As Etsy continues to change their algorithm, update their rules, and grow, more and more makers are questioning if Etsy is worth it in 2020. Should people with Etsy shops continue to put the effort in them and for those who don’t have one, should they start one? Let’s find your answer.
(Wanna know if CRAFT SHOWS are worth it? My thoughts on it here.)
You may also be interested in:
- HOW TO SELL HANDMADE BEYOND FRIENDS & FAMILY
- HOW TO SELL YOUR HANDMADE GOODS BY STARTING A NEWSLETTER
- LAWS FOR SELLING HANDMADE
The bottom line is, Etsy is worth it IF you make a profit from it.
Countless forum threads with sellers stating their sales are down or that Etsy is “dead” or “dying”, doesn’t make it true or make Etsy any less useful to makers.
Obviously, Etsy IS worth it for many businesses or the platform wouldn’t continue to grow (as The Wall Street Journal pointed out this year) and there wouldn’t be sellers continuing to support the platform.
So, the question isn’t: is Etsy worth it?
It’s: is Etsy worth it for your business?
There isn’t a blanket statement that applies to all businesses. Just because one person says Etsy is 100% worth the time and money investment, does not mean it’s worth it for your business.
And on the other hand, if you have an Etsy shop up and running and are profiting from it, no need to read this article any further. It’s worth it for you. Don’t listen to the “Etsy is dead” or “Etsy has lost its soul” opinions. It’s working for you and that’s all the matters.
But if you’re not sure if your Etsy shop is profiting or if it’s quite a fit, the questions in this article will help you.
By the end of it, you’ll know if Etsy is worth your time and money, or if you’re better off spending them on another sales channel (e.g. craft shows, wholesale accounts, or even your own website).
HOW TO KNOW IF SELLING ON ETSY IS WORTH IT FOR YOUR HANDMADE BUSINESS
Answer the following 10 questions for your business:
1 – HOW DO YOU PREFER TO SELL?
First and foremost, think about if you’re excited to sell on Etsy. Do you enjoy putting time into your shop or does the idea of starting an Etsy shop excite you?
I’m a big believer in the idea that passion gets results.
If the thought of Etsy fills you with dread, you’re not going to want to put time into it and you won’t be putting your best foot forward when you do spend time on it. That will be reflected in your results.
If you’ve been thinking about setting up an Etsy shop for a while but just can’t get motivated to take the first step, maybe that’s an indication that it’s not the right platform for you, regardless of how much success others have had on it.
One important lesson I’ve learned from over a decade of running my own businesses is: there’s no one size fits all.
It can be frustrating when you’re following the steps that worked for another business and it’s just not working for you.
But on the other hand, it’s exciting. You can pave your own path.
I used to be filled with dread thinking there was going to be a day I would have to go back on television, have more and more, and bigger and bigger media interviews, or even have to talk to a room full of employees. But I’ve slowly discovered that just because most businesses use media for marketing and dream of having an entire team of people working on their business, doesn’t mean that had to be my path.
You can make your own goals and you can achieve them in a way that makes you happy. Passion must be behind everything you do and only you know what sparks that passion.
If sitting behind a computer and posting to Etsy doesn’t make you happy, look into selling at craft shows, selling wholesale to retailers (here’s how to attract wholesale orders at craft shows), or other ways to sell your products locally (here are lots of ways)
You may even find running your own website is more rewarding than an Etsy shop because you get more control over the design and functionality of it.
Consider if Etsy aligns with your passions and skills.
2 – WHAT ARE YOUR PROFIT MARGINS?
For any business to survive, it must have profits. And you must know how much you profit from each sale before you can make solid decisions for your business, such as which sales platforms to use.
*Profit is the money left once you pay for your expenses and pay yourself a wage.
As I mention in THE SUCCESS PLANNER, profits should be used to determine how much money you put towards growth.
Based on your profits, Etsy may be a better fit for your business than a sales channel such as craft shows.
For example, let’s say last month you spent $100 on expenses (e.g. materials, Etsy listings, marketing, etc.) and your wages total $100. If you sell all the product you made for $200, you’ve earned your $200 back and can repeat what you did last month. There is no profit and no extra money to spend on more supplies, marketing efforts, sales channels, or wages.
If you earned $400 dollars from selling all the product you made, you’d have an extra $200 to play with next month. You could put more money towards products, marketing, and selling to earn more than you did last month. With that profit, you can also pay yourself more so you’re not just an employee getting paid for the hours put in.
The expense of selling through Etsy is lower, and lower risk, than selling at a craft show, so if you have lower profit margins, Etsy may be the better choice between the two.
Etsy is also a better choice when compared to selling wholesale, if you have low profit margins.
However, you may find that making sales through your own website is the best option and may not cut into your profits as much as Etsy does. You will be charged transaction fees either way if you’re using a service such as PayPal or Stripe to collect payments online. However, Etsy charges a listing fee for every item, which you won’t have with your own website. You will have domain and hosting fees when running your own website, but those may be lower than Etsy listing fees, depending on your business.
Know your profit margins and how much each sales channel eats into them to determine which is the best option for you.
3 – HOW DO YOUR CUSTOMERS SHOP?
Think about the product you’re selling, the market you’re targeting, and how your target market typically shops for your product.
Are they likely to search online for your product or visit a store and buy it when shopping for other products?
Etsy won’t be worth it for you if your typical customer doesn’t shop on Etsy.
For example, let’s say a vendor is selling high-end jewelry to be worn with evening and ball gowns. They’re targeting women who are in their 40’s to 50’s attending galas, charity dinners, operas, etc. When shopping for a special occasion, most people go to boutiques or department stores so they can try on a gown and see it with all the accessories; the clutch, earrings, necklace, etc.
It’s unlikely that a woman in her 50’s is going to buy a ball gown and then go to Etsy to find high-end jewelry to go with it. She wants to see the jewelry in-person and try it with the dress before deciding on it. Selling that jewelry wholesale to high-end boutiques carrying special occasion wear would be a better option than selling it through Etsy.
On the other hand, a woman in her 30’s who just saw Jessica Biel wearing an amazing pair of earrings on the red carpet won’t go from store to store looking for something similar. It’s easier for her to hop online, type “Jessica Biel earrings at MTV Awards” or a description of the earrings into Google and find something similar. In this case, Etsy would be a good option (if the proper SEO tactics were in place).
Consider your target market and if those customers typically head online to shop for your product.
If the answer is yes, start researching which keywords your target market might type into a search bar and create Etsy listings using those same keywords.
4 – WHAT IS YOUR ROI?
As mentioned in THE SUCCESS PLANNER, it’s important to track how much time and money goes into each major task on your to-do list so you can determine if it’s actually worth your time and money. That’s a task’s ROI; return on investment.
Once you’re set up on Etsy, you need to track how many hours and dollars you put into keeping your shop updated, promoting your shop, communicating with buyers, shipping orders, etc. and how much money you get back from it.
If you spend $100 each month on listing fees, taking photos, creating listings, promoting those listings on social media, etc. but you only sell 2 items per month from Etsy and that results in $50 of revenue, you’re NOT making a return on investment.
If you earn $100 in revenue from Etsy, you’d be breaking even.
And if you earn more than $100 in revenue from Etsy, you’d be making a return on investment. But then the question is; how much?
If you put $100 into Etsy in a month and earn $110 back from it, that’s only $10 profit. Is all the time and money you put into Etsy worth $10 profit or would that $100 be better spend somewhere else?
Know where your sales are coming from and how much you’re profiting after the time and money spent on the sales channel is deducted.
You may find Etsy doesn’t produce enough sales or profit to justify all the hours and expenses it requires.
If another sales channel brings you more sales and requires less time and money to make those sales, it deserves more of your time and money.
5 – DO YOUR PRODUCTS STAND OUT?
Take a look at the category your products fall under and scope out your competition.
In most cases, your products will be competing with thousands of similar products.
If you don’t have something that sets your products apart (aside from being “made by you” or being “your designs”) you may have a hard time making sales on Etsy.
When there are several similar options to choose from, consumers will go for the cheapest, quickest, or most convenient option unless there’s a valuable reason not to.
When you put all the work into getting people to your website, they’re only seeing your products and aren’t distracted by millions of other listings.
At craft shows, there are usually only one or two other vendors selling similar items to you.
Consider how your products will do when placed next to thousands of listings on Etsy. Will they catch eyes and encourage people to click or get lost in a sea of photos?
6 – WHAT TYPE OF FEEDBACK DO YOUR PRODUCTS GET?
Different products attract different types of customers and feedback. And, everyone has an opinion. If your product’s features are subjective they may garner a wide range of reviews (e.g. “oversized” may be big to some and not big enough to others, “subtly scented” may be too strong for some and too weak for others).
With online shoppers, you have to make it crystal clear what you’re selling so customers know exactly what to expect. If a customer receives something different than what they were expecting, based on photos, they may not be happy and leave a negative review.
For example, selling a moisturizer deemed “perfect for summer” is open to interpretation. Some people prefer lightweight oils for summer while others want oil-free options to avoid that greasy feeling. The moisturizer is likely to be too light for some, too heavy for others and could result in mixed reviews.
On Etsy, a negative review is permanent (unless it violates policies).
Even if it’s completely unfair, simply their opinion and not a reflection of your product, or even if they made a mistake when ordering and are making it your problem, customers can leave a review and it’s on your permanent Etsy records.
On your own website, you’re in control of what appears. So if a Negative Nelly leaves an unfair review, it’s your choice if you want to display it.
Obviously, you want customers to be satisfied with their purchase and for everyone to leave a good review. However, if your products read differently online than in person, and are better received when one is able to pick them up, handle them, see the quality, etc. they may be better suited for offline sales.
7 – HOW DO YOUR PRODUCTS SHIP?
Factor in how easily your products ship and how much it costs to ship. Many sales are abandoned because of high shipping fees.
The bulk of users on Etsy reside in the US, so if you don’t live in the US and it costs a lot of money to ship your products to the US, you may want to look at a different online marketplace (there’s a long list here), considering starting your own website and working on SEO for your product name combined with your location, or focusing on selling locally offline.
Also consider how easy it is for you to stay on top of shipments. Do you have a system in place to track orders, package them for shipping, and get them off to buyers in a timely manner?
Online shoppers want their items to ship quickly.
Many negative reviews left on Etsy shops have to do with wait time or lack of communication from the Etsy seller letting them know when to expect their item.
If you can’t get to the post office each week or your products have a long lead time (i.e. you custom make each order and it takes you 2 weeks before an item is ready to ship), online selling may be difficult for you.
8 – WHAT ARE YOUR COMPUTER SKILLS?
Etsy makes it fairly easy to set up an online shop, especially when comparing it to setting up your own website.
If you want to have an online presence but you have minimal computer skills, Etsy is likely your best option.
There are several tutorials that will walk you through how to set up your shop and their interface is pretty user-friendly.
Like anything, it will take some time to understand the platform and become comfortable with it, but if you have limited time to do so, my suggestion is to go for Etsy over setting up your own website.
Once you become comfortable with using Etsy, you can ease into the idea of starting your own website.
9 – HOW WILL YOU GET TRAFFIC?
One thing is for sure; Etsy sellers can no longer rely on adding listings to their shop and watching views and sales pour in.
If you hate social media and other forms on online marketing, it’s going to be hard to get traffic to your Etsy shop and may not be worth it for you to use the platform.
When selling online, it also requires you to invest time into SEO (search engine optimization). Etsy can help your listings show up in Google searches because Etsy has a good ranking on Google. However, within Etsy, they are constantly changing their algorithm and when and how a listing shows up on the platform. So although Etsy might initially help attract Google shoppers, it’s easier to lose those shoppers to other sellers
It may take longer to get your own website to rank on the first page of Google but once someone lands on your website, your products aren’t competing with millions of others just like them. You decide what appears at the top of the page and you can keep your shoppers focused on your products.
You’ll also have an easier time getting someone on your newsletter list when they’re on your website vs. Etsy. Which is absolutely essential to your business.
Seriously, don’t wait. Set your newsletter up today. It’s free, will take 10 minutes and you don’t even need a website to start collecting email addresses. And here are 365+ ideas for what to send to your subscribers.
Etsy may be worth it for your business if you don’t have a lot of time and money to pour into SEO and getting traffic to your personal website (it can take years for your own website to start showing up on the first page of Google).
10 – WHAT ARE YOUR GOALS?
Where do you see your business in the coming years?
Do you want a business that is 100% online? Etsy may be a good starting point and support for your online business.
Do you want to open your own store one day? Perhaps focusing on selling wholesale to retailers is a better path. It may also be more effective to start your own website so you can slowly start to build traffic to it and it’s ready to go when you do open that store.
Do you want to focus on craft shows and make a few online sales? Etsy might be the perfect solution to that as you don’t have to build your own website, pay a developer, pay for hosting and a domain, etc.
Consider if selling on Etsy aligns with the vision you have for your business.
BEST THINGS TO SELL ON ETSY
There are tools that track shop sales and report which Etsy shops have the highest sales. But unfortunately, the success of the top shops on Etsy has less to do with what they sell and more to do with how they sell it (which I’ll also cover in this article).
To get an idea of the type of items are popular on Etsy, take a look at Etsy’s subcategories.
For example, under Bath & Beauty, “Soap & Bath Bombs” is a subcategory. Under Soap & Bath Bombs, Bar Soaps, Bath Bombs, Bath Salts & Scrubs, and Body Washes & Liquid Soaps are subcategories. These are pretty general but do give you an idea of the types of Soap & Bath Bomb products that are most popular.
However, instead of focusing on what other Etsy shops sell, let’s look at Etsy shoppers.
There are a few things that must be kept in mind when it comes to products that sell well on Etsy:
1 – Online Shopping Behavior
2 – Handmade trends
3 – Shipping fees
1 – ONLINE SHOPPING BEHAVIOR
People head online to shop for a few main reasons:
If you saw your favorite celebrity wearing a yellow sundress with ruffle sleeves and wanted to find one just like it, would you head to the mall and stop in ALL of the stores? Or head online and type “yellow sundress with ruffle sleeves” into Google?
The second option is easier right?
When selling on Etsy, you must think which details online shoppers might be specifically searching for and what type of wants/needs drive them to shop online. For example, most people aren’t heading online to find a “women’s dress”. Instead, one may be looking for a “yellow sundress with ruffle sleeves”.
When you know the specific product features your target market is searching for, you can be sure to name them in your product title and description, so your listing gets found.
Even if you aren’t sure what your target market is searching for, your listings are more likely to be discovered when your titles are specific.
No one is searching the Internet for “soap”, so online shoppers are unlikely to discover an Etsy listing titled “soap”. Soap can be easily found at the grocery store or drugstore.
If someone is going online to find soap, it’s because they’re looking for a specific type of soap. Maybe it’s unicorn-themed soap for their child, or food-themed soap as a gift for their foodie friend, or turmeric-infused soap because they read about turmeric’s beauty benefits.
Soap listings using the same keywords online shoppers are typing into search bars are more likely to be discovered.
When shoppers want to buy a product but aren’t sure which features they want or which business provides the best option for them, they’ll head online to research and compare.
You must know who your business is targeting and understand the features they’re comparing so your listings can stand out and sell better than your competitors’.
For example, let’s say I make unicorn-themed soap. If I don’t know who I want to buy the soap, how do I adapt the soap’s features to be perfect for someone? What price are they willing to pay? What are they using it for? What other items might they need with that soap? Those answers would vary greatly if a teenager was buying my soap versus a mom.
But if I know I’m targeting moms throwing their kids unicorn-themed birthday parties and they’re looking for unicorn-themed party favors, I can offer unicorn soap that is perfect for them and will stand out when being compared to other unicorn soap listings.
First of all, I would name my Etsy listing “Unicorn Soap Kid’s Birthday Party Favors” so when someone is searching for “birthday party favors” or “kids birthday” or “party favors”, my listing is more likely to show up. Then, to sweeten the pot, I might offer my soaps in bulk and make them smaller to reduce the price for those buying 10+, offer individual gift-wrapping or customizable tags (e.g. Happy 5th Birthday Jane) as add-ons, etc.
Know your target market, the features they’re searching for and make your products and Etsy listing more appealing to them.
There are items that can be purchased from a local store but are more convenient to buy online and have them shipped right to the doorstep. Keep in mind, the people who could drive to a local store to buy an item but choose to shop from their computer and pay extra to have that item shipped to them instead, tend to be busy.
They may be buying basic items online but they’re looking for convenience. For example, razor refills can be purchased at the grocery store but many people sign up for razor refill “shave clubs” to have refills shipped right to their door on a regular basis, so they don’t have to think about it.
Consider if your online shop can appeal to the convenience side of online shopping and how you can create more ease for your customers.
2 – HANDMADE TRENDS
Trends will have an influence on what shoppers are searching for, as well as how many Etsy shops are selling a similar product.
As an Etsy seller, you’ll want to stay ahead of the trends (*if your business and products are trend-focused) so you can be one of the first sellers to offer products that are trending up. If you capture more of those sales and rack up reviews, your product is going to be more appealing to other Etsy shoppers.
3 – SHIPPING FEES
Etsy has recently encouraged its sellers to offer free shipping. If a craft business hasn’t priced their products for profit, it can make it difficult to cover shipping costs. *Learn how to master your profits with THE SUCCESS PLANNER
Aside from Etsy, eCommerce sites such as Amazon, have changed the expectations of online shoppers. There’s now an expectation of shipping being cheap and fast. This can be hard for a handmade business to compete with.
Regardless of whether Etsy wants its sellers to offer free shipping or not, it’s important your business has reasonable shipping costs. If I’m shopping online, put an item in my cart, begin the checkout process and find shipping costs are almost as high as the product, I usually decide not to buy.
It’s also important you streamline your process to decrease turnaround time (the time it takes to fulfill an order). We live in a world of instant gratification. When online shoppers must wait two weeks before their item will even ship, they may second guess their purchase and search for another Etsy seller who can ship a similar item quicker and cheaper.
If there’s no way for your business to work around that (e.g. you sell custom pieces that take two weeks to create), you may consider transitioning your online shop to your own website. Etsy shoppers now expect shipping to be free and fast, so when you’re one of the few businesses that can’t offer that, it can make your business less appealing to Etsy shoppers.
When online shoppers are on your website, your competitors’ listings offering free shipping aren’t displayed next to yours’. Your shoppers aren’t as likely to be comparing your products, prices, and policies to thousands of other Etsy shops. They may have one or two other businesses in mind but aren’t as distracted by them when they’re on your website.
Your product must also be easy to ship. Items that require a lot of packaging to get them to their destination in one piece, or are bulky or heavy, can drive shipping costs up, making the items less appealing to shoppers.
The best items to sell on Etsy appeal to online shopping behavior, trends, and shipping in mind.
WHO PAYS FOR SHIPPING ON ETSY?
The customer should always pay for shipping, in one way or another.
Customers pay for every expense of your business. Although they’re buying the product, there are many steps that come before that product is ready for them to buy.
Customers may not think about everything it takes to get a product to market, but you must keep each step in mind and work those costs into product prices. The money your business makes must cover every single cost of your business, such as:
- Your hours to photography, upload, and edit product images
- Etsy listing and transaction fees
- The cost of the label you place on each item
- The cost of the box and bubble wrap you ship an item in
- Your time to drive to the post office
And since customers paying you money for your products is likely the only way your business makes money (unless you have other revenue streams), the money your customers pay you must cover all of those costs. You cannot pay for them out of your own pocket.
For customers to pay shipping costs, even when you’re offering free shipping, you must work those shipping costs into your prices.
You can either:
1 – leave prices the same and reduce your profits (this may be acceptable if you already have high profit margins)
2 – increase your prices to include shipping costs (this may be acceptable if your prices are below average)
3 – increase prices to include some of the shipping costs and reduce your profits to cover the rest.
The first step is to look at your numbers and make sure your prices are covering ALL expenses and leaving you with a profit…at wholesale prices.
When handmade business owners don’t set wholesale and retail prices, that’s when they get in trouble with changes, such as Etsy encouraging free shipping or even a recession. Without healthy profit margins, your business can’t put money aside for a rainy day or have the wiggle room to adjust prices, offer discounts, etc.
Once your products are priced properly, you can adjust your shipping costs to be more appealing to the customers, which will help with your sales.
PROS & CONS OF SELLING ON ETSY
Etsy has made several changes lately, and they’ll continue to do so. Etsy’s top priority is for Etsy to make money, so they’re going to do what’s best for their business, not yours. The recent changes seem to reflect that as there are many upset Etsy sellers wondering if it’s worth it to continue selling on the platform.
To help you make that decision, here are a few pros and cons:
QUICK, EASY & COST EFFECTIVE
It’s easy to set up a shop and keep costs low. When you build a website, you must either pay someone to design and build it for you, or invest hours into building it yourself. You’ll also have domain and hosting fees.
Etsy also makes it easy to add listings, edit listings, and update your shop.
ETSY HAS AN ESTABLISHED AUDIENCE
If you were to start a website today, it would take months, maybe even years, for it to start showing up on the first page of Google. And Google is a much more competitive platform than Etsy since it lists every website in the world. Etsy allows you to set up a shop and have the potential for shoppers to see it immediately.
GOOD TESTING GROUND
Etsy is a great place to start your business and test the market before investing more time and money into a website. There’s so much to learn and do when it comes to starting a handmade business. Etsy takes building and maintaining a website off that list. Start to earn money, build your brand, get to know your customers, etc. first, before you add more to your plate. Everything you learn from selling on Etsy can help ensure you hit the ground running when you launch your website.
Although Etsy is well-known and attracts lots of shoppers, it’s also well-known to other handmade business owners. It’s become quite competitive over the years and every category is saturated, so you can no longer rely on Etsy driving shoppers to your shop. You must work or pay for those shoppers. That time and money could be put into building your own audience of loyal customers who shop on your website and aren’t distracted by thousands of other sellers or products.
Because so many crafters know about Etsy, it makes it easy for them to find your product and copy it. I don’t like to provoke fear and I would never encourage you to not put your work out there because of copycats; it’s likely to eventually happen whether you’re on Etsy or not. But the better jump start you have on establishing your brand and becoming known for offering your unique product, the harder time copycats will have taking customers away from you. On Etsy, those copycat products are sitting right next to yours and are just a click away for shoppers.
LACK OF CUSTOMER LOYALTY
When shoppers sign up for your newsletter, follow your social media accounts, and visit your website, it’s because they’re a fan of your brand. When people head to Etsy’s website, it’s because they’re a fan of Etsy and they’re looking for handmade products…not specifically your handmade products. They’re going to come across several sellers offering similar products and may choose based on which shop has the lowest prices, fastest shipping, etc.
It’s like shopping at the grocery store. You likely don’t know the farmers who produced the vegetables and may not even care which farm they come from, as long as there’s a good selection for you to choose from. But let’s say you’ve gotten to know a local farmer. You’ve seen the land they grow their vegetables on, you’ve met the farm owners, you know their processes, etc. it’s likely you’ll feel more loyalty to that farmer and will make the effort to buy vegetables from them.
On Etsy, it’s hard for you to set your shop apart, which makes it harder for Etsy shoppers to get to know you and your brand to create brand loyalty. Which brings me to my next point…
LACK OF BRANDING
A business’s brand should come through in many ways, but Etsy only gives you control of a few of those touchpoints. For example, on your website, you can change the colors, fonts, navigation, layout, shopping experience, etc. but those aren’t things you can adapt on Etsy. Etsy shoppers can only get to know your brand through your shop’s name, the images you upload, and the text you use.
Let’s say my brand is high-end. I’d have a hard time making my Etsy shop look and feel higher-end than my Etsy competitors because we have the same font, font colors, layout, etc. On the other hand, I’m in control of every element on my website and can make every detail that surrounds my products feel “high-end” so my prices seem justified to shoppers.
HARDER TO GROW YOUR EMAIL LIST
Email marketing is one of the most effective ways to market, so it’s important for every handmade business to have a newsletter. It is possible to market your newsletter on Etsy, but at this time, you’re unable to have a signup form directly in your Etsy shop. Getting people to sign up for your newsletter when the form is right in front of them is one task. Adding more steps for a person to get to that form makes them less likely to sign up.
You can still collect email addresses, even if you don’t have a website setup. So it’s still worth it to start a newsletter and link to a signup form from your Etsy shop. It takes 10 minutes to set up a landing page form, and it’s free. Here’s how: HOW TO START A NEWSLETTER FOR YOUR HANDMADE BUSINESS (IN 10 MINS & FOR FREE).
DO YOU HAVE TO CHARGE TAXES ON ETSY?
Taxes can cause confusion for business owners. There are a few things you must consider when it comes to taxes:
- Sales tax
- Income tax
It’s up to the business owner to understand and follow ALL laws, including tax laws. Which vary depending on what type of business you have, your sales, where you run your business, where you ship to, and other factors. You’ll find more information in: LAWS FOR SELLING HANDMADE.
Due to new laws in some states that affect online marketplaces, Etsy has begun calculating, collecting, and remitting sales tax for sellers when they’re shipping items to certain states. The list of states may change if/when more states introduce similar laws.
It’s important to note: just because Etsy is not calculating, collecting, and remitting sale taxes for all locations, does not mean your handmade business is not responsible to do so. Learn more in LAWS FOR SELLING HANDMADE.
If you sell your products and make a profit, you’re considered a business and must report your income when you file income taxes. How you report your income will depend on what type of business you set up (e.g. sole proprietor, partnership, LLC, Corporation, etc.).
You pay taxes on your income, which is the money left once you deduct expenses and costs of goods sold. So you must track and keep records of your expenses and costs so you can reduce the amount you pay taxes on. Which brings me to the next point…
If you work out of your home, use your car for business, travel for trade shows, etc. you may be able to write off part of those expenses as indirect business expenses.
What’s considered a business expense and how much of that expense can be filed varies depending on your business and jurisdiction.
The more you can (*legally) write off as an expense, the less income you have to pay taxes on. So it’s important to properly track your business expenses.
Again, more information can be found in LAWS FOR SELLING HANDMADE.
HOW TO BOOST SALES ON ETSY
There are many factors that play a role in increasing Etsy sales.
>> Selling profitable products: THE MOST PROFITABLE CRAFTS TO SELL
>> Having the right selection of products: HOW TO KNOW IF YOU’RE OFFERING TOO MANY PRODUCTS
>> Offer products that make it easy for a new customer to dip their toes in the water: HOW TO OFFER AN ENTRY-LEVEL PRODUCT FOR YOUR HANDMADE BUSINESS
The success of many Etsy shops has less to do with what they sell and more to do with how they promote and sell it. These articles may help:
Your photos must sell your products. Customers can touch/pick up/try on products when shopping online so your photos and product descriptions must communicate enough information for shoppers to make informed decisions. Without enough information, shoppers won’t buy.
GOOD SALES STRATEGIES
>> Write great product descriptions: PRODUCT DESCRIPTION TEMPLATE, SAMPLE & EXAMPLES
>> Make it hard for shoppers to choose your competitors over you. Here’s how.
>> Use effective sales strategies when people are in your shop: THE MOST EFFECTIVE SALES TECHNIQUE FOR A HANDMADE BUSINESS
>> Set up a sales funnel for your business. Most shoppers aren’t ready to buy the first time they visit your shop. So it’s important to have a way to stay in touch with them. A sales funnel is the easiest and most effective way: HOW TO SET UP A SALES FUNNEL FOR YOUR HANDMADE BUSINESS
WORKING WITH ETSY
Etsy is constantly changing and your business must work with those changes to continue seeing sales on the platform. I cover the most recent changes Etsy has made and how your shop can adapt to them here: WHAT’S GOING ON WITH ETSY?
Are you starting an Etsy shop this year or shutting one down?