Etsy was founded in 2005 to make it easier for small artists to find customers for their products. Traditionally, small artists would go to trade shows to sell their goods, but with more people online than in person, Etsy opened new doors for those who wanted to reach a larger audience.
What is Etsy?
Etsy is an online marketplace with 5.6 million sellers. Their marketplace attracts millions of shoppers, around 86.6 million in 2025, which has decreased since 2024. On this platform, you’ll find a wide range of handmade goods, such as jewelry, wreaths, clothing, furniture, vintage goods, and more. Overall, it’s the go-to place to buy crafted goods.
Unlike other platforms, Etsy products are handmade. Typically, manufacturers and dropshippers are actively discouraged from using the marketplace. However, many have found in recent years that dropshippers have flooded the marketplace with manufactured goods.
To learn more about how this marketplace stacks up against other ecommerce platforms, check out our resource on Etsy alternatives.
How does Etsy work?
Etsy works by giving sellers a marketplace to sell their products online. Sellers create shops on the platform where they list each of their products. Whereas Etsy attracts the customers who will buy from these storefronts. They earn revenue from every sale a seller makes through transaction fees, listings fees, advertising fees, and more.
Buyers choose this marketplace for their handmade items. They browse through organized collections of listings or search via the search bar to find products they’re looking for. Some buyers may even receive personalized recommendations depending on how active they are on the platform. Buyers can pay via Apple Pay, Google Pay, PayPal, credit card, and debit card.
Sellers choose Etsy for their pre-existing audience of buyers. Etsy sellers get a built-in shop builder that allows them to upload product photos and descriptions, organize items into collections, add a logo, banner, and about page, and more. They allow sellers to print shipping labels, manage customer messages, and calculate shipping costs.
What you need to know about selling on Etsy
Etsy charges a lot of fees for sellers. Not only do you need to pay a 6.5% transaction fee per sale, but you also need to pay a 3-4% payment processing fee. Plus, they charge US $0.20 per listing. The listing fee expires every four months. If Etsy makes a sale from advertising your product or through its affiliate program, you get charged between 12-15% per sale, too. Plus, if you want to receive instant payouts, you need to pay another fee on top of that. Overall, selling on Etsy can be expensive.
Another thing you need to know about Etsy is that they are customer-focused, not seller-focused. If a customer has a bad experience with buying your product, they may remove you from their platform.
Some sellers claim their products have been taken down for copyright infringement, even though the designs were their own simple ideas. They may not even have known about the product that appears to infringe. One seller had their store taken down for selling bows with beads. Their policies aren’t always fair.
Another thing to note is that they have a verification process for vintage items. The vintage items you sell need to be at least 20 years old.
Since Etsy is a marketplace, you won’t be able to have any of your own branding on the platform. All the shops on this marketplace look identical to each other with no differences besides the products themselves. If you’re looking to stand out on the platform, your only opportunity is through your product photography. Customers won’t remember shop names, they’ll only remember Etsy. If your goal is to start a name brand, this might not be the best platform for you.
Is Etsy the best platform to sell products?
No, Etsy isn’t the best platform to sell. Payhip is the best platform to sell products due to its forever free plan with only a 5% transaction fee per sale, no listing fees, and no fee for instant payouts. This platform also has a marketplace where you can sell products, with no additional fees for being included in it. This ecommerce platform is also seller-centric, providing all the features you need to sell digital and physical products online. Sign up to sell products today!