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10 min read

How to start an Etsy shop

If you are a small independent business selling hand-crafted or unique vintage finds, then opening an Esty shop is likely to be the best business move you could make in 2021.

What is Etsy?

Etsy is a booming online marketplace which has grown rapidly in the last 10 years, boasting over 60 million buyers in the second quarter of 2020, and it’s on trend to continue growing. Renowned for being a ‘one of a kind’ community supporting independent creators, using Etsy’s platform is sure to elevate your brand, and a good way to tap into consumer demand for unique and home-crafted items. 

Particularly if you’re concerned about how to make sales during the current crisis (where lockdowns are impinging upon the way we go about our business and lives), opening an Etsy shop is the perfect solution for any small creative business.

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Video: Starting a business on Etsy

by Etsy

In this video from Etsy, sellers share why they love running their Etsy shops.

How to start an Etsy shop in 8 steps

While the prospect of setting up an Etsy shop may feel daunting right now, the possibilities that it could open up for your small business will make your efforts worth it. To help you in this endeavour, we’ve compiled everything you need to know to help you start your Etsy shop today.

  • Step 1. Sign up for an Etsy account

    Before you can open your shop, you have to create an Etsy account. Create an Etsy account by:

    1. Clicking the Sign In button on the top right-hand corner of their home page
    2. Clicking the Register button on top right of the pop-up form
  • Step 2: Set up your Etsy shop preferences

    Once you have been able to log in to your new account, you will able to open your shop. To set up your shop preferences:

    • Click Sell on Etsy.
    • Click Open your Etsy shop.
    • Select your shop language, country, and currency, then click Save and continue.

    The language you select should be the one in which you intend to post your listings and should probably match the country you are selling from (if using Etsy.co.uk, we recommend posting in English). You won’t be able to change the language preference later, but you will have the option to add translations in other languages if you wish.

    It is also important that you choose the correct country for your shop (where you are located and will be shipping from), and that you choose the currency that you will be making transactions in (conversion fees could apply is your bank’s currency is different to the one you select for your shop).

  • Step 3: Choose your Etsy shop name

    Choosing your Etsy shop name is an important step. Perhaps you have already been trading under name or maybe this is the first time you’ve thought about it, but do spend some time thinking about this as you want your shop name to be memorable reflect your brand.

    Etsy does have some rules about names. All shop names must be:

    • Between 4 and 20 characters long
    • Free from profanities
    • Not trademarked by another business
    • Free from spaces or special characters (if you want a name which is more than one word long you will have to write it like this example: CreativeNameIdeas)
    • Not already in use by an existing Etsy member

    If the name you had wanted is already being used, Etsy will make suggestions of similar names which are still available.

  • Step 4: Add items to your Etsy shop

    When preparing to add items to your shop, make sure you take good quality photos and videos. Etsy have quite specific guidelines about photos so make sure that they are:

    • At least 2000 pixels wide
    • In a supported .jpg, .gif or .png format
    • At least 72 PPI resolution
    • Less than 1MB

    It is also sensible to ensure that photos are:

    • Clearly lit
    • Taken from a range of angles
    • Highlighting unique details
    • Demonstrate the size of the item

    Once you have your images, click on Add a listing and follow the steps as they appear on Etsy:

    1. Add the photos and videos
    2. Select the one you want to be your thumbnail image (the front image that will show up on Etsy searches).
    3. Add your listing details
    4. Describe your listing accurately by making the correct selection and using clear, descriptive language which highlights the best of your product without exaggeration, using ‘words and phrases that buyers might use when searching your item’ (Etsy’s Taylor Combs).
    5. Add how many of that product you have in stock and your price
    6. For digital items, you will need to add the files at this stage
    7. Set up your shipping preferences including your processing time, shipping method and cost for the buyer (know that lower shipping fees are usually more attractive to customers)
    8. Choose whether or not you want to use an Etsy Ads campaign to advertise this specific product
    9. Preview your listing to check that it looks as you want it to
    10. Publish your listing or save it for later.
  • Step 5: Choose your payment preferences

    Once you have added a listing to your shop, you will need to organise your payment preferences.

    Here is where you will need to decide whether you want customer payments to be made into your personal account, or use/open a business bank account to keep the your business finances separate.

    1. Click the Your Account icon, then click Shop Manager.
    2. Click Finances.
    3. Click Payment account.

    If you decide to enrol in Etsy Payments, your seller fees will be automatically deducted from your sales. This means that you will either have money Available for deposit into your bank account or owe Etsy fees (shown as Amount due). In this case, you will need to set up a disbursement schedule to withdraw funds to your bank account, or click Request it now to receive your funds the next day.

    If prefer not to enrol in Etsy Payments, your fees will appear as Amount due while your sales funds will be directly processed through the payment method you decide to use.

  • Step 6: Set up billing

    If you have a business account, you may wish to have Etsy seller fees deducted from your business account as this will help you to keep track of all your business outgoings and expenses.

    If you are in the UK, you can’t yet enrol for auto-billing, so you will have to manually pay your Etsy seller fees each month.

  • Step 7: Open your Etsy shop

    A final thing to add before you open your shop is a logo (more on that below). 

  • Step 8: Customize and market your Etsy shop

    Since your shop homepage is essentially your Etsy storefront, you want to ensure that this makes a strong and positive first impression on your potential customers.

    In order to have the best impact on potential customers you need to consider how you can create cohesive visuals which are coordinated to your brand.

    Your shop icon and banner are your main visual tools to help you sell your brand’s story. Your colours, fonts and photos should also coordinate (though not necessarily match) with these central graphics.

    Etsy Ads are a great way to advertise your listings, getting featured spots at the top of Etsy search results and other pages on Etsy.

Designing a banner for your Etsy Shop

Your banner is the most prominent graphic on your Etsy homepage. Therefore, it ought to highlight the best your shop has to offer and be attractive to potential buyers, generating interest and showcasing your brand positively.

Etsy’s top tips for designing a banner are that it should:

  • Look polished and professional
  • Use text sparingly
  • Be creative and eye-catching
  • Contain links to the rest of your shop
  • Be adaptable (for example, at Christmas, you may want to consider a way to adapt your banner so that you are highlighting the season while still retaining your brand identity).

To further help your Etsy shop stand out, consider signing up to Etsy Plus. Etsy Plus subscribers have advanced customisation options.

Once you have settled on your Etsy aesthetic for your homepage, we recommend applying your colour schemes and style to all of your listing images too. The more coherency you can create across all elements of your shop, the more professional, memorable and branded your Etsy shop will become.

Checklist: Five things to know before setting up an Etsy shop

Use the checklist below to weigh up the different considerations when setting up an Etsy shop. 

You must be logged in to use this checklist

Login or Register

Deciding on a niche

Finding your Etsy niche relies upon you remaining true to the Etsy ethos of being a unique seller. The best way to do this is to remain true to your own creativity and craft; don’t be tempted to become a copy-cat of other business which you think are doing better than you. Instead, focus your energy and attention on improving your own branding, exploring your own sources of inspiration and honing your creative process.

Building a brand

Your niche and your branding are, in many ways, two sides of the same coin. As you start to explore what your niche is, you will discover more ways in which you can strengthen your branding, and as you develop your brand you may find that it helps you to create a more distinctive niche for yourself.

In order to promote your brand, there are certain things you can do to start increasing your brand’s reputation:

  • Ensure all graphics are cohesive and that your page has a distinctive ‘look’ which conveys something important about your work
  • Categorise your products so that your shop looks professional and is easy to navigate
  • Update your profile, using key words in your shop title, announcement and shop description
  • Optimise your listings for search engines by adding keywords to the listing title and description
  • Make your descriptions detailed, clear and grammatically correct
  • Provide the very best customer service
  • Keep your rates competitive
  • Invest appropriately in good quality photography
  • Increase your listings (more items increase the likelihood of building up buyers’ familiarity with your brand)
  • Build loyalty to your brand by offering discounts to repeat customers
  • Use social media to promote yourself and create a lifestyle associated with your brand
  • Ask customers to leave reviews which can be highlighted on your homepage
  • Collect email addresses and build a mailing list (with consent)
  • Join Etsy Ads to become featured at the top of searches
  • Research your market, thinking carefully about who your target audience is and the sorts of aesthetics and descriptions they might be drawn to.

Conducting research

When conducting market research, don’t forget to look at your competitor’s pages too. While you don’t want to copy a competitor’s branding, it is always worth having a look at the types of things which are working for similar small businesses.

Understanding Etsy fees

While it’s free to create a shop on Etsy, you’ll pay them fees for each item you list, receiving sales. If you sign up to Etsy Ads, you will also be charged for marketing your shop.

You will be able to see the details of your fees and taxes in your monthly statement CSV by:

  • Going into Shop Manager, and clicking Settings.
  • Click Options.
  • Click Download Data.
  • Select your preferred CSV Type.
  • Select the month you’re interested in.
  • Click Generate CSV. You’ll receive an email when the CSV file is ready.
  • Click Take me to download in the email.
  • Click CSV to download your CSV file.
  • Filter by Type and Title.
  • Sum the Fees & Taxes column for each type of fee.

Etsy transaction fees
Etsy transaction fees are calculated at 5% of the total item costs (plus postage and gift wrap if applicable). If your listing and payment account currencies differ, the fee amount is converted to your bank account currency at the current market rate.

Etsy payment processing fees
This only applies to sellers who enrol in Etsy Payments. By enrolling in Etsy Payments, you are agreeing to pay a payment processing on every transaction which uses Etsy Payments. The payment processing fees for the UK are currently 4% + 0.20 GBP.

Additional Etsy fees
Other Etsy fees which may be applicable are:    

  • Listing fees
  • Postage fees
  • VAT
  • Pattern fees
  • Advertising fees

To view your taxes and fees, just:

  • Click the Your Account icon, then on Shop Manager.
  • Click
  • Click Payment account.
  • You will be able to see fees you owe under Recent activitiesFees & Taxes.

How to Start an Etsy Shop FAQs

  • Does it cost money to sell on Etsy?

    Creating an Etsy shop account is free. There are different types of fees to be aware of when selling through Etsy, including a 5% transaction fee and a 4% + 0.20 GBP charge if you agree to pay a payment processing on every transaction with Etsy Payments.

  • Do I have to report Etsy income?

    If you are already employed or self-employed then you are required to report Etsy income as it will be added to your total income for the tax year. If you are unemployed but you sell on Etsy as a hobby, you generally won’t need to pay tax on income as you can earn up to £12,500 tax-free for Personal Allowance.

  • How much do Etsy shop owners make?

    Some Etsy shop owners are able to make an additional income per month alongside their current job. Whereas other Etsy shop sellers have gone onto earn enough to quit their jobs and sell their products on Etsy full time. Although it’s free to create an Etsy shop there are fees for each item you list and sell so this will affect how much money you earn.

  • How profitable is an Etsy shop?

    The profits Etsy shop owners can make entirely depends on the selling volume of the products. Etsy is an online marketplace which is profitable for independent creators who have unique products to sell. Popular items sold on Etsy include craft and supplies, handmade items, and jewellery.

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