What are the Pros and Cons of Etsy for Your Small Business?

By Keilyn Mancilla| Dec 21, 2016| 2832 Views
What are the Pros and Cons of Etsy for Your Small Business?

From screen printing to embroidery, Etsy serves as a buying and selling platform for any and all things crafts. This e-commerce platform caters to an audience that values handcrafted, personalized, and unique products. If the mission of your small business aligns, Etsy could be a helpful site for the growth of your company.  Unfortunately, it may not always be the greatest selling platform for all businesses, so we’ve listed out a few pros and cons of creating an Etsy shop for your business.

A businesswoman answers a customer call for her Etsy shop.

The Pros:

Crafting is in!

Whether it’s because crafting can be therapeutic or because it gives one a sense of accomplishment, creating unique and personalized items is definitely a popular pastime for all generations. A site like Etsy is able to capitalize off of this widespread phenomenon, especially through millennials. Targeting this younger and more technologically-savvy audience is highly important to any small business. They can easily understand how the site works and tend to have a greater willingness to spend in contrast to older generations. This culminates in a “buy, buy, buy” attitude, thus bringing in more revenue for your small business.

How much better can it get!? If you’re able to effectively target and gain their support for your products, you just gained a large audience of loyal customers whom you can continually target for the rest of their lives.

It’s easy to target a niche audience

Etsy allows you to position your business in a way that targets the niche audience interested in your products as a decorated apparel business. Because you’re an embroidery or screen-printing audience, you can use Etsy to your advantage. What makes Etsy so convenient is that it already has a large audience base that can transfer to your company.

Etsy is a great and easy way to start up a new business

Etsy is the fifth most visited marketplace site in the United States behind Amazon, eBay, Walmart, and Best Buy. Out of all of these more frequently visited sites, Etsy is the only one that specializes in craft related products – it’s clearly doing well considering how small and unique its niche audience is.

Not only that, Etsy offers features that make starting up your own business feel easier, less overwhelming, and more manageable. Etsy’s interface is extremely easy to navigate making it simple to add new products, control your inventory, and manage customer orders. The site has its own sort of “economy” that promotes the growth of small businesses. As a new business, Etsy’s popularity can help drive traffic to your new online shop and its simple built-in features can help simplify the startup process. Sounds like a dream come true, doesn’t it?

The Cons:

Heavy Competition

Customers are typically looking for the most bang for their buck – they want the best deal they can get. The problem with using Etsy as an e-commerce platform is that so many other small businesses are selling very similar if not the same exact products as your business. As a business owner, you may choose to price your products at the competitive market value to hopefully sell more of your inventory, but risking a smaller profit. On the other hand, you could choose to increase the price of your products to hopefully increase profit, but with the risk of losing customers. For start-up companies specifically, the competition can be tough to overcome, and it can become hard to maximize your return on investment.

Unfortunately, this competitive atmosphere that Etsy promotes can burden newer or smaller companies. These companies often struggle to grow because they’re unable to purchase their supplies at cheaper prices via bulk purchases like larger companies can, thus they may struggle to break even. This in combination with Etsy’s surcharges, can make the platform unfitting for certain small businesses. Specifically, Etsy charges $0.20 for “rent” for every listing that your post to their site. On top of that, they take 3.5% out of every sale you make. These numbers may seem small, but they can add up. To avoid this extra cost, you may want to calculate and compare the fees associated with other e-commerce hosting sites to find the best platform to maximize profit for your business.

Difficulty marketing your business

Although Etsy offers a variety of different features to help manage your business, it unfortunately lacks tools that allow the customization of various logistical marketing elements. For example, Etsy does not automatically collect e-mail or mailing address contact information for each customer. This means you cannot follow-up with any of your previous customers, making it impossible to advertise any new products or promotions that you may be having.

Not only that, Etsy also makes it incredibly difficult to differentiate your brand. When a customer heads to Etsy to search for whatever product they may want, their results simply appear as a variety of different pictures, prices, and company names. The only thing that sets your company apart from another is the price and the header picture. The customer has no way of seeing that your company donates a portion of the sales to a charity or that it’s environmentally friendly – it’s purely a matter of whether or not your product seems appealing enough to click on for further information. If your screen-printing company were to use a private, third-party site to sell their products, you can then promote that brand image right away and throughout every aspect, page, or link on your site.

Poor search engine optimization

If a customer searches for a product using a general search engine such as Google or Bing, the chances of your Etsy shop appearing at the top or even the first page of their search are small – unless your page is highly successful or targets a seriously small and unique niche market. But because crafting has become so popular in recent years, it’s now a very homogenized market, meaning that everything starts to look the same, making it harder and harder to stand out from all of the other small business selling similar items.

Weighing your options

All in all, Etsy can be beneficial to your small business, however, you may not want it to be the only selling platform that your company relies on. Etsy does, in fact, give business owners an opportunity for their company to grow exponentially. Unfortunately, it is not a perfect site for everyone. If it turns out Etsy isn’t for you, you can take your e-commerce business elsewhere. Consider a private third-party platform in which you, as a business owner, will have more control over.

When deciding whether or not to use Etsy as a selling platform, evaluate both the current and future needs of your business to see if they align with what Etsy has to offer.

Keilyn Mancilla

Keilyn Mancilla

As a marketing coordinator, Keilyn collaborated with Beacon Funding industry experts to write informative content about equipment financing that helps business owners in the commercial truck and decorated apparel industries.