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1. How to make money on Etsy: 10 Best practices

How to make money on Etsy: 10 Pro tips for beginners [2024]

Updated Jan 15 2024

Etsy has become a leading online marketplace home to around 7.5 million active retailers, who recently generated $1.7 billion worth of revenue in a single year alone. The Etsy marketplace is excellent for selling everything from handmade creations, like home decor and digital art, to vintage products.

But is it really possible to make money on Etsy, even as a beginner? The truth is that whether or not you'll be able to make money on Etsy will largely depend on how much time you're willing to invest in learning what it takes to become a successful Etsy seller.

Fortunately, starting your own Etsy store comes with plenty of beginner-friendly benefits. The online marketplace doesn't charge mandatory monthly fees and offers plenty of great resources to help you master the easy-to-use navigation platform.

We'll walk you through everything you need to know to set up your own Etsy store and start selling in no time. You'll also get the inside scoop on what differentiates successful shops from the competition.

Main takeaways from this article:

  • Setting up an Etsy store is easy - the hard part is figuring out how to make money on Etsy. We'll walk you through what you need to know to become a successful seller.

  • Clothing and textiles, jewelry, personalized items, homeware, and art & collectibles are among the top-selling product categories on Etsy.

  • By launching your own Etsy shop, you can sell to an established audience, minimize payment processing hassles, avoid making significant upfront investments, and adopt a multichannel selling approach.

  • Working with a print on demand partner can eliminate the need to worry about purchasing supplies, keeping up with inventory, or dealing with shipping.

  • Using high-quality products and providing excellent customer service are vital components that can set your shop apart.

  • While setting up your Etsy shop, business licenses, taxes and fees, and shipping costs are some requirements you must take care of.

  • Promoting your Etsy store through online marketing can greatly increase your odds of making money on Etsy.

How to make money on Etsy: 10 Best practices

The good news is that it's certainly possible to make money on Etsy. But the reality is that simply setting up an Etsy shop and hoping for the best isn't likely to cut it.

Whether you want to sell products as a side hustle or hope to earn a full-time income from your Etsy store, there are several keys to upping your odds of making more money. Let's walk through each step by step.

1. Choose and research your niche

As mentioned earlier, the Etsy marketplace is now home to literally millions of different shop pages. When it comes to how to make money on Etsy, one of the most foundational keys is to select and cater to a specific niche.

A niche is a group of people most likely to buy a specific type of product due to their shared interests, needs, or demographics. Just a few examples of niches include pet owners, gamers, book lovers, eco-conscious customers, and sports enthusiasts.

The most important parts of choosing a successful niche are:

Be specific...but not too specific.

For instance, while there are indeed Etsy sellers who cater specifically to Corgi lovers, defining your target audience as "males over 30 who love dachshunds, gourmet cooking, and coin collecting" may be a tad overboard. Make sure to select a niche with plenty of demand.

Choose a niche you relate to

Whether you love vintage items or creating abstract wall art, choosing a niche that caters to your skills and interests will make running your online store much more fun. It will also make it easier for you to spot gaps in your niche that you may be in a unique position to fill.

2. Sell high-quality products

Sell high-quality products

If there's one thing all Etsy sellers know to be accurate, it's that nothing is more important than selling high-quality products. Many Etsy sellers rely on positive reviews, reputation, and a loyal customer base to turn their listings into extra cash.

Selling Etsy products that are unique, striking, and made from long-lasting materials is the recipe for success. Make sure to research the product listings of other sellers in your niche to ensure that the quality of your products is on point.

3. Optimize your listings

Search Engine Optimization (SEO) is the art of using specific keywords in your product listings to help potential customers find them more easily. Think about the type of things someone might type into a search bar when looking for each of your products.

Adding these words and phrases to your detailed product listings can help increase the odds that your products will rank higher in Etsy search results. Check out this helpful guide to understand how the Etsy search algorithm works.

Don't be shy about including all the relevant information about your items in your listings, and ensure you feature high-quality images that portray your products accurately and sufficiently. A recent survey of Etsy customers revealed that great product photos were the #1 thing that influenced customers to make a purchase.

4. Customize your Etsy store and leverage seller resources

Leverage Etsy_s seller resources

Etsy stores come with a few customization options; taking advantage of them is essential! Come up with a relevant and memorable shop name and upload a shop icon, a visually attractive shop banner, and a seller's photo to help your store stand out.

It's definitely worth going over Etsy's customization guides to familiarize yourself with ways to set yourself apart from other Etsy sellers. One of the great things about starting an Etsy business is that the platform offers plenty of resources designed to help you succeed.

You'll find all kinds of useful tips and tricks in the Etsy seller handbook. You can even pick up some great tips on making money on Etsy directly from other sellers in the Etsy community forums.

5. Provide exceptional customer service

Create a clear refund and return policy

Before you start selling, it's vital to make sure you establish a clear refund and return policy. Stating which products can be returned and within what amount of time can create trust among your target audience, help you avoid potential disputes, and deter negative reviews.

But if you really want to stand out among other Etsy shop owners, make an effort to go above and beyond by providing exceptional customer service. Respond promptly to any customer questions and do your best to provide timely, professional solutions to any complaints.

You might even consider following up with a thank-you note each time a product sells or including a small gift or discount code with each order. Sometimes the little things can make your Etsy store stand out.

6. Take advantage of print on demand

Take advantage of print on demand

Want to learn how to make money on Etsy without worrying about purchasing craft supplies, dealing with product fulfillment, managing inventory, or even shipping orders? The answer lies in partnering with a print on demand (POD) company like Gelato.

When you sign up for a free Gelato account, you can upload your custom designs to your user dashboard and choose which of our high-quality products you'd like to feature them on. Simply connect your Gelato account to your Etsy store using our easy integration and offer the products of your choice to potential customers.

The best part is that you don't actually have to purchase anything until a product sells. When it does, Gelato will take care of everything from order fulfillment to shipping so that you can concentrate on creating.

7. Focus on sustainability

Recent studies in market research confirm that sustainability has become a far more significant consideration for today's customers than ever before. Utilizing sustainable products or selling methods is excellent for the environment and gives your business a unique selling point that can drive customer loyalty.

At Gelato, we use sustainably sourced materials and offer organic clothing options for adults and even organic kids' clothing. You might even consider adding our eco-friendly items, like reusable water bottles or tote bags, to your Etsy shop.

As part of our commitment to sustainability, we also utilize a network of over 130 local producers worldwide to offer ecommerce sellers a smarter, greener solution. Our vast producer network lets us quickly ship to customers worldwide while reducing carbon emissions.

8. Promote your shop

No matter what you choose to sell on Etsy, advertising is the crucial element that can make or break your success. No matter how catchy your shop name or how great your products are, making money will be a lot harder if no one knows you exist!

Make sure you create a dedicated business page for your Etsy shop on all the major social media channels and use them to get the word out about your products. In addition to regular posting, you may even choose to invest in paid social media advertising to help get the word out about your Etsy store.

You can also invest in paid advertising on the Etsy platform with Etsy Ads. Building an email list is also a great way to stay in touch with your customers about product information, updates, and promotions or sales.

9. Experiment with your pricing

Deciding on a reasonable product price can be among the biggest challenges for first-time sellers. Not only will you want to keep your production costs in mind, but also Etsy's fees.

While you don't have to pay a monthly subscription to sell on Etsy, it's not entirely free, especially if you make a sale. Here's a breakdown of the fees Etsy charges:

  • Listing fees: You'll pay a small listing fee of $0.20 for each product you want to list.

  • Transaction fee: Each time a product sells through Etsy, the platform deducts a transaction fee of 6.5% of your price + any shipping or gift wrapping charges that may apply.

  • Payment processing fee: If you make a sale through Etsy Payments, you'll also be subject to a payment processing fee, which can vary depending on your home country.

While it's essential to price your product high enough to recoup your production costs and Etsy's selling fees, it's also important not to go overboard. Check out similar products that sell on Etsy to get a feel for average prices.

Additionally, don't be afraid to test various price points, increase the prices of unique products, and listen to customer feedback. You might even consider offering bundling discounts to help encourage sales as you perfect your pricing model.

10. Stay on the cutting edge

Last but not least, stay current on the latest trends and constantly look for ways to incorporate them into the products you sell on Etsy. Keep your customers returning for more by adding new products or designs regularly.

Establishing a solid reputation on Etsy is a journey, so don't fall prey to discouragement if you don't become a top seller overnight. Over time, you'll establish a loyal customer base by constantly working to enhance your storefront, listings, and customer service.

What are the compelling reasons to launch your own Etsy store?

As a beginner in the ecommerce realm, launching your online store in a reputable marketplace like Etsy will offer a head start to making online sales and garnering reviews, which launching a standalone website can't. Here are some more reasons why you should start your Etsy store:

Tap into an established audience effortlessly

By selling on Etsy, you will have an online storefront visible to an extensive market of prospective buyers. With millions of trusted users, Etsy can give your brand the exposure it needs by helping you promote your offerings to an existing audience ready and willing to buy the products you sell, which directly translates to less time spent on marketing and more time spent on creating. 

If you are a graphic designer looking to make money on Etsy, you can rest assured that the site’s algorithms will put your offerings in front of users looking for products similar to your creations.

Bypass the hassle of payments

Setting up your shop and selling directly in a marketplace like Etsy allows you to circumvent the complexities of handling payments manually. Etsy offers a secure member login option so that customers can transact securely, providing different payment methods on the checkout page. 

For those who are keen on learning how to sell on Etsy and maximize their earnings, minimizing payment setup time can be helpful. Simplifying the process allows you and the customers to use the platform without worrying about safety, and you can focus on driving sales without the hassle of complex payment configurations.

Minimize your investment with ease

Setting up and running your Etsy shop also has a financial aspect to it. Launching your own website includes expenses such as hosting, domain, and management fees, which can be a bit challenging to manage in the early stages of business. 

Etsy can handle these costs for you. However, Etsy charges fees for product listing, transactions, and payment processing, which you must bear. Yet, being an Etsy shop owner is more cost-effective than self-hosting because a big chunk of your budget is allocated toward crucial areas like marketing and product development, which are essential for business growth.

Enhance your sales channels with this versatile supplement

If you own a website, adopting a multichannel selling approach allows customers to discover and buy your products across the internet, which extends your visibility beyond your website and even offers customers a seamless shopping experience. This approach not only creates multiple income streams but also lowers the risk of financial loss by using different selling channels.

Imagine your website malfunctions or is experiencing a downtime. In this event, an Etsy shop can be a backup and contribute to your brand's credibility. Selling across different channels can significantly improve conversion rates and customer retention, as this approach can cater to diverse audience segments on different platforms. So, whether you are looking for ways to increase your income or expand your market, a multichannel approach offers a robust strategy.

What types of products can you sell on Etsy?

You can sell a host of different products on Etsy, from handmade furniture and custom apparel like t-shirts and hoodies to accessories like hats and engraved jewelry. Etsy is also home to personalized calendars and digital products like printables. Your options for products to sell on Etsy are limitless, but if you’re wondering what kind of products are most popular, they typically belong to these categories:

  • Clothing and textiles

  • Jewelry

  • Personalized items

  • Homeware

  • Art & collectibles

  • Handmade cosmetics and spa products

  • Wedding items

  • Craft supplies

How to set up an Etsy shop?

Now that you have learned the benefits of starting an Etsy shop and what products to sell, it's time to learn how you can set up your shop and get started. It is a fairly straightforward process, as Etsy offers an intuitive interface that guides sellers through every step.

As a first step, go to the “Sell on Etsy” page and log into your account, or create it if you don't have one. Once logged in, Etsy will guide you through the following steps.

Business licenses

While Etsy doesn't require you to obtain a business license to sell products, it's important to note that your state or city might still need you to register for sales tax. Certain cities in the US have their own rules that differ from the state legislation. So, make sure you do your research and find out the specific rules of your location to ensure regulatory compliance. If you intend to sell your products to customers overseas, you must check if you are required to charge them sales tax over and above the product and shipping costs.

Taxes and fees

As an Etsy shop owner, you may have to pay taxes. For US-based sellers, any income generated on Etsy will be considered business income that must be reported on an annual Schedule C tax form. Etsy reports gross (or pre-tax) income to the IRS via a 1099-K form, which must correspond with your own income records when you receive it. As every country and state has its own tax regulations, how much of your earnings on Etsy will be taxable will depend on your selling location. However, earning more will attract more taxes, but you can deduct expenses to reduce your taxable income. This can include the cost of raw materials, any ad money, and even shipping costs.

You must also factor in the payment processing fees a credit card processor will charge and the Etsy fees for using their service. While there’s no seller membership cost unless you opt for the Etsy Plus plan, each listed item will cost you 20 cents, and every transaction has a fee of 6.5% for each product you sell.

Shipping

Many buyers on Etsy expect to get free shipping for their orders. While many sellers offer free shipping as one of the benefits of buying from their shops, it can often eat into profits. In order to offer free shipping and maintain your own profit margins, you must strike a delicate balance. 

This is done by including the shipping cost in the product price without increasing the price too much. Work out the average cost and then decide how much to include in the product price. It is important to fairly charge the customers and not go overboard here.

Here's a tip: Since you will be charging your customers for shipping the product, you can offset the increase in the product price with a small discount. This will not only make your customers happy but also make them feel valued. It is also recommended that you do not offer free shipping to international customers all the time, as international shipping costs can fluctuate sometimes. Many successful Etsy shop owners who get prioritized in searches tend to offer free shipping to US-based customers only.

Unlock next-level sales with Etsy + Gelato

Want to learn more about the benefits print on demand has to offer? Head to Gelato to learn more about POD or to sign up for a free Gelato account that you can use to launch your own Etsy store.

Whether you want to sell your own wall art or design custom phone cases, Gelato has you covered with a full range of high-quality products. You take care of the design and marketing; we'll handle the rest.

Etsy FAQs

Do you have to make something yourself to sell on Etsy?

While you don't necessarily have to sell handmade goods, there are particular rules about what you can and can't sell on Etsy. The Etsy guidelines specify that everything listed for sale on Etsy must be either:

  • Made or designed by the seller, whether it be digital downloads, t-shirts featuring a customer design (POD products are fine), or handmade items

  • Craft supplies

  • Vintage items

Can you make good money with Etsy?

Much like any other venture, making money on Etsy will come down to how much effort you put into your Etsy business. Some Etsy success stories feature sellers who make millions of dollars with top-selling items.

Others who create an Etsy account but never really market it may not make money on Etsy at all. A little effort can go a long way when using the Etsy platform to supplement your bank account.

Can a beginner make money on Etsy?

Etsy is an excellent place for creative entrepreneurs who are just starting because it introduces you to a network of over 96 million active buyers. Whether you want to use it instead of, or in addition to, your own website, Etsy is a great place to meet new customers.

How much does the average Etsy seller make?

You won't have difficulty finding questionable sites that assure you that average Etsy stores pull in tens of thousands yearly. But the truth is a lot more complicated.

While plenty of sellers make significant money on Etsy, others just pull in a little extra money from time to time. The key takeaway is that (much like with a physical business), you can make as much or as little money on Etsy as you want, depending on the time and effort you're willing to put in.

Is selling on Etsy hard?

Setting up your own Etsy shop is relatively simple! The hard part is actually running the shop itself. Print on demand partners like Gelato can make things much easier by taking care of everything from product production to order fulfillment.

This eliminates the need to worry about juggling inventory, purchasing supplies, or accidentally overstocking. When you utilize a POD service, you cut your responsibilities down to design, marketing, and keeping your customers happy.

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