What is Etsy? Everything You Need To Know Before Opening a Shop

Last updated: 28/02/2024 Written by: Ruby Layram

At first glance, Etsy is just another eCommerce platform that connects buyers with sellers. However, there is much more to the application than meets the eye.

Etsy stands out from other eCommerce platforms because of its strong focus on supporting small, handmade businesses. Understanding what makes Etsy different from other eCommerse sites is key to understanding how to be successful on the platform.

In this post, we will delve into what Etsy is, how it works, and 5 important things that you should know before opening your own Etsy shop.

Etsy is an online marketplace where independent sellers can reach a global audience of buyers. The platform caters to the selling of handmade goods and vintage items that are sold by small business owners rather than large brands.

Etsy recorded over 7 million active sellers in 2022 and over 96 million buyers. That is 30x more buyers than there are on Depop and 16 million more than were recorded on Poshmark.

Sellers have their own ‘shops’ on Etsy which can be personalized according to their niche. Each shop represents an individual storefront within the eCommerce platform.

Much like Amazon and eBay, Etsy offers a search function that can be used to search the entire platform. However, it is also possible for customers to search for products within individual shops. This makes it possible for sellers to make a name for themselves and attract regular customers.

Sellers are required to handle all aspects of their Etsy shop including customer service and fulfillment. Buyers can send messages directly to sellers if they have any queries or feedback. Again, this helps small businesses to build a relationship with customers.

Key Features of the Etsy Platform

A good way to understand exactly what Etsy offers is to take a lot at the platforms key features. Below is an overview of the main features that make up Etsy.

The Etsy Marketplace

At the centre of the platform is the Etsy marketplace. This is an eCommerce platform that can be used to browse through listings, search for specific products, and discover categories. The marketplace is similar to most other eCommerce platforms.

Buyers can filter the search results to show products that meet their requirements. It is also possible to message sellers directly from the marketplace.

Etsy search results rankings are determined by several factors. The platform puts trustworthy sellers at the top to ensure that the best shops are being promoted fairly. Etsy also favours sellers who use accurate, informative descriptions in their product listings.

Etsy Shops

An Etsy Shop is a dashboard for sellers on the platform. Shops can be personalized to suit each individual business and come with a range of features to track performance, orders, inquiries and more.

Sellers upload items to their shops with images and descriptions. They can then manage engagement, sales, shipping and customer messages from their shop dashboards.

Etsy Ads

Etsy Ads can be used by sellers to increase traffic and sales. The ad feature is very simple to use and is a great way to grow your small business.

Sellers have to pay a 12%-15% fee to use Etsy ads. The fee is taken automatically when a sale is made.

Etsy stands out from other eCommerce sites because it places a strong focus on supporting independent sellers rather than big brands.

In the following section, we will discuss exactly how Etsy is different from its competitors to help you decide whether or not Etsy is the best platform for your business.

Etsy vs Amazon

Both Etsy and Amazon are online marketplaces that allow anyone to list items for sale.

However, Amazon allows dropshipping and the sale of branded products. One the other hand, Etsy does not support dropshipping or the sale of branded or bulk-purchased goods. Instead, Etsy caters to small businesses that sell handmade, vintage or custom items.

Etsy also doesn’t allow large brands to create shops on the platform. This makes it easier for small business owners to rank highly in search results and attract buyers.

If you are interested in dropshipping or selling new products purchased from a wholesaler, check out our post on how to start an Amazon FBA business.

Etsy vs eBay

eBay is another online marketplace that supports independent sellers. The main difference between eBay and Etsy is that eBay focuses on selling second-hand items rather than handmade products.

On eBay, items are listed and sold individually. Whereas, Etsy sellers can sell multiple products through one listing. This means that sellers don’t need to re-upload a listing each time that they make a sale.

Also read: How to make money on eBay without selling anything

In a nutshell:

Etsy is the most suitable online platform for anyone who wants to sell handmade, custom or vintage products.

If you’re looking to sell new products, start a dropshipping business or try reselling, you may want to check out some other eCommerce side hustle options.

Etsy acts as a platform that connects small business owners with customers. Sellers create their own shops and list products for sale. Buyers can then use the search function to find products and place orders.

The platform supports direct communication between buyers and sellers which means that all customer service is handled by shop owners. Sellers are also responsible for order fulfillment and returns.

Etsy follows are simple model. Here is how Etsy works for sellers in 2024.

1. Account creation

Before opening a shop and listing products, sellers must first create an Etsy account.

It is free to sign up for Etsy in the UK and opening an account requires just your email, phone number and a password.

You will be able to access the Etsy marketplace and start browsing through products with your Etsy account.

2. Open a shop

To start selling items on Etsy, sellers must create their own Etsy shop. Shops can be customized to suit your niche by adding a profile image, creating a shop name and changing the design.

When you open a shop, you will also be asked to provide tax information and a payment method.

3. Create product listings

Sellers can create product listings from the shop dashboard. Each listing should contain images and a detailed description. Sellers are also required to set a price and product quantity.

4. Use Etsy ads to promote your shop

After listing their products, sellers can use Etsy ads to promote their shop and increase sales. This is an additional feature that is suitable for experienced sellers.

Also read: How to brand your Etsy shop

5. Order fulfillment

When a sale is made, sellers are notified through their shop dashboard. It is then the seller’s responsibility to fulfill the order and respond to any messages.

Sellers should make sure that all orders are delivered on time, in good condition. Payments are made available in the seller’s account after the order has been successfully shipped. If a buyer choose to return an item, the refund will be taken out of the seller’s account.

Etsy is a small business marketplace that caters to independent sellers. All products must be either handmade, customizable, vintage or a craft supply.

Also read: Best business ideas for Etsy sellers

Handmade items: Handmade items should be made or designed by yourself or another person who is employed by your business.

Custom items: Custom items are products made on demand to meet the requirements of a buyer. For example, you might sell engraved bracelets that can be personalized with the names of loved ones.

Vintage: Vintage items are old items that are usually thrifted from charity shops, car boot sales or vintage stores.

Most vintage items cannot be bought from Highstreet stores or online retailers because they are no longer made. Therefore, it is possible to sell these items on Etsy.

Craft supplies: As part of its effort to support the sale of handmade items, Etsy allows sellers to sell craft supplies. This could be sewing patterns, paints, craft kits and more.

What can't be Sold on Etsy

As well as providing guidelines about what can be sold on the marketplace, Etsy also offers guidelines around items hat can’t be sold.

Prohibited items, services, and violations of intellectual property policies are not allowed.

Reselling items as handmade when they are not is not permitted.

Sellers must not engage in fee avoidance or coordinate pricing with other sellers.

Permission is required when raising money for charity.

To understand how Etsy works, it is helpful to look at the seller guidelines. These are set set of rules that ensure sellers maintain Etsy standards and provide a good experience to buyers.

Here is an overview of the current Etsy seller guidelines.

Etsy shop management:

• Sellers should provide honest and accurate information about their shop and items.

• Shop policies must be honored.

• Shop content, including text, photos, and videos, must adhere to Etsy's policies.

• Accurate representation of items in listings and listing photos is essential.

• Respect the intellectual property of others.

• Avoid fee avoidance and other actions to manipulate the platform.

Seller Standards:

• Sellers must comply with all applicable laws and regulations for their listed products.

• Meeting Seller Service Level Standards, including prompt dispatch, timely responses, and dispute resolution.

• Honoring commitments made in shop policies.

• Responsibly addressing disagreements and order issues.

• Notification and order cancellation when unable to complete an order.

Privacy and Protecting Personal Information:

• Sellers must protect and use personal information in accordance with relevant laws and Etsy's Privacy Policy.

Etsy's Purchase Protection Programme for Sellers:

• Etsy’s Purchase Protection programme protects sellers in certain situations when cases arise. The programme offers a refund of up to $250 for unsuccessful orders if the seller can prove that they sent the item to the buyer.

After using the Etsy platform ourselves, we came up with 5 important things that every seller should know before opening a shop in 2024.

1. You should update your listings regularly

Etsy allows shop owners to update their listings with new photos and information. You should try to do this regularly to keep your store up to date and to show the search algorithm that you are an Etsy seller.

We uploaded a few listings to our shop and found that the ones that weren’t regularly updated dropped of the search results page.

2. Looks matter

Being successful on Etsy isn’t just about selling a good-quality product. It is also important that you make your shop look great.

Aesthetically pleasing shops tend to perform much better on the platform. This is mainly because buyers search by image.

You should spend time taking great photos and making your listings stand out on the search results page to attract customers.

3. Use social media to promote your shop

You can increase your store traffic by using social media platforms to promote your Etsy shop. Pinterest works particularly well for this because you can link directly from pins to your products.

Promoting your shop on social media is a good way to speed up the process of making your first sale.

4. Increase your listings

One way to increase your shop’s visibility is to add more listings. Doing so will increase your chances of your shop appearing in the search results and drive more customers to your business.

Try to add new listings regularly and stay active on the platform by communicating with buyers.

5. Track and analyze your shop performance

The best Etsy sellers actively monitor their shop’s performance to spot areas for improvement. This is a good way to prevent your shop from being hit by algorithm updates and to stay ahead of your competition.

You can use the seller dashboard to monitor traffic, search appearance, visits, clicks and other key metrics.

Etsy is an online marketplace that supports small, independent businesses. Etsy can be used to sell handmade goods, customizable items, vintage products, and craft supplies.

Etsy provides sellers with a range of tools to grow their businesses, monitor their performance, and attract buyers from around the globe.

In this article, we have taken a look at what Etsy is, how it works and the most important things to know before starting your own Etsy shop.