Etsy is an American e-commerce company that provides a global online marketplace (category and item listings), for handmade/fancy/Craft/Vintage items and food. This company is headquartered in Brooklyn, New York. It allows people to buy and sell on its platform. It works in pretty much a similar way as Amazon but what sets it apart is that it charges a lesser percentage of handmade fees than Amazon. Amazon charges a 15% referral fee from each product sale including the shipping cost.
ETSY just charges $0.20/item listing which needs to be renewed every 4 months. Also, Etsy has not partnered with any third-party listing sites like Facebook, eBay, or Amazon.com as Etsy is its own parent company and operate their business in their way. Etsy is an online marketplace that does not offer standardized consumer products like the ones listed on eBay or Amazon. They rather focus on handmade and vintage products, oxidized, tribal, or tarnished craftwork or unique factory products for sale. Etsy also gives skilled people tribal, rural or urban or small businesses to showcase their work and craftsmanship and simultaneously opens up a source of money generation.
Etsy connects sellers with buyers via its online platform. It initially started to sell vintage items, handmade items, crafts, and artwork. Businesses can partner up with Etsy and open up their own small Etsy shops.
Etsy allows sellers of all business size to sell on its platform. They can earn an average income of around $100 – $56,000 (estimated) annually.
Etsy charges $0.20 per product they list from the seller and this listing stays active for four months. If the product is sold then 3.5% of the selling price is charged as a commission.
You won’t require any joining or starting fee to open your Etsy shop. There is a 5% transactional fee on every item that is being sold. In case the customer makes use of Etsy payments, the businesses collect 3% + $0.25 as a payment processing fee, if the item gets sold.
It is mandatory to pay income tax if businesses are selling items on Etsy. It will be the total amount they earn by selling their products less the business expenses.
Etsy reports their gross income to the IRS on Form 1099-K. Either way, the Etsy sales income must be reported on the tax return.
Sole proprietors, corporations or companies with limited liabilities may make use of social security numbers to file tax. They may opt to get EIN.
in various categories (etc.)
There is no joining and start-up fee on Etsy. Three basic selling fees include a listing fee, payment processing fees and a transaction fee. Businesses need to spare USD 0.20 to publish their listing to the marketplace. Once the item is sold, there is a 5% transaction fee aligned on the sale price (including the postage price). This 5% of the listed price should be added to the shipping, customization fee and any gift wrapping charges upon purchase of an item.
The transaction fee may or may not be applicable on sales tax, (Goods and Services Tax), or HST (Harmonized Sales Tax) – depending upon the location.
Easy steps to follow to start your shop or start selling on the Etsy platform requires:
Etsy pops up a monthly statement, which ensures that all fees can be automatically deducted from the payments account. In case of insufficient funds, the remaining fees are required to be paid within 15 days.
Etsy identified their niche area and worked to uplift their uniqueness. This created a sense of community and gave an experience apart from their competitors. They took advantage of the size of the community to advertise.
However, if you think that Etsy isn’t the right platform to display your products online or if you’re facing difficulties in understanding the Etsy Revenue Model you may look at some of alternatives to Etsy, Poshmark, Mercari, Amazon etc. Alternatively, if you would like to create a simple e-commerce business website without wanting to create an online marketplace, check our portfolio for relevant examples. We can help you with creating shopping apps like Etsy to connect buyers with sellers and showcase a variety of items in an online marketplace. Connect with us to create an Etsy API to create Etsy powered app for web, desktop or mobiles.
Manish Jain is the co-founder and Managing Director at Konstant Infosolutions. He is responsible for the overall operations of the company and has played a major role in bringing Konstant up from its humble beginnings and, with his immense energy and drive, transforming it into a globally trusted name in IT solutions.
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