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How to Start an Etsy Shop

Do Business the Right Way

So you’re a maker, a designer, an artist, or a creator, and you’re considering starting an Etsy shop. What’s more, you have products to sell and more products coming.—Good. That’s already half the battle. The rest is learning how to start an Etsy shop (which is easy) and figuring out which decisions you’ll need to make before and after you take that momentous step (which isn’t easy at all).

The following guide on how to start an Etsy business covers the main details—the easy stuff and the hard stuff—you’ll need to know.

Not interested in starting an Etsy business? Visit our generic Start A Business Guide.

What is Etsy?

Etsy is an online marketplace where people buy and sell sell handmade crafts, art supplies, and vintage items. Etsy itself doesn’t make or sell these products (its sellers do), but Etsy provides the platform—the E-marketplace or virtual space—where buyers and sellers “meet” and conduct their business.

You might think of Etsy as an online alternative to an arts and crafts fair, providing buyers with access to one-of-a-kind, vintage, or custom-made products, and providing sellers with access to a ready-made place to do business online.

What Can I Sell On Etsy?

You can sell handmade items, vintage items, and craft supplies on Etsy. Essentially, this means unique products you designed or crafted, rare (and old) products, or the materials someone else can use to create something of their own.

  • By “handmade,” Etsy means items made or designed by the seller, so you can’t resell handmade items created without your involvement (even if those items are technically “handmade”), and anyone you work with, including any in-house shop members and outside production partners (such as printers), has to be included in your shop’s “About” section or referenced in the relevant listing.
  • By “vintage,” Etsy means items that are least 20 years old, and Etsy may ask you to verify the age of the item. How? By using “vintage indicators,” such as the item’s designer, the fabric used (for clothing and other garments), the source from which you obtained the item, and so on.
  • By “craft supplies,” Etsy means items (tools, materials, etc.) that a buyer can use to create something of their own. Items like beads, patterns, DIY kits, blank canvas, and even party supplies fall under this category, but items that could be used without any alteration (such as a blank T-shirt) don’t qualify.

Is it Easy to Start an Etsy Business?

Yes and no. The actual process for setting up your Etsy account and pushing your shop live is fairly simple, but only if you already know your shop name, have your listing details worked out in advance, and have your banking information at the ready. This is because you can’t walk through the entire process of setting up your shop until you complete each stage of the process. For instance, you can’t enter your billing information before you create at least one listing, and you can’t create a listing before you enter your shop’s name.

That means it’s hard to take an exploratory approach to setting up your Etsy account. It’s as if Etsy thinks you should already know everything you want and need to do advance, and you obviously won’t, so we lay out the range of information you’ll need to collect (and some decisions you’ll need to make in advance) below.

After that, we’ll cover the steps involved setting up your Etsy seller’s account and pushing your Etsy shop “live” to the public.

Steps to Starting an Etsy Business

1

Distinguish Your Brand

There are millions of Etsy sellers worldwide, so you’ll need to distinguish your shop in some way. A key factor here is establishing brand consistency. Maybe you’re a versatile maker (creating, say, glass art, prints, woodcuts, and one-of-a-kind poster art), but your versatility won’t necessarily set you apart or individualize your shop on a platform as visually busy as Etsy.

In fact, it’s easy for Etsy buyers to move from product to product without much awareness that they are also moving from seller to seller, but you can mitigate this problem somewhat by establishing a consistent brand that focuses on specific types of products (handbags and related items, for example, but not handbags, jewelry, poster art, and wicker baskets).

Of course, the choice is yours. If your goal is to sell everything you create on Etsy, Etsy itself won’t prevent you from doing so. But to be more than an occasional seller on Etsy, and if you want return customers who will actually seek you out, clearly associating your Etsy shop’s name with specific types of products is a tried-and-true recipe for success.

2

Name Your Etsy Shop

You’re likely to stress over this part a little (everyone does!), but the name you enter at this point doesn’t have to be set in stone. Before you open your shop, you can change your name as many times as you’d like. After you open it, you can still change it up to five times.

Still, it’s useful to keep the following naming rules in mind:

  • Your shop’s name needs to be 4 to 20 characters.
  • The name can’t have any spaces (so janedoedesigns but not Jane Doe Designs).
  • The name can’t be in use.
  • The name can’t contain profanity or violate an existing copyright.

Fortunately, Etsy will tell you if your shop name is already taken (and even offer alternatives), but it’s also wise to search around on the internet to see if any other businesses out there are using your preferred name. You can save yourself a lot of headaches (and potential lawsuits) by doing your due diligence in advance. (Check out our Free Business Name Search to see if your business name is available in your state.)

Ultimately, though, the key is making sure you choose a name that helps customers understand your business or recognize you again on future visits. Your choices are basically some variation on your name, an abstract name, or a descriptive name.

  • Your name: The first option (your name) has the virtue of being ready-made and flexible. If you aren’t entirely sure how to define your brand yet, using your name or pairing your name with a term like “Design” (as in janedoedesigns above) can give you a solid place to start.
  • Abstract names: Abstract names offer the same flexibility, but make sure the name is memorable if you go this route. The relationship between an abstract name and your niche or product may not be instantly clear, so—at the least—that name should imprint itself readily in your customers’ minds.
  • Descriptive names: You can also use a descriptive name, of course, if your product line is already clearly defined, and if you don’t want there to be any question about the types of products your Etsy shop sells.
3

Choose a Business Structure

When you become a seller on Etsy, you’re starting a small business (even if you’re just an occasional seller), and that leads to the question of how you want to structure that business.

On the one hand, you can operate as a sole proprietor, which simply means that there is no legal distinction between you and your business, and you don’t need to register your business in your state. This is the simplest and cheapest (yet riskiest) option available to you, and it’s the route most small business owners take. If you choose to go the route of being a sole proprietor, at the least you might still start a separate bank account to keep your personal finances separate from those of your Etsy shop.

But if you want and can afford a safer option for your Etsy shop, you might consider starting a limited liability company (LLC) instead. An LLC is a business structure that provides the limited liability protections of a corporation without the complex maintenance and tax burdens of a corporation, and you can form an LLC in any U.S. state. Starting an LLC will establish your Etsy business as a distinct legal entity, decrease your personal risk if your Etsy business ever gets sued, and help prevent creditors from going after your business’s assets if you ever fall into personal financial hardship.

Just keep in mind that, as a registered business entity, your LLC will need to appoint a registered agent to receive service of process (legal notices and other official state mail) on its behalf. This is one of the core services Northwest provides.

Visit out our general LLC Guide to learn more about starting a limited liability company in any state or consult our state-specific guides. You can also check out our blog on Why You May Want an LLC for Your Etsy Business.

4

Stock Your Etsy Shop

To be a seller on Etsy, you of course need something to sell, and it’s best to have a generous backlog of inventory available when you first get started. Why? Because your early success could mean running out of the very thing (your awesome inventory) that made your Etsy shop successful in the first place.

Of course, most new Etsy sellers don’t blow through their inventory right away simply because they’re still figuring the platform out, defining their brand identity, and figuring out how to make listings rank in Etsy’s search results, but that’s hardly a reason to rest on your laurels. Being understocked can quickly lead to being sold out, consequently missing out on sales and revenue, and failing to create a reliable brand for your potential customers.

That doesn’t mean you should wait until you have a year’s worth of stock at hand (if you tried that, you might never start selling!). But monitoring your top-selling items, estimating your supply needs and production capacity, and building up a robust inventory are key to running an efficient, successful Etsy shop.

5

Take Beautiful (but Accurate) Photos

Etsy is a visual platform, and most buyers searching on Etsy will look at photos and prices before they look at anything else. That’s natural (I do it, and you probably do too). And, ideally, it isn’t a job for your mobile phone’s camera. If you can afford a higher-end digital camera or the assistance of a trained photographer, all the better.

Just make sure those pretty pictures are accurate. We personally hate it when we buy an item online only to discover that the real product is like the photograph’s diminutive twin or has a slightly different color, and your customers won’t be any different.

6

Understand Etsy's Fees

You’ll pay a lot in fees when you run an Etsy shop—probably more than you’ll like. These fees include listing fees, transaction fees, payment processing fees, and additional fees associated with advertising, promoting your brand, and other services.

The basic Etsy fees include the following:

  • Listing fees: Etsy charges $0.20 for each new listing, and the listing is good for 4 months before it needs to be renewed. At that point, you’ll need to pay an additional $0.20 if you decide to renew the listing. If you include multiple items in the same listing (say, 10 handcrafted bowls), you’ll pay an initial $0.20 for the listing and $0.20 each time one of those items, after the first one, sells.
  • Transaction fees: Etsy currently charges a 5% “transaction fee” for each sale. This is just Etsy’s commission (as with a consignment shop), and it applies only when you make the sale.
  • Shipping transaction fees: Etsy’s shipping fees apply when you charge your buyer for shipping (separately from your listed price). They come to 5% of the shipping charge.
  • Payment processing fees: This is the fee Etsy charges for payments processed through “Etsy Payments.” Since you’ll be required to use Etsy Payments if you’re in an “eligible” country, and you probably are (more on that below), you can expect to pay these fees, which apply to your total sale including shipping costs. At present, Etsy’s payment processing fee is 3% of the total sale plus $0.25.
  • Etsy Plus subscription fees (optional): Etsy Plus is an optional package that provides extra tools for sellers and costs $10 a month (unlike the nominally “free” basic seller’s account).
  • Additional fees: A host of additional Etsy fees are possible depending on the services you choose (far too many, in truth, to list out in this article). These include Pattern (Etsy’s custom website tool), fees for purchasing shipping labels, package insurance, and paid advertising.

Etsy collects these fees by deducting them from your payment account unless the account lacks sufficient funds, in which case you can pay the fees in the old-fashioned way (by debit card, credit card, or PayPal) up to 15 days after you receive your monthly statement.

7

Price Your Etsy Listings

Pricing the merchandise you’re selling on Etsy can be daunting, not least because you’ll need to factor in your base costs (materials, labor, etc.), your competitors’ prices, and Etsy’s fees.

Here it helps to start out with an experimental mindset. Don’t expect to get everything right the first time, but take a learners approach and modify your pricing as you go. Focus on the individual items you’re selling, and consider the following questions and issues:

  • What are the basic costs for making this item?
    Include costs for supplies (not everything you bought but everything you used to create this item), the listing fee, Etsy’s transaction fee, and the processing costs for Etsy Payments.
  • How long does it take me to make this item?
    Simply time yourself at work (and be honest about it!).
  • How much do I want to pay myself?
    It might be tempting to ignore this factor, especially if you’re working alone, but it’s usually not wise to do so. If your goal is to make money selling on Etsy and also grow your business, you’ll need to distinguish between what you pay yourself and your Etsy shop’s profits. In general, we recommend starting with a simple hourly rate in mind that, when combined with your base costs, still leaves enough money left over to keep your business operating.

If you’re totally new to doing business, you can search Etsy for similar products and base your pricing at least partly on the pricing of your competitors. Just don’t fall into the trap of simply trying to offer the lowest prices every time. People shop on Etsy because they are looking for something unique, not necessarily something cheap, and you prices are only “right” if they reflect your costs and contribute to the continued success of your Etsy business.

8

Open Your Etsy Shop

Once you have worked through the preliminary issues described above, you’re in a position to create your account and get your Etsy business started.

Here are the basic steps involved:

Step One: Register Your Etsy Account

On Etsy, everyone “starts” as a buyer—which simply means that you’ll be prompted to create a general Etsy account before you transform that account into a seller’s account. Fortunately, that’s extremely easy:

  • Just go to Etsy.com, click “Sign In” in the upper-right corner of the Etsy home page, and a window labeled “Sign in” will pop up.
  • Assuming you don’t already have a buyer’s account, you’ll click “Register” and enter the required information (including your first name, an email address and password) to create your account.

Step Two: Sign In & Click “Sell on Etsy”

Once you’ve confirmed your account with Etsy, return to the website’s home page, sign in, and scroll down to the bottom where you’ll find a “Sell” column and a “Sell on Etsy” link.

Click that link, and it will take you to the Etsy seller’s page. Then locate “Open your Etsy Shop” and click the link. (If you’re not already signed in at this point, you’ll be prompted to do so.)

Step Three: Set Your Shop Preferences

You’ll then arrive at a page labeled “Shop Preferences” that asks you to specify your shop language, shop country, shop currency, and the type of seller you intend to be.

If you’re in the United States, the default settings (English, United States, and “$United States Dollar”) will typically work; otherwise, you’ll need to select the most appropriate options from the drop-down menus next to each choice.

Next to “Which of these best describes you?” you’ll also need to select either full-time seller, part-time but hoping to sell full-time, part-time, or “Other.” Whatever choice you make won’t be listed publicly.

Step Three: Enter Your Etsy Shop’s Name

At this point, you’ll need to enter a name for your Etsy shop. We discussed naming your Etsy shop in the previous section, so we won’t beat a dead horse here.

Just note that whatever name you enter will be checked for its availability by Etsy. If the name is available, you’ll get a check mark. If not, Etsy will provide alternatives to help you identify a similar name that isn’t in use.

Step Four: Stock Your Shop

Next, you’ll come to a stage labeled “Stock your shop” and you’ll need to create at least one listing to continue.

Fair warning: Of all of the steps to starting your Etsy shop, this is probably the most complicated and time-consuming. You’ll need to upload product photos (up to 10), include an item description of up to 140 characters, categorize your product, price your item, and set shipping costs as well (among numerous other details).

Fortunately, Etsy works hard to make this stage as painless as possible. You’ll have the option, for example, to let Etsy calculate your shipping costs based on the item’s size and weight, choose between manual and automatic renewal options for your listing, and even preview how your listing will appear as a Google search result.

Since creating listings can get complicated, you might consider creating 1 listing while working through the steps to creating your Etsy shop, so that you can explore the next two stages of the sign-up process. You can then go back and build out your additional listings before pushing your Etsy shop “live” to the public.

Step Five: Set Up Etsy Payments

After you create at least one listing, you’ll proceed to a stage labeled “How you’ll get paid.” If you’re in an “eligible country” (and the United States is an eligible country), your shop is required to use Etsy Payments. “Eligible” is really just Etsy’s way of saying you have no choice but to use Etsy Payments.

But, really, that requirement isn’t so bad. Through Etsy payments, you can accept all of the major credit cards as payment (Visa, MasterCard, American Express, and Discover), Etsy gift cards, Android Pay, Apple Pay, and PayPal—pretty much the full range of payment options your Etsy shop is likely to need.

Step Six: Enter Your Billing Information

Etsy collects its fees automatically by having you include a credit card or debit card as part of the sign-up process.

Our only suggestion here is that you consider keeping your personal finances and business finances distinct by starting a separate bank account and getting a credit or debit card that you only use for expenses related to your Etsy business.

In our view, starting a separate bank account for your Etsy business is a worthwhile choice even if you operate as a sole proprietor and forgo registering your business with the state.

Step Seven: Open Your Etsy Shop

At this point, you’ll have the option to open your Etsy shop and start selling. Simply click “Open Your Shop.” Your shop will go “live,” will be assigned a URL (web address), and your listings and shop details will be visible to Etsy buyers.

If you’ve reached this stage, congratulations! You’re now the proud operator of a new Etsy business!

9

After Opening Your Etsy Shop

Since this is a page on starting your Etsy business, we won’t cover what happens or could happen next in much detail—but, rest assured, you’ll have no shortage of tweaks to make, options to explore, and interesting obstacles to overcome as you continue to grow your Etsy shop.

One of your likeliest first steps, however, will be creating and refining your personal and company bios and your shop policies. This includes whether or not you’ll accept returns or exchanges, your Privacy Policy, and other details relevant to how you’ll interact with your customers on Etsy’s platform.

You also might consider building a physical and online presence for your business outside of your Etsy shop—whether that includes starting a separate business website, using Etsy’s Platform tool, engaging with potential customers and other Etsy sellers through social media or on Etsy forums, or engaging more directly with your community to get the word out about the products you’re selling.

That’s right, there’s a lot to consider. But the ongoing need to learn about your networking and selling options shouldn’t prevent you from getting started. Indeed, getting started more or less right away also has the virtue of taking this whole idea—starting an Etsy business—out of the realm of abstract thinking.

Once your Etsy shop goes live, and once you sell that first item, the dream gets real—and that’s exactly the place where you’ll want to be.

Learn More About Starting an Etsy Business in Your State

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Do Business The Right Way