Then choose the option Open Your Etsy Shop.
• Select the suitable country, currency, and language with the help of the shop preferences.
• Then Enter the Shop name.

After setting up your shop on Etsy, now tune it with the mobile application Etsy.

• Add Lists of Your Products

Now, since you have created your business account, built up your Etsy shop, it is time to list your product on the website. To add the lists follow the following steps:

• Open your Etsy account.
• Select the choice Shop Manager.
• Then go to the button, Your Shop.
• If you have products in your list, then add the new list by clicking on the option “Listings.”

Product Photos:

Product photos are one of the most essential things that you as a seller would require to add to your shop. It helps the buyers to get good knowledge about what they are going to buy. Therefore, Etsy suggests adding at least 5 pictures of one photo from different angles. So that the customers would feel more confident in buying the items.

It also suggests image quality of not less than 2,000 pixels wide. The larger the picture, the buyers will get more information from it, after zooming in.

Videos:

Videos are the next essential feature that an Etsy seller can provide. It is completely optional, but can surely enhance your presentation. While uploading a video, make sure that they are between 5 to 15 seconds in duration and must have a quality of 1,080 pixels. Also you can not add audio with the video, so if you have recorded the video with sound then unfortunately the audio will be removed.

Listing Details

This list will help to affect the listing visual of your shop on Etsy search. Hence, give an attractive descriptive title to stand out. Make sure that the character does not exceed more than 140 words.

Complete the section of About this listing, which required information about the item, like who made it, is Handmade or Vintage, when the product was made, etc.

Listing Description

In this section, choose your word wisely, because you need to describe your product very well in the listing description to reach and encourage a potential customer to click on your list or product.

Therefore, focus on the keywords that shoppers are likely to search while looking for items. Oh, no you do not have to be an SEO expert, but learning a few basic knowledge about SEO would definitely help you to grow.

Pricing and Inventory

Add the price of the products and also add the option to show inventory or the number of items in the stock.

• Open Etsy Shop

If you have successfully followed all the above steps, then now is the time to open your own Etsy shop. To do that, go to the option Open Your Shop and click it.

You now may get the URL of your shop as:

https://www.etsy.com/shop/yourshopname

or

https://yourshopname.etsy.com

How Much One Can Earn From Etsy Shop?

Well, the limit is the sky!

Etsy is a portal where you get a chance to bring your product on an online eCommerce platform and reach your buyer. So the more strategically you plan your business the more likely you will earn. There is no guarantee to that either. Some business owners are making millions from it, whereas there are many who are getting nothing out of it.

However, that should not stop you from getting started, it is very important to believe in your plans and passion. If you have an idea and the right talent, then you should give it a shot. Just start it with the right motivation and plan.

Sales

There is a wide range of variation in the number of sales too. Some shopkeepers can sell around 700 items in a month, while others only could sell as low as 3 sales a month. It is a bigger picture, if you will look closer the story could be different than that. Because there is a difference between selling 3 expensive paintings and 700 paper clips.

Profit

The sellers of Etsy price their product at the cost of 68% from the markup to cost the range of the profit from Etsy could be as low as $8.50 per month for a small shop and around $5000 for a big shop.

Hourly Income

It is the scariest part of the whole Etsy business.

Have you ever gone through the list of the products and releases that are way too expensive?

Around 50% of Etsy shop owners make less than $7.25 an hour from the platform. Therefore, Etsy is a good platform for passive income. If you are extremely passionate about our art and want to try a side hustle then give Etsy a try.

Bests of Etsy!

Owning an art shop is itself very liberating. And so most of the Etsy shop owners are extremely enthusiastic about bringing their product to the platform.

Apart from that, everyone has other reasons to love Etsy, we will now going to share those points, that makes the platform fun to explore:

1. The shop owners can have an interactive session with customers.
2. Etsy provides them with a wonderful opportunity to work from home.
3. You can also prepare a creative outlet for your arts. 
4. The platform allows the owners to explore their art and earn from it.

Not So Good Things

Everything has its benefits and flaws, so does Etsy.

Well, of course, running a business is amazing, it helps to showcase your creative arts and earn from them. But, let’s pause and do some logical analysis. Etsy is also a business just like any other, and every business is a roller-coaster ride. There could be some miserable probabilities too, like not getting paid for the month, etc.

Here we will explore a few things that Etsy shop owners do not like about the eCommerce site.

• Search Engine Optimization (SEO):

Etsy is a highly competitive platform, hence you need to research your keywords well to get in the search list of your customer. It could be time taking and might take the creative fun away.

• Shipping:

All the calculations around shipping and delivering might also be a fun killer. It also adds packaging and other random things.

• Rude Customers:

Remember the time when we had been rude with some of the shopkeepers? Yeah, please don’t do that again. The business is already creating much pain in their life, let’s cut it off a little from our sides.

Etsy Reviews

The creative souls definitely love to be a part of the platform, but they also have to struggle with the competitions and other marketing skills.

Become an INCREDIBLE Etsy Shop Owner

Shop owners on Etsy are mostly artists. So if you love what you are doing, you have won half the battle. Because loving your craft and keeping creating new stuff is very fulfilling for artists.

On top of that, Etsy is an amazing platform for passive income, so you can also get some money out of it if planned strategically.

Although remember, you won’t be getting rich instantly. So patience is extremely important in any kind of business. However, you can keep in mind a few things to increase your sales like making sure that the quality of the product is good. The starting selling cost is very low and it might take some time to make the first sell. So do not lose hope and hang in there!

Check out, The Behavior Gap: Book Review

Getting the First Sale

To be honest, it takes around a month to get the first buyer that is not their friends or family members. So be prepared for some series of late results.

A seller on Etsy spent around 20 hours setting up her shop and got no immediate result. Therefore, again, patience is the key. Things might take an extremely slow start but eventually, it will take a good turn.

Tools that will help you to get started

Search Engine Optimization is a panacea.

SEO is very essential to grow your business online, like YouTube, Instagram, Google, or any other platform.

Why is it important?

Let’s take an example, if you search “black nail paint”, we will get thousands of results in this particular search. A user or buyer might click on one or two, a maximum of four, and then he/ she will leave. Other vendors except from the three-four pages, might not even get a chance to present their products or service. Hence it is very important to use the correct keywords to describe your items so that you stand out and get a reasonable click-through rate.

Other useful tools are:

Photoshop:

Beautiful pictures are attention catcher. So make sure that the pictures you are uploading are eye-catching and incredible to look at. As an online buyer, the customer can not touch the items, so it is extremely important that I look good. A well-captured and edited picture could be a deal maker or breaker.

Bookkeeping System

Etsy is a business and you must keep track of the expense in your business. If it’s few then maintaining a spreadsheet is enough to maintain the records and data. But if you have a fairly established business then consider getting a subscription to QUickBooks Self employed or any other retail managing software.

More Information about Etsy

Some other fun statistics about Etsy.

• There are more female sellers in Etsy than males.
• Most parents look at Etsy as a wonderful platform to start their business.
• People are growing their business on Etsy as a full-time job. However, the percentage is still less than that of parents who stay at home.

MamaFish’s Take Away!

In our opinion, Etsy is not for everyone, and definitely not for the faint hearted. It demands patience, lots of patience, time, money, and obviously creativity. If you are passionate about your craft and looking for a platform to sell those art pieces, Etsy is a good option for you.

However, if you want quick money to pay your debt or loan, we would try somewhere else, because Etsy would give you frustration.

On a larger aspect, the eCommerce site has surely given the artists a platform to connect with the world and share their craft. Sharing your art works on Etsy means you can share it with hundreds and thousands of people out there, who could be interested in buying your product. If it sounds cool to you then, give it a try.

Write to us, what you feel about the article, did it help you to understand Etsy on a deeper level? Will you try the platform for your new business? Or if you are an active user, share your experience with readers and suggest some insights.

Hopefully, the blog post was informative and fun to read. Share it with your artsy friends and colleagues.  Check out an amazing article on our website Mama Fish.