How to start an Etsy shop and drive sales in six steps [2024]

Since its inception in 2005, Etsy has remained at the forefront of ecommerce marketplaces for sellers who want to offer personalized items, handmade trinkets, and vintage items. The Etsy marketplace is now home to nearly 7.3 million active sellers and 95 million active buyers worldwide, creating enormous opportunities for designers, collectors, and artists looking to turn their passion into a business.

Budding entrepreneurs particularly prefer the Etsy platform as it eliminates the need to create a personal ecommerce website or storefront and simultaneously handles business management tasks, like payment processing and customer notifications. However, to flourish across the market, sellers must complete the necessary steps to establish an Etsy shop and attract potential buyers.

Keep reading to discover how to set up an Etsy shop in six simple steps, complete with the best practices to scale your storefront on the platform.

• Etsy, established in 2005, is a leading ecommerce platform for personalized, handmade, and vintage items, with 7.3 million active sellers and 95 million buyers globally.

• It offers a convenient alternative to creating a personal ecommerce website by handling payment processing and customer notifications.

• To succeed on Etsy, sellers must understand the platform, establish a niche, and attract buyers.

• To start a business on Etsy, begin by researching market trends and planning a strategic business approach, followed by creating compelling product listings with professional photos and clear pricing. Next, customize the storefront and set up payment and billing.

• Once your Etsy shop goes live, promote it using organic and paid strategies, offer exceptional customer service, and regularly monitor and adjust business tactics for optimal performance and growth.

• Streamline your Etsy sales by integrating with Gelato's print on demand platform. Offer custom products without managing inventory, packaging, or shipping, and monitor performance metrics with cutting-edge tools for continuous business improvement.

Given the platform's features, setting up a new Etsy shop is pretty straightforward. But since your storefront will act as your small business, there are still several steps and relevant business decisions you'll need to start a business on Etsy and start selling to customers.

Here are the six simple steps for how to start an Etsy shop.

1. Research and plan before you begin

Conduct market research: Identify trends and niches

Selecting an ecommerce marketplace is one of the most significant business decisions you'll make. Once you've decided to start a business on Etsy, your next decision is to establish a niche or product market you want to fulfill. Consider your skills, interests, and passions to identify a specific niche for your Etsy business, like custom greeting cards or spunky apparel.

With your niche market in mind, use the Etsy search bar to scan the site for trending and popular products that align with your audience. Assess the top-selling Etsy shops that currently offer related products. Such research enables you to draw inspiration from sellers who complement your desired niche and understand how to effectively market, price, and sell your products.

Outside of product and niche research on the Etsy platform, it's helpful for prospective sellers to assess the coinciding search volume for similar products online. Platforms like Google Trends enable business owners to view the search traffic for specific queries, such as product-related terms, over a set period of time to gauge potential consumer demand or interest.

Plan your Etsy business strategy

Formulating a well-crafted business plan serves as a roadmap and helps shape the future of your Etsy shop. It gives you a sense of direction, outlining what you plan to sell, who your target customers are, your marketing and pricing strategy, and how you plan to stand out in the marketplace. Market research will enable you to develop a cohesive business plan (and financial goals!) for your Etsy store.

Start a business on Etsy by creating a budget for your initial start-up costs and ongoing expenses, such as product material and shipping costs. With these numbers on hand, you can set realistic sales and revenue goals for your first year in Etsy operation and understand how to best price your products. Your business plan will also highlight the strength of your products and will often include a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) which is crucial for understanding your business environment.

Establishing financial goals is equally critical. It not only provides an objective measurement of your business operations but also aids in decision-making. Set achievable, time-focused financial goals - whether it's a certain revenue target by year's end, a specific number of sales each month, or improving profit margins by reducing production costs. 

Ultimately, understanding Etsy's marketplace dynamics will put you in a better position to succeed. This involves actively keeping track of buyer behavior, trending products, and popular search terms. Familiarize yourself with Etsy's algorithm and how it affects search results and the visibility of your products. Participate in Etsy's community events, forums, and groups to gain valuable insights from other store owners.

2. Set up your shop and customize your storefront

Creating your Etsy account

With products in mind and sales and revenue goals ready to go, now is the time to create your Etsy account and storefront. If you don't have an existing Etsy seller account, you must register for a general buyer account with basic details like your full name, email address, and password. From here, you can toggle to Etsy.com/sell to begin setting up your storefront.

Establishing your Etsy seller account using the latest interface updates is a clearer, more intuitive process when you start a business on Etsy. 

First, you'll be asked about your preferences, such as where you plan to sell and your main language for shop operations. 

Next, you'll get to name your Etsy shop. Be strategic in your selection, considering factors like ease of recall and relevance to your products. The revamped dashboard also conveniently gives you an overview of your shop’s progress. 

Take note of Etsy's Marketplace Integrity policies and ensure your business conforms to their standards before finalizing your shop setup.

Customizing your Etsy storefront

Remember that your shop's name cannot already be claimed by an existing seller and should be unique to your brand and the products you offer. If social media pages already exist for your brand, consider coordinating your shop name with your social media handles to support better brand cohesiveness and customer discovery.

Depending on your target market and the shipping regions you offer, you will then need to select the shop preferences for currency, language, and location that work best for your business. Remember that Etsy is a global marketplace, so it's crucial to select the proper settings to increase the chances of your product listings reaching the desired audience and avoid potential customer complications.

As with any successful ecommerce storefront, you will also need to develop a logo and store banner when you start a business on Etsy. Aside from being attractive, Etsy shop logos and banners should be consistent with your existing business branding. If you don't have existing artwork to refer to, hire a designer or use DIY design software (like CanvaorLogo.com) to create a polished and professional design.

3. Create high-quality listings that convert

Crafting engaging product titles and descriptions

Now that you've completed the essential sign-up process for your Etsy shop, move forward with developing your product listings. Quality Etsy listings begin with clear titles that include various identifying product keywords, such as "Star Wars Themed Greeting Card." Aside from the title, Etsy allows you to select a category and add up to 13 product tags to each listing to access additional keywords that support higher discoverability.

You will be asked to provide a product description for each Etsy listing. On top of descriptive titles and tags, take the time to explain how the product was developed, the materials that were used, and any other details you think could intrigue Etsy buyers. When considering such listing details, think about what information you would look for when seeking a product like this.

Alongside crafting compelling product descriptions, understanding and leveraging SEO is an essential part of enhancing your product listings and getting discovered on Etsy. SEO, or search engine optimization, involves strategically using keywords related to your product in your listing titles, descriptions, and tags. Consider the terms potential buyers might use to search for your products on Etsy and incorporate these into your listings organically. This will make your shop and products more likely to appear in top Etsy search results and drive more traffic to your shop, thereby boosting your sales.

Photographing your products

To create listings that convert customers, take professional-quality photos of each product. Don't hold back, either! Etsy allows you to upload up to ten photos per listing, so snap a multitude of photos and select your best options.

For pro-level product photography, always pay attention to lighting, angles, and backgrounds. Using natural light can capture beautiful details, but if that's not an option, invest in a lightbox or softbox. Play with different angles and perspectives to show off unique aspects of your products. As for Etsy’s latest listing features, experiment with the video upload option. Videos can showcase your products in a dynamic, engaging way that photos just can’t match. Also, make use of Etsy’s new 'Shop Sections' and 'Item Attributes' features to improve your product’s visibility and searchability on the platform.

Setting pricing and shipping policies

Lastly, shop owners are asked to set their pricing and shipping policies for each Etsy listing. Consider labor and material expenses and shipping costs to settle on a price point you feel is fair. Next, determine if you plan to offer customer returns. If so, create a detailed return policy that outlines any return, exchange, and refund limitations for complete customer transparency.

On behalf of your shipping price, Etsy allows you to create shipping profiles that can be quickly attached to each item. With each shipping profile, you must select a flat shipping rate or allow Etsy to calculate one using customer location details. Many Etsy storefronts also choose to offer customers free shipping and tie these costs into the final product price instead.

4. Configure your payment and billing details

Setting up payment methods

With listings ready to launch, you must now configure your Etsy storefront's payment and billing settings to get paid properly — and promptly! While some shops solely accept PayPal payments, most storefronts prefer to use the Etsy Payments integration. This integration lets customers choose a preferred payment method, such as credit or debit card, Apple Pay, and Etsy gift cards.

To set up payment processing when you start a business on Etsy, you must navigate to the 'Payment settings' under your 'Shop Manager.' Here, you can enable 'Etsy Payments,' which will give your customers a multitude of payment options. This includes both the conventional (credit and debit cards) and the digital (PayPal and Apple Pay). Besides, it even permits the use of international payment methods such as iDEAL and Sofort. It’s essential to remember that Etsy may charge a small fee for these transactions, so always review and understand Etsy’s pricing standards before proceeding.

After settling on your payment collection method, Etsy will prompt you to answer if you are an Individual or a Business entity. This business designation is required for proper legal and tax filing purposes. Once you submit these details, Esty will need you to verify your identity and bank account details to ensure security and stress-free payouts.

Understanding Etsy’s billing and fees

The last step before you make your first Etsy sale is to set up a separate billing account for your storefront. As a shared ecommerce marketplace, the Etsy platform charges its sellers specific fees to sell to customers on the platform. Miscellaneous billing charges to anticipate as a seller include:

• Product Listing Fee of $0.20 for each item.

• Sale Transaction Fee of 6.5% of the item price, including shipping costs.

• Payment Processing Fee of 3% of the item price plus $0.25 on each Etsy Payment.

Let's say you've created a whimsical, hand-painted coffee mug that you're pricing at $20, and shipping is an additional $5. For listing the item in your shop, Etsy charges a $0.20 Product Listing Fee. 

When you sell the mug, Etsy takes a Sale Transaction Fee, which would be 6.5% of $25 (the cost of the mug plus shipping), adding up to $1.63. Additionally, you'll be charged a Payment Processing Fee. That's 3% of the sale price plus $0.25, totaling $1.00 in this case. So, from your $25 sale, you'd pay $2.83 in fees, leaving you with $22.17 for your artistic endeavors.

It's crucial to realize that Etsy sellers are responsible for paying each necessary fee to maintain good account standing. When setting up your billing account, you can decide to have these fees automatically deducted from your Payment Account, or you can provide an alternative method, such as a business credit card or PayPal business account, to cover the costs of Etsy fees.

5. Promote your Etsy shop to attract buyers

Organic promotion tactics

Now that you've navigated the steps on how to start a successful Etsy shop, you should be ready to launch your storefront and begin promotional efforts to drive traffic to your business. At this opening stage, use search engine optimization (SEO) best practices — like incorporating keywords in your product titles, tags, and descriptions — to boost discoverability through Google and Etsy searches.

You can also make your shop more search-friendly by including a store biography on your storefront. Craft your biography to include identifying details like seller name and niche or popular product types. You can also include outbound links to your social media pages in your Etsy bio so potential customers know how to contact you (and you can begin to build a niche community). Another key to your Etsy success might be right in front of you - have you utilized Etsy's built-in tools for organic reach? These tools can do wonders in extending the visibility of your store. 

Etsy's own search engine optimization tools help sellers create more discoverable product listings. The best part? It's baked right into the platform! By strategically picking relevant keywords, you'll make it easier for buyers to find your products when they search Etsy.

Paid advertising and outreach

Beyond organic promotion tactics like SEO, sellers may also want to consider paid advertising options on Etsy. For a set daily price, sellers can purchase Etsy ads, so advertised product listings can appear at the top of Etsy search results. Paid efforts like Etsy ads help shop owners gain significant brand exposure, especially in the early stages of opening a new storefront or offering new products.

To ensure the traffic you drive to your storefront converts, offer shoppers sale pricing on specific products — or even the entire storefront! Etsy's marketing options allow you to create coupon codes that can be shared on third-party sites, like social media networks, to attract new and old customers and effectively scale your ecommerce business.

Feeling a bit more promotional? Take advantage of Etsy's advertising services. By paying a small fee, your shop can be seen by a whole lot more potential clientele. It's an investment worth considering if you're serious about increasing your shop's traffic. Monitor your Etsy shop's performance with their shop stats feature. It can provide insights into your shop’s traffic, what the buyers are looking for, and which products are favorites. With this data at hand, you can clearly analyze and optimize your strategies for better organic reach when you start a business on Etsy.

6. Manage your Etsy shop

With your Etsy storefront launched and promotion efforts well underway, the final (and never-ending) step to a successful Etsy setup is ongoing management. Like any ecommerce business, Etsy shop owners must consistently follow management best practices for their Etsy biz, including:

Order fulfillment and inventory management

Strong order and inventory management practices are a must to gain business traction and positive customer feedback. Sellers who offer custom products may consider a print on demand (POD) service like Gelato to develop products and quickly fulfill and ship each order without ever lifting a finger. Integrating an Etsy shop with Gelato's print on demand services supports scalability as it can significantly reduce start-up costs but still offer robust customization options.

Inventory management is the backbone of any successful ecommerce business. In your Etsy shop, you'll need to keep a close eye on your stock levels, adjust accordingly, and ensure timely replenishment to keep up with the demand. Effective inventory management not only helps meet orders on time but also minimizes storage costs, eliminates waste, and improves cash flow, thereby ensuring the financial health of your Etsy shop. When aligned with a POD service like Gelato, inventory management becomes a breeze as it delivers on-demand printing, hence eliminating the need for bulk ordering and excessive storage.

Provide excellent customer service and create engagement

A poor customer service experience is one of the quickest ways to lose customers and receive negative reviews that further impact shop performance. Etsy sellers must provide top-notch customer service to supply buyers with a consistent and memorable purchase experience. This can be done by providing friendly and personalized customer communications across all channels while promptly providing solutions or answers to all customer inquiries.

Taking proactive steps toward addressing your customers' needs is a great way to show them you care about their satisfaction. This can be as simple as informing them of any potential delays or issues as soon as they arise or checking in with them after a purchase to ensure they are satisfied. 

And don't shy away from taking feedback sportingly! Every piece of feedback, positive or negative, is an opportunity to refine and perfect your service. Make sure to reply to every review, showing your appreciation for the feedback. If a customer points out an issue, respond in a friendly and professional manner and assure them that you’re taking the necessary measures to rectify the situation.

Monitor shop metrics and make adjustments as needed

To hit annual revenue goals and continuously scale your Etsy operations, business owners need to understand the ongoing performance of their shop. By integrating your Etsy shop with the Gelato POD platform, sellers can track top-selling products, sales trends, gross revenue, net profit, and much more from one easy-to-use application. With this data, Etsy sellers can make better-calculated business decisions to help encourage continuous growth.

Ready to streamline how you sell on Etsy?

When browsing the best methods for how to start a successful Etsy shop, you won't come across a simpler process than the six steps outlined above. Beginning with market research, identify a niche market and set up your storefront to reflect your unique product offerings. Create high-quality product listings and continuously promote your business, taking care to assess performance routinely.

Unsure if you're ready to handle order fulfillment once sales start rolling in? Partner with a reliable print on demand service provider like Gelato. Gelato empowers independent creatives and entrepreneurs to offer custom products without ever needing to purchase inventory, package a product, or ship an order. Plus, we provide metrics to improve your performance over time!

Connect your Etsy store with Gelato today to streamline how your custom products reach your customer's hands.

How much does it cost to start an Etsy business?

There are no upfront costs when you start a business on Etsy, but operational fees include a 20¢ fee per product listing, Etsy Payment processing fees of 3% of the item price + 0.25 USD, and sales transaction fees of 6.5% per item sold.

Do I need a business license to sell on Etsy?

The Etsy marketplace does not require sellers to obtain a business license like a brick-and-mortar store. However, as small business owners, Etsy sellers may still be subject to outside business laws and regulations depending on their operating location.

Is there a monthly fee for Etsy?

There are no monthly fees for the default Etsy Standard account. However, if a seller wishes to access more advanced Etsy business tools and capabilities, they can purchase an Etsy Plus membership for $10 per month.

Can you make money selling on Etsy?

Etsy can be profitable only if you put in the required effort. Print on demand solutions, such as Gelato, are preferred for streamlining more tedious Etsy store management needs, including order fulfillment and shipping, to enhance profitability.