Why Building a Business Solely on Etsy is a Bad Idea

$5000.

That’s how much I made in four months after opening an Esty shop with a $0.12 investment.

Isn’t it appealing?

It can be challenging for newbies to decide whether to launch an Etsy shop or create their own website. You have more control over an ecommerce website since you can customise the design, handle marketing and SEO, and ensure that your customers aren’t distracted from the products on your page.

Etsy, on the other hand, is known for being a great location for businesses. It’s user-friendly, and in 2019, Etsy had about 45.7 million active purchasers, giving your products a larger reach. What’s not to enjoy about this?

Add in the fact that with only a couple of Etsy listings, I can earn $5,000. Starting an Etsy shop, as a fresh new seller, might be the key to making money online, right?

Not so soon, though.

Starting an Etsy shop isn’t the way to go if you want to start your own company.

Not in the long run, however.

Many people incorrectly believe that my article The Ultimate Guide to Selling on Etsy is the answer to their entrepreneurial itch. It has everything going for it, after all:

Setting it up is a breeze.

To open an Etsy shop, you don’t need a single technical bone in your body.

The risk of putting yourself out there and delivering a service is eliminated by using products.

At initially, all you’ll need is a prototype.

Etsy already has a following and traffic.

Getting up and running is quite inexpensive.

However, despite all of its positive attributes, it does have some drawbacks.

The limits of Etsy may begin to weigh on you when you’ve started an Etsy shop and begun to earn sales, or perhaps grown it above $1,000/month.

Don’t be concerned, though. I will not abandon you. I’ll show you how to repair them so you can effectively sell on Etsy while also providing yourself the freedom and flexibility you need from your 9–5 job (or even just more creative liberty!).

1. Products with a Low Average Price

Etsy is a cutthroat business.

When you’re just getting started, this is great news.

After all, Etsy has a huge fan base, which means you won’t have to spend as much time and effort marketing if you’re just getting started with an online business.

However, when your shop expands, this can be constraining.

In 2019, Etsy has around 2.1 million active merchants. Hundreds of sellers compete for each product in each business segment.

As a result, the cost of your product falls.

In 2020, the average weekly wage in the United States will be roughly $957, or $49,764 for a 52-week job.

You would need to sell 1,600 copies of your product on Etsy to earn roughly $50,000 per year selling a product for $32 (around the average price). Right?

Except for “COGS,” or “cost of goods sold,” which is a cost related with actual products.

Assume you’re a jewelry salesperson. You make the jewelry by hand using stones from your local bead store, as well as leather and metals, which you may have sent in.

You’ll spend $6 on each $32 piece of jewellery. You’d have to either boost your rates by $6, risking losing clients, or sell more units to reach the $50,000 average pay.

If you only make $23 per unit, you’ll need to sell 2,105 units in a year to break even. On Etsy, you’ll have to sell a lot of units. Particularly in light of…

2. The Absurd Amount of Work

Anyone selling antique on Etsy isn’t concerned about this. Please skip this section if that’s the case.

Etsy is an online marketplace where you can buy and sell handcrafted goods. You’re probably interested in selling on Etsy because you want to be able to do what you enjoy, be creative, and make a livelihood doing it.

So, if you made your products using the first example and managed to sell 2,105 pieces on the uber-competitive Etsy market over the course of a year, you’d have to manufacture 2,105 units.

That works out to 5.7 units a day, which we’ll round up to 6 units per day to cover fees. If each unit takes an hour to manufacture, you’ll need to work on the jewelry for six hours each day.

Then there are the administrative responsibilities, such as dealing with consumers and putting together sales.

It can take longer than owning an independent platform if you don’t have mechanisms in place for your Etsy store.

3. You’re Only Accepting Etsy Customers

Etsy’s search engine is fantastic…

Etsy’s platform allows you to do this.

You’ll find the best listings on Etsy for handcrafted leather purses if you’re looking for a gift for your mother’s birthday.

However, if you search Google for handmade leather bags, which is something that a lot of people do, Etsy products will appear at the bottom of the search results (unless you have a very popular Etsy store).

It is significantly more difficult to rank in Google than it is on Etsy, which is why I recommend starting there.

Make certain that everything is correctly labelled. You may boost the search ability of your products once you’ve got some fantastic ones to sell by doing the following:

Including keywords in the title, description, tags, and properties of your item. In your title, you can incorporate long-tail keywords.

Adding your shop’s address.

To improve your shop’s SEO, rename the sections.

Keep in mind that once you’ve mastered Etsy, you’ll lose control over your Google keywords and store presence.

Additionally, people are less likely to visit an Etsy shop because….

4. Etsy Stores are “Lower-Quality”

I don’t know about you, but the goods that aren’t from Amazon, eBay, or Etsy peak my interest the most when I Google something like a handcrafted leather purse.

I’m much more likely to click on a reputable store with its own URL and shop than on an Etsy listing. This is due to the fact that the company appears to be more respectable, which is true for almost all higher-priced things.

I feel more confident with a store that has its own name and website because I know they will be there if I need to return something.

The built-in customer base on Etsy is a major selling feature for starting a shop there. If your firm has developed to a profit of $1000 per month or more, you’ll want to explore the markets of other search engines and platforms.

5. Etsy Takes a Cut of Your Earnings

Assume you’re the owner of a retail store in a shopping mall.

Every month, you paid your rent and complied with the mall’s rules and regulations, but at the end of the month, the mall’s owner approached you with his hand outstretched, wanting 3.5 percent of your sales.

Etsy manages to do just that.

You must not only pay to “rent” a space on Etsy with each listing (the listing charge is $0.20), but you must also pay a 3.5 percent commission on each purchase. You’ll also have to pay fees if you accept credit cards, currency conversion fees, and PayPal fees if you let them check out with PayPal.

Worst of all, you don’t even own the “land” legally! This isn’t a debate over property taxes.

You’d miss out on the foot traffic of a crowded mall if you owned your own “store” rather than renting one from Etsy, but you’d save a lot of money by selling your things.

This is the fee you pay when you first begin selling on Etsy in order to have access to Etsy’s enormous customer base. When your company grows, though, it’s best to minimise profit-sharing by opening your own marketplace.

6. You Don’t Have Control Over Your Property

You’re renting when you’re on the Etsy platform. Your website is not completely within your control.

Here’s why, even if you’re opening an Etsy shop, having your own website is still preferable:

Your land is not yours.

Etsy has the right to “evict” you at any time, and you must pay a higher rent.

You are not allowed to do whatever you want with your home.

You don’t have complete control over the appearance and functionality of your website.

You do not have complete control over your company.

Having an Etsy company requires devoting more time and resources to the platform. But, after all, didn’t you start a business to have greater control over your time, money, and life?

As your company grows, branching out to include your own self-hosted store can assist mitigate this risk.

7. It’s a Press-Free Zone on Etsy.

As you can see, press can be a game-changer for any entrepreneur, particularly those in the eCommerce space. I was thinking about Etsy, eBay, and Amazon and realised that in order to obtain exposure, you need your own website. You might be able to obtain some press on Etsy.

Theoretically. It’s just that it’s much more challenging. If you contact a newspaper and they like your products, where would they lead their readers if they were to include them? They couldn’t possibly include a long URL that started with Etsy.com.

Because of this, magazine editors and product curators don’t cover Etsy items as regularly as they used to. This isn’t usually a problem for those who are just starting out, but it can be if you’re running your business full-time.

8. If you only sell on Etsy, you’ll lose sales.

Let’s use Etsy to return to the mall analogy.

When you walk into a mall to buy a pair of shoes, for instance, you are surrounded with options. Shoes can be found in a variety of shoe stores as well as department stores.

Etsy is the same way. Buyers are given with hundreds of options when they come on Etsy’s homepage, in addition to your products. They are easily distracted by other options, and even if they do come to your Etsy shop, they are unlikely to stay because Etsy has so many options.

The website itself is in competition with you because there are so many different sellers selling the same things. When I looked for my product, for example, I used some terms I know a lot of people use, and there are twenty other goods shown before mine.

It doesn’t matter whether my product is better than theirs. It makes no difference whether the quality is higher, the shipping is faster, or I have a higher number of favourable reviews. They keep appearing in front of my ad.

When someone comes to your own website’s homepage, their only option is to look at your products.

Getting visitors to visit your website is the most challenging part.

9. Up-Selling Difficulty

Focusing on boosting average order value by upselling or delivering add-on products is one of the finest strategies to achieve revenue growth in retail.

It’s easier to sell a second or third item to someone who has already bought something from you than it is to sell to someone who hasn’t. Retailers understand this, which is why they frequently include a “You Might Also Like” box beneath an item on their websites. This section contains additional products that the buyer might be interested in.

On Etsy, this feature is not available. When a potential buyer looks at your listing, there are no extra features. These features will assist you in growing your company.

10. Etsy Makes You Forget About Marketing

Have you ever heard of a “Unique Selling Proposition”? It’s one of the most crucial marketing concepts. What sets you apart from the competition is your USP, or unique selling proposition: why should buyers buy from you instead of someone else?

The aforementioned reasoning, however, is problematic on Etsy because it’s difficult to articulate your brand or unique selling proposition.

All you see when you use Etsy’s search engine to look for something specific are tiled photographs and item descriptions.

You don’t get a feel of the company’s distinct brand or how it differs from the competition. As a seller, you can’t even include that information in the listing title because you need to optimise it for search.

I can’t choose an Etsy seller just based on which brand appeals to me. I’m not sure what distinguishes each of these choices from the others. To work with, I just have a price and an image.

Etsy also makes it more difficult for your customers.

11. You Are Not Able To Communicate With Buyers Following The Sale

Have I emphasised how important it is to have an email list? Yes, I believe I’ve accomplished this.

You can’t ask buyers on Etsy if they want to be connected to your email list. This implies you won’t be able to contact customers once they’ve made a purchase.

It’s much easier to sell to an existing customer than it is to sell to a new one. Because you’ve already sold something to your current customers, and assuming you did a good job and they liked it, they’re far more likely to want to hear from you and buy from you again. You can also utilise email to strengthen your relationship with your customers and gain their trust.

On the other hand, Etsy does not allow you to re-engage with those customers through an email list. Using Etsy to make money will drastically limit your revenue because the money is in the email list.

What are your options if relying solely on Etsy to relax is such a bad idea?

Instead, consider the following options.

If you’re serious about making money with an online store, starting an Etsy shop isn’t the way to go. It’s an excellent place to begin, but it shouldn’t be your only choice.

Starting an Etsy shop has a lot of benefits: it’s easy, you get exposure, and it alleviates a lot of the stress of marketing your products, especially if you don’t know where to start!

However, if you’ve grown your Etsy shop to the point where the variables I listed above are limiting you, there is one thing you can do to help you overcome the majority of these problems.

It isn’t a challenging job. It’s also not a difficult task. Many people, however, are excessively intimidated by it:

Creating a store of your own.

Yes, you are free to keep your Etsy shop open. You should, in fact, do so. Etsy is a fantastic search engine, and you don’t want to miss out on its sales and visibility.

However, you can also run your own store. You can do the following with your own store:

You may brand yourself in any way you desire.

Using a plugin, you can sell add-ons.

Directly to your website, get press for your products.

You can list as many products as you like without paying any listing or renewal costs.

You can market your shop far more effectively than you can on Etsy.

To stay in touch with your customers, keep an email list.

Buyers will take you more seriously, you’ll have more freedom and flexibility (all of which are necessary in a lifestyle business), and, most significantly, you’ll be able to build and maintain important relationships.