How to be successful on Etsy: a beginner-friendly guide

With 95 million potential customers worldwide, Etsy is a promising marketplace for sellers looking to establish their online stores. But with so many others competing for success, how can you be successful on Etsy?

Understanding how Etsy works and developing a clear strategy for your shop and products are key factors in setting yourself apart. This guide from Merchize will make the process easier than ever, helping you build a strong foundation for your Etsy business.

1. Find your niche and target audience 

Etsy is a vast marketplace, but not everyone can create a successful store on the platform. The key difference between making sales and being able to sustain and grow a store lies in choosing the right niche and identifying the target customers.

Each niche represents a customer segment with specific needs for products that are not yet fully met by traditional suppliers. Therefore, focusing on a niche allows you to gain deep market insights, increase competitiveness against rivals, and stay ahead of shifting trends in demand.

To choose the right niche for your business, selecting a niche based on your interests and strengths is the safest and most reliable path for your store’s future. Understanding the market as well as the industry in which you will be doing business will help you maintain and develop your business rather than starting with a completely new industry. For instance, if you have a talent for designing artistic posters, you can start selling typography-related products. However, passion alone is not enough—your niche must have a real market demand.

Conducting market potential research is a crucial step in assessing customer demand within your niche. With the recent advancements in technology and AI tools, this has become easier than ever. You can use free tools like Google Trends to identify trends and interest levels over time. For instance (Market Research Future report), the global personalized gifts market was valued at USD 30,754.10 million in 2023 and is projected to reach USD 53,948.50 million by 2032, with an annual growth rate of 6.5%, indicating a strong demand for this personalized gift niche.

If you’re wondering whether selling on Etsy is truly worth it, you can explore this detailed guide that breaks down the pros and cons of the platform, helping you make an informed decision.

Etsy itself also provides a useful tool for analysing top-selling shops in your chosen field. Additionally, to gain deeper insights into niche market challenges, you can explore discussions on platforms like Reddit or Quora.

2. Curate your product offerings 

The importance of product selection

The products you choose are the essence that determines how much money you can make selling on Etsy. If your store offers a collection of unique, high-quality products that align with the tastes of your target customers, the number of sales you generate will not disappoint you.

To achieve this, understanding market demand and having a keen sense of trends are crucial factors that will help your store stand out among thousands of competitors. Observe and learn from top-performing stores in your niche, but don’t simply replicate them—your brand identity is what keeps customers coming back in the long run. 

Brands that maintain consistency in style and customer experience can achieve customer retention rates 20–30% higher than those lacking consistency (Shopify). Therefore, staying updated on market trends and incorporating seasonal fluctuations will allow you to adjust your product catalogue flexibly.

Optimizing product listings for engagement

Personalized products such as engraved keychains, custom-printed mugs, and customised t-shirts are among the bestsellers on Etsy. According to Data Bridge Market Research, the global personalized gifts market was valued at USD 28.19 billion in 2023 and is projected to reach USD 57.85 billion by 2031, with an annual growth rate of 9.40%, reflecting the strong appeal of these items. This data highlights an important insight: when you conduct thorough research to understand what customers are looking for—and if you can fulfill their needs, such as offering a “personalised experience with an emotional connection to the product”—your revenue potential will be significant.

Optimize your product listing for better engagement

A diverse product range also helps attract a broader customer base. Stores offering products at different price points can see an average sales increase higher compared to those focusing on a fixed price or a narrow product category, highlighting the advantage of price diversification in attracting customers. For example, if you are a t-shirt designer, consider expanding your product line to include hats, tote bags, and posters—items that can complement each other to form a complete collection.

Enhancing customer experience through organization

Here is a small tip to enhance your store’s customer experience: When setting up your product list, start by categorizing your items into clear, easy-to-navigate sections. Organizing products by theme, occasion, best-selling POD products, or price range can help shoppers quickly find what they need. For instance, if you sell custom-printed apparel, consider creating sections such as “Personalized Gifts,” “Seasonal Collections,” and “Best Sellers.”

Selecting products is not just about having something to sell; it’s the foundation for building a long-term brand—something every business needs. If your products align with customer preferences while also providing them with a meaningful experience, they will keep coming back for more.

3. Craft a winning Etsy business plan 

Being proactive is the fastest way to achieve success and make money on Etsy. In this context, too, without a solid business plan, you can easily fall behind millions of other stores.

For any store, choosing a name is an essential step in the business plan. Don’t just pick a random name and hope it works—your shop name is your brand. If your desired name is already taken, try adding words like “studio," “atelier," “crafts," or simply a stylized version of your name. The key is that it should be easy to remember, easy to pronounce, and reflect your store’s unique personality.

Next, define the goals you want to achieve with your store. Setting unrealistic, overly ambitious goals will only add pressure, so break them down into manageable stages. For example, aim to get your first 10 orders within two months of launching. A good goal keeps you motivated and is realistically attainable.

Having a plan is great, but a plan that can be adjusted flexibly based on customer demand and market trends—using real, data-driven insights—will help you reach your goals even faster.

4. Set up your Etsy storefront 

For customers, your storefront is the first thing they see and the impression they associate with your store’s name. This highlights the crucial role of a professional shopfront in influencing their purchasing decisions.

If you can craft a compelling story to connect with customers—rather than just providing the basic required information—your store will become much more appealing to them.

Enhance your storefront for a better shopping experience

Below is the process for customising your new Etsy store that you can apply right away:

Step 1: Create an Etsy account

1. Go to Etsy’s website: Open Etsy.com and click Sign in > Register.
2. Sign up for an account: Enter your email and password, or sign up quickly using Google, Apple, or Facebook.
3. Set up your shop: After logging in, click Sell on Etsy > Open your Etsy shop.
   1. Shop preferences: Choose your shop’s language (English is recommended), country, and currency.
   2. Shop Name: Pick a short, memorable, and unique name.
4. Complete setup: Double-check your information and click Open Your Shop.

Etsy account creation interface

Etsy Tip: Before signing up, prepare your ID, bank account, and Visa/Mastercard to ensure a smooth registration process.

Step 2: Set up your shop profile

1. Complete your shop’s profile:
   1. Profile Picture & Banner: Upload high-quality images to create a strong first impression.
   2. Shop Description: Write a short, engaging introduction about your products and business style.
2. Set up shop policies:
   1. Shipping Policy: Define shipping regions, fees, and processing times.
   2. Return & Exchange Policy: Clearly state conditions and procedures for returns.
3.  Optimise your shop for SEO:
   1. Title & Description: Use relevant keywords to improve visibility.
   2. Tags: Add targeted tags to enhance product discoverability.

Step 3: Create and list products on Etsy

1. Access the product management page: In your Etsy Shop Manager, go to “Listings" and click “Add a listing".
2. Upload high-quality product images: 
   1. Add up to 10 images showcasing your product from different angles.
   2. Use bright lighting and clean backgrounds to highlight details.
3. Fill in product details:
   1. Title: Create a clear, keyword-rich title to improve search visibility.
   2. Description: Provide detailed information about materials, sizes, and unique features.
   3. Category: Choose the most relevant category to ensure the right customers find your product.
4. Set pricing and stock:
   1. Price: Set a competitive price considering costs and profit margins.
   2. Quantity: Enter the available stock for the item.
   3. Shipping options: Select delivery regions, shipping costs, and estimated delivery times.
5. Publish the product: After reviewing all details, click “Publish" to list your product on Etsy.

Create a listing on Etsy

Step 4: Set up payment methods

1. Access payment settings: In Shop Manager, go to “Finances" > “Payment settings".
2. Choose payment methods: 
   1. Etsy supports credit/debit cards, PayPal, Etsy Payments, and more.
   2. Select the methods that are convenient for both you and your customers.
3. Set up a bank account: 
   1. Enter your bank details to receive payments from successful orders.
   2. Double-check for accuracy to avoid payout delays.
4. Verify tax information: 
   1. Etsy may require tax details depending on your country.
   2. Ensure compliance with local tax regulations.
5. Review and save settings: Double-check your information and click “Save" to complete the setup.

Getting paid on Etsy

 Step 5: Set up shipping

1. Access shipping settings: In Shop Manager, go to “Settings" > “Shipping Settings".
2. Create a shipping profile: Click “Add a shipping profile" and name it for easy management.
3. Set shipping details:
   1. Origin zip code: Enter the postal code for your shipping location.
   2. Processing time: Select how long it takes to prepare and ship an order.
   3. Shipping destinations: Choose the countries or regions you ship to.
   4. Shipping services: Select your preferred carriers, estimated delivery times, and costs.
4. Set shipping rates:
   1. Fixed price: Charge a set shipping fee based on the destination.
   2. Free shipping: Attract more customers by offering free shipping (adjust product pricing accordingly).
5. Save and apply shipping profile: Once everything is set, click “Save" to finalise your shipping setup.

Additionally, creating and optimising product listings will increase your visibility to potential buyers, as Etsy’s search algorithm prioritises well-optimised listings. Each product should have a title and description with relevant keywords and clear shipping and return policies.

5. Optimize titles, descriptions, and photos 

Customers will buy from you when your product looks appealing and stands out among thousands of other items on Etsy. Your product title, description, and images are the key factors that attract buyers and maximize revenue. No matter how great your product is, it will go unnoticed if it doesn’t appear in search results or fails to create a strong visual impression.

Your product title serves as the keywords your customers are searching for. If you use generic titles that aren’t optimised—like “Cute Bracelet" or “Adorable T-Shirt"—it will be difficult for customers to find your store. For example, if you’re selling a silver bracelet, Etsy shoppers often search for engraved silver bracelets. In this case, your title should be “Personalised Engraved Silver Bracelet." This strategy can increase product visibility by up to 30%.

Next, the product description is where you have the opportunity to convince customers to make a purchase. You need to craft a compelling story that aligns with what customers are looking for. Take this example from Merchize: “The Sebring polo shirt is made from lightweight, breathable fabric, ensuring ultimate comfort—whether you’re at work, on the golf course, or just out and about. With high-performance fabric and thoughtful details, this polo keeps you cool, comfortable, and effortlessly polished.” Tools like eRank can greatly assist in this process, as they help you research the most popular keywords among Etsy users.

Optimize titles, descriptions, and photos for better visibility

Finally, product images are the deciding factor in whether customers click on your listing. Etsy allows up to 10 images per product, and listings with product videos tend to attract more engagement than those with only static images. Capture photos from multiple angles, use natural lighting, or invest in a mini photography lightbox if necessary.

6. Establish pricing and shipping strategies 

Pricing and shipping strategies directly impact your store’s profitability and competitiveness on Etsy. Pricing too low may make it difficult to sustain your business long-term, while setting prices too high could drive customers away. That’s why it’s crucial to start by understanding your target customers: How much are they willing to pay for your product? A unique handmade item can be priced higher due to its craftsmanship and exclusivity, whereas a mass-produced product needs a more competitive price.

To set a profitable price, consider production costs, materials, Etsy platform fees, taxes, transaction fees, and shipping expenses. At the same time, researching the pricing strategies of other Etsy stores in your niche can help you adjust your approach effectively. Here are detailed instructions with illustrative examples:

Step 1. Determine production costs and related fees

• Production cost: If you produce a T-shirt, the cost might be $5.
• Listing fee: Etsy charges $0.20 per item listed.
• Transaction fee: Etsy takes 5% of the total sale price, including the product price and shipping fee.
• Payment processing fee: Typically 3% of the sale price + $0.25 per transaction.

Step 2. Calculate the selling price

To ensure profitability while keeping prices reasonable for customers, add up all costs and include your desired profit margin.

Example calculation:

• Production cost: $5
• Listing fee: $0.20
• Transaction fee (5% of $15): $0.75
• Payment processing fee (3% of $15 + $0.25): $0.70
• Total cost: $5 + $0.20 + $0.75 + $0.70 = $6.65

To make a profit, you can set the selling price at $15. After deducting the total costs ($6.65), your profit will be $8.35 per shirt.

A $15 price point is competitive on Etsy and aligns with typical customer spending, ensuring both profitability and market appeal.

Optimising costs will also allow you to set more competitive prices. Etsy offers discounted shipping rates through USPS, FedEx, and DHL, which can help sellers save significantly on shipping fees—take advantage of this. Additionally, if your product can be packaged in a lighter yet secure way, use that to reduce costs further.

Another common strategy is to incorporate shipping fees into the product price and offer free shipping. This can improve your product’s ranking in search results and increase the likelihood of conversions.

7. Boosting visibility with promotion and SEO tactics 

If you simply wait for customers to find your store on Etsy, it could take a long time to build a steady customer base. That’s why attracting buyers requires a well-planned strategy. Two ways that can help you do this: if you want to reach customers quickly, you can choose to run ads (cost), and if you have a longer-term plan, use SEO (free).

Leverage Etsy ads to boost visibility

Etsy Ads is one of the most powerful tools Etsy offers, allowing your products to appear at the top of search results and in featured categories. With a pay-per-click (PPC) model, you only pay when someone clicks on your ad, making it an efficient way to control your budget. To get the most out of Etsy Ads, use high-quality images, compelling titles, and clear descriptions highlighting your product’s uniqueness.

1. Determine your advertising budget

Start with a small budget to test the effectiveness of your campaign. Etsy Ads follow a pay-per-click (PPC) model, meaning you pay for each click. To estimate efficiency, calculate the average cost per click (CPC) and conversion rate.

Example of an initial advertising budget:

• Test budget: $5/day ($150/month)
• Average CPC: $0.20 – $0.50
• Estimated clicks per day: 25 – 30
• Average conversion rate on Etsy: 1-3%

If we assume a 2% conversion rate, then with 30 clicks/day, you could generate approximately 0.6 orders/day, equalling 18 orders/month from ads.

• Average order value: $25
• Total revenue from ads: $450/month
• Ad cost as a percentage of revenue (ACOS): 33%

➡ A 33% ACOS (advertising cost of sales) may be optimized by adjusting your ad strategy, refining keywords, and targeting the right audience.

Etsy Ads management 

2. Select the right products to advertise

To maximise ad efficiency, focus your budget on high-performing products that can generate strong revenue. The best products for advertising should meet these criteria:

• Proven sales history or positive reviews.
• High profit margin to cover ad costs.
• Trending or seasonal demand.

Example of product selection:

• Custom-printed T-shirts (production cost: $5, Etsy fees: $2, selling price: $20 → pre-ad profit: $13).
• Personalised tote bags (production cost: $4, Etsy fees: $1.80, selling price: $18 → pre-ad profit: $12.20).

If you spend $5/day on ads and generate 1-2 sales/day, with a $12-$13 profit per item, your post-ad profit would be around $7-$8 per sale.

➡ This highlights the importance of selecting high-margin products for ads, as lower-margin items may lead to significantly reduced profits due to advertising costs.

3. Monitor & optimize ads

After running a test campaign for 7 to 14 days, you’ll have enough data to analyze whether your Etsy ad strategy is effective. At this point, you should make adjustments based on the results:

1. If CPC is too high (above $0.50): Adjust keywords or test a different product.
2. If the conversion rate is below 1%, review and improve product images, titles, and descriptions.
3. If you identify a high-performing product, increase the ad budget to $10 – $15/day to maximize revenue.

Boost visibility with Etsy ads

However, to maximise results while keeping costs low, start with a small budget, monitor performance, and adjust your campaign based on the results. If you want to reach potential customers quickly, Etsy Ads is a tool you shouldn’t overlook.

Optimize Etsy SEO to increase organic traffic

Like any search engine, Etsy has its own search algorithm, and understanding how it works can help you improve visibility without paying for ads. Customers often search using descriptive phrases like “unique birthday gift” or “custom printed t-shirt” rather than just single words. There are reasons why researching and using the right keywords in your product titles, descriptions, and tags is crucial.

Here are some key steps to optimise your Etsy SEO:

• Keyword Research: Use tools like Etsy’s search bar, eRank, and Marmalead to identify trending search terms.
• Write clear, keyword-rich titles: Make them natural and readable without keyword stuffing.
• Use all 13 tags: Help expand your product’s reach to different searches.
• Optimise customer experience: Etsy favours shops with fast response times, high ratings, and clear shipping policies.

Etsy SEO

Additionally, Etsy gives higher priority to products with reasonable prices, including shipping. If possible, bundle shipping costs into your product price and offer “free shipping” to boost your rankings.

Use social media to expand your reach

Besides running ads and optimising Etsy SEO, promoting your products outside of Etsy can help attract even more customers. Platforms like Pinterest, TikTok, and Facebook Groups are powerful tools for increasing brand awareness and driving traffic to your Etsy store.

8. Effectively managing your Etsy shop 

After setting up and starting operations, the next thing you need to focus on is store management. You must monitor performance, optimise processes, and ensure the best shopping experience for customers. This requires perseverance, flexibility, and a clear strategy for sustainable growth.

Etsy provides significant support for sellers by offering the Shop Manager feature, which helps you track views, orders, and revenue, allowing you to make optimal decisions. Additionally, managing your store enables you to keep track of inventory, update products promptly, and process orders efficiently. But please pay attention to Etsy’s policies to avoid errors during the management process.

Shop manager on Etsy

For sellers using the Print-on-Demand (POD) model, such as Merchize, inventory management becomes much simpler, as there is no need to stock large quantities or worry about storage.

The data collected and managed over time will be the key to addressing potential risks that may arise in the future.

9. Key tips to remember when selling on Etsy

One important factor that some sellers tend to overlook is that customer experience is the final step to achieving sustainable growth. Every interaction with a customer is an opportunity to build trust, create a positive impression, and boost sales.

A prompt response to a customer’s initial inquiry can strongly influence their purchasing decision, highlighting the critical role of speed in the overall customer experience. Therefore, how quickly you respond to inquiries, how well you assist customers, and how professionally you handle any issues that arise will significantly impact customer engagement and positive feedback.

Additionally, aim to achieve Etsy’s Star Seller badge, as it helps establish credibility and leaves a strong impression on buyers. To earn this recognition, you need to maintain fast response times, on-time shipping, and consistently positive reviews. Don’t be afraid of negative feedback—see it as an opportunity for improvement. A professional and courteous response can turn an unhappy customer into a loyal supporter.

10. Frequently asked questions when running an Etsy store

Question 1: Common barriers when starting a business on Etsy

High competition: With over 9 million active sellers (Statista), Etsy is a highly competitive marketplace. Popular niches like handmade jewellery or home decor often have hundreds or even thousands of sellers.

Initial costs: While opening a shop only costs $0.20 per listing, expenses such as production, high-quality product photography, and shipping can be discouraging for new sellers. For example, a handmade bracelet seller may need to invest $50–$100 just to create their first batch of products.

SEO and visibility: Etsy functions as an internal search engine. If sellers don’t know how to optimise keywords (titles, tags, and descriptions), their products can easily get “buried" in search results.

Time and management skills: Many sellers underestimate the time required for order fulfillment, customer service, and regularly updating listings. This can lead to difficulties in handling issues when they arise.

Question 2: Taxes

Etsy Fees: Etsy charges a 6.5% transaction fee on each order (including both the product price and shipping fee), plus a $0.20 listing fee per product (renewed every four months). If you use Etsy Payments, there’s an additional payment processing fee (typically 3% + $0.25 in the U.S.).

Income Tax: Earnings from Etsy are taxable in your country of residence. In the U.S., if you make over $400 per year from Etsy, you must report it to the IRS (Internal Revenue Service).

VAT (for international sales): When selling to customers in the EU, Etsy automatically collects VAT (Value Added Tax) from buyers and remits it on your behalf. For example, a $20 order from Germany may include an additional 19% VAT ($3.80), but you don’t have to handle this tax yourself.

Question 3: Which markets on Etsy are the most promising?

USA, UK, Canada: These are the three largest Etsy markets, accounting for over 70% of buyers (according to the Etsy Report). The U.S. stands out with 96 million active buyers who particularly love personalised products such as custom-printed t-shirts or seasonal decor (Christmas, Halloween).

Europe (Germany, France): High demand for sustainable crafts like recycled fabric bags and handmade wooden items. Germany, in particular, is Etsy’s fourth-largest market, driven by the strong “eco-friendly" trend.

Emerging niches: According to an article from Merchize, fast-growing niches with lower competition include pet products (e.g., personalized pet collars), digital downloads (e.g., printable design files), and eco-friendly home goods. These offer great opportunities compared to highly competitive categories like jewellery or clothing.

How to be successful on Etsy? The answer is time, strategy, and dedication—combined with the right approach. Start applying these tips today and take your Etsy business to the next level. Merchize wishes you success on your journey ahead!