Using Etsy as a growth tool, not a long term business strategy
Don’t limit your business by only selling on Etsy.
Etsy is a fantastic resource for obtaining sales. With access to almost 82 million buyers, Etsy can give your business a nice revenue boost at the launch of your venture. It is easy for small businesses to get caught up in growing their Etsy store and lose sight of the branding that is needed to create a sustainable business with returning customers. Etsy is no longer a reliable platform for long term business growth. This has us wondering, what other options are available to creators of handmade products?
Fees and Commissions
Etsy currently charges $0.20 listing fee for each product every 4 months. Etsy also takes a 5% commission on items sold. Of course, there will always be a credit card processing fee when selling online. Small businesses should absolutely take advantage of the sales that come from Etsy, in addition to directing social media users and returning customers to your business’s eCommerce site.
As of April 11th, Etsy plans to raise its transaction fees again by 30%. If this happens, that means in the last four years, Etsy’s basic fees have doubled. Click here to read and sign a petition to stop the fee increase.
Competition
Etsy is highly competitive. There are currently 4.3 million active sellers and 60 million listings. Many of these listed products are similar or easy to replicate. Are you aware of what your potential customers see when they search for the item you sell? The search results will lead them to you, as well as all of your competitors. It is important to use your brand presence to create a competitive edge through social media, targeted advertisements, and your business’s website in addition to competing for sales on Etsy.
A Lack of Branding
There is only so much of your brand that you are able to add to an Etsy business profile. Most sellers will include branding when the item ships, in the form of a handwritten note or business card, but it is likely that the customer will discard these promotional items along with the packaging.
Shoppers on Etsy are looking for handmade products, not necessarily your handmade products. Because sellers cannot contact the buyers, customers will most likely not remember your shop. This leads to a lack of brand recognition and, even worse, a lack of brand loyalty. Customers that are asked where the item was purchased, likely respond with “I found it on Etsy.” In fact, well-designed websites can increase consumer brand loyalty.
Constant Platform Revisions
If you have sold on Etsy for a while, you may have experience with changes in Etsy’s selling policies. Etsy is known for routinely changing their terms of selling on their site. For many sellers, learning how to be successful after a change can be time consuming. It can also be costly if it’s not done correctly and efficiently. By choosing Etsy and only Etsy, you put the fate of your revenue in the hands of Etsy. For small businesses, it is critical to limit potential risks to your eCommerce revenue. Owning your own domain name and building consistent revenue through your own site helps to limit future risks.
Advertising Policy
Before your sales reach $10,000 in 12 months, Etsy allows you to opt out of their 15% suggested advertising spend. Once your sales exceed $10,000 over a 12 month period, Etsy requires 12% advertising fee on items sold through their automated digital advertising. These ads are created by Etsy and are designed to benefit Etsy. In addition to advertising commission on sales, Etsy also charges a cost-per-click for the ad, regardless if the click leads to a sale. These advertisements lead to your section of their (Etsy’s) website. The benefits of this advertising strategy include Etsy’s large database of customers and their streamlined advertising placement. However, it is designed for them and not always the best direction for your business to go in.
One Etsy Seller said it best in a response to a complaint about the new advertising policy,
“Because Etsy feels they need more money than you do. Start looking for other sales options if you haven't already, including your own website. Etsy may provide better exposure for your items to find you customers, but there is no reason you can't redirect them to your own site for repeat business going forward. Not to mention directing any social media marketing to your own site or other less expensive platform instead of giving Etsy any more free advertising.”
Relying on Etsy to place ads for your small business is the least that you can do. Digital ads work extremely well in many other places, such as Google, that can be designed to convert sales for your specific items.
What you can do in addition to selling on Etsy
If Etsy works for you and your small business, great! However, we don’t recommend relying on it for long term business growth. Here are a few steps you can take to ensure sustainable success for your small business, in addition to (or instead of) selling your items on Etsy:
1. Build an e-commerce page on your business’s website
2. Reroute customers and social media followers to your website’s e-commerce page instead of Etsy
3. Create an Email List to remain in touch with past customers
4. Stay involved in community events and markets
5. Be active and responsive on social media
We know all of this is easier said than done. We also understand how busy small business owners are. If we can assist you in any way along your journey to creating sustainable revenue beyond Etsy, please give us a call or shoot us a message anytime. We offer free consultations Monday-Friday!
Edit as of March 22nd, 2022: Added Etsy fee increase expected for April 11th, 2022
