Marketplaces are as old as human commerce. From the bazaar to the bodega, they exist in every culture. Today, they also exist online, as ecommerce has globalized and democratized the selling and consumption of wares. For small businesses, this is a particularly impactful change: It’s no longer necessary to have a warehouse, a logistics coordinator, or even a physical storefront to have a globally recognized brand.
Although dozens of online marketplaces exist, two of the most popular and established options are Amazon Handmade and Etsy.
What is Etsy?
Etsy is an online marketplace for vintage and handmade goods from around the globe. Founded as a small Brooklyn shop in 2005, Etsy has grown into a global ecommerce hub with over 45 million items for sale. In 2021, it counted over 7.5 million sellers and 96.3 million active buyers worldwide.
Despite this growth, Etsy has remained committed to its alternative, community-embedded identity. The company aims for a 50% reduction in greenhouse gas emissions by 2030, and its Etsy Uplift Initiative provides support to economically disadvantaged makers and promotes products made by historically marginalized communities, including BIPOC, queer, and female-identifying sellers.
Demographically, Etsy skews young and female. A 2017 survey found that 81% of Etsy shoppers identify as female, and most shoppers are between 25 and 40 years old.
Pros and cons of selling on Etsy
Like most things, evaluating the merits of selling on Etsy is made easier by taking a close look at the pros and cons.
Pros of selling on Etsy
- Low startup fees. Etsy fees are low. In fact, the company prides itself on the fact that you only need 20¢ to open an Etsy shop—there are no additional monthly fees or subscription fees to consider. This startup figure represents the 20¢ cost of a four-month listing. Total selling fees also include transaction fees, which come in at 6.5% of the total cost of product and shipping as well as a payment processing fee of 3% plus 25¢.
- Analytics and custom options. Etsy’s standard plan also comes with a Stats page that displays traffic volume to an Etsy seller’s shop as well as information about how those visitors arrived at the shop. Etsy also offers an additional paid plan—Etsy Plus—that allows users to customize the look of their Etsy store with banners and featured listings, and offers waitlist notifications for sold-out items, listing credits, ad credits, and 50% off a custom domain for one year.
- Flexible advertising plans. New in 2022, Etsy is allowing sellers to purchase both on-site and off-site ads through the Etsy platform. Etsy’s internal ads space is placed using an auto-bidding system. Etsy sellers set a daily ad budget, and Etsy uses these numbers to “auction off” ad space for particular product categories and search terms. Etsy’s off-site ads operate on modified a pay-per-click (PPC) model, where sellers pay only if an ad is clicked and the user who clicked the ad orders from the seller’s shop within 30 days. The fee for these ads is 15% of the total transaction amount. Enrollment in offsite ads is automatic, although users making less than $10,000 annually in total sales have the option to opt out of the program.
Cons of selling on Etsy
- Recurring fees. Although Etsy has low initial startup costs, listing fees, which recur every four months, can be a drawback for some Etsy sellers. For example, the cost to a seller of opening an Etsy shop with 100 listings is $20. If none of these listings have sold within four months, the user would owe another $20 on the same listings. This can make the site expensive for users whose product types require a high number of individual listings, and it is actually possible to lose money running an Etsy store if sales proceeds don't exceed listing costs.
- Not all types of items can be sold. Etsy sellers offer vintage and handmade goods. If your items don’t fit either of those categories, you will not be allowed to sell on Etsy, and listings that don’t fit into these categories can be flagged and removed.
- Etsy doesn’t offer fulfillment services.Etsy shop owners are in charge of their own shipping logistics. While Etsy provides printable labels at a discounted rate, that still means a lot of printing, boxing, and taping—or finding and managing your own third-party distribution vendor.
What is Amazon Handmade?
Amazon is currently the leading online retailer in the US, with annual net sales of over $300 billion. Amazon boasts over 213 million unique visitors per month in the US alone—meaning that about 65% of the US population visited the site at least once per month.
Amazon Marketplace, the third-party seller platform integrated into the main Amazon commerce experience, has over 9.7 million sellers worldwide, nearly 2.5 million of which are actively selling on the platform. In 2021, over 60% of Amazon sales came from marketplace sellers.
In 2015, Amazon launched a smaller market, Amazon Handmade, designed for small businesses that specialize in handcrafted goods. Although Amazon does not publicize the total sales or the number of sellers participating in Amazon Handmade, in September 2020, the company reported that over 100 of the market’s makers had surpassed $1 million in annual sales.
A 2019 study found that 53% of Amazon shoppers are between 19 and 44 years old, and the gender breakdown of Amazon shoppers is evenly split between male- and female-identifying consumers. Top-selling Amazon Handmade product categories are jewelry, home, and kitchen items.
Pros and cons of selling on Amazon Handmade
Here are some of the benefits and drawbacks of selling on Amazon Handmade.
Pros of selling on Handmade
- Massive potential reach. As of April of 2022, Amazon was the 5th most visited site in the US, coming in behind only YouTube, Twitter, Facebook, and Wikipedia. Because Amazon Handmade products are integrated into the larger Amazon ecommerce site, selling on Amazon Handmade can get you in front of a larger global audience than any other platform.
- Complimentary professional plan. Amazon Marketplace offers both an individual and a professional plan option, with professional plan sellers paying a flat subscription fee of $39.99 per month, plus selling fees on individual orders. Sellers who are approved for Amazon Handmade receive the professional plan perks for free and are charged a flat 15% transaction fee on all sales.
- No listing fees. Amazon doesn’t charge product listing fees, so you only pay if you make a sale.
Cons of selling on Amazon Handmade
- Amazon competes with its own sellers. Amazon has a number of in-house brands that it sells alongside those offered by its vendors, so small businesses are effectively in direct competition with the world’s largest ecommerce company.
- Higher selling fees. Although Amazon Handmade sellers receive Amazon’s professional selling plan at no cost, the 15% selling fee charged on each sale is still higher than those charged by many other marketplaces.
Etsy vs. Amazon Handmade
In order to know which marketplace is the right choice for your shop, it’s helpful to have a sense of the similarities and differences between these two popular and powerful selling platforms.
Both of these sites are set up to provide small business owners with a simple, secure way to earn money while sharing their products with a large audience—no business license or coding skills are required. Their most significant differences involve fee structures, support services, and start-up time.
General website and user interface
- How they’re similar: Amazon Handmade and Etsy are both designed to be intuitive and user-friendly for buyers and sellers alike. Both platforms make it easy to set up an online store without any web development knowledge, allowing you to create and customize a storefront page (your “store”) in addition to including your product listings in their search results. Both also provide a seller dashboard that tracks order and sale information and both provide a mobile app for sellers.
- How they’re different: Etsy’s seller dashboard includes information about how many users visited your shop and how they ended up there, while Amazon’s does not.
Custom products offered
- How they’re similar: Both Amazon Handmade and Etsy allow sellers to pay more in exchange for preferred listing placement.
- How they’re different: Etsy offers integrated off-site advertising, which is optional for sellers whose annual sales total less than $10,000. Amazon does not offer off-site ads.
Listing and selling fees
- How they’re similar: Amazon Handmade and Etsy both charge selling fees that are calculated as a percentage of the total sale amount.
- How they’re different: Amazon doesn’t charge a product listing fee, while Etsy does. These listing fees recur every four months. Additionally, Etsy and Amazon Handmade both deduct selling fees at a flat rate across categories and price points—for Etsy, this comes in at 6.5% of the total sale price plus a 3.5% plus 25¢ payment processing fee, and for Amazon Handmade, the selling fee is 15% of the total sale price.
Product category organization
- How they are similar: Both sellers sort items into top-level product categories and subcategories.
- How they’re different: Amazon Handmade and Etsy both feature top-level product categories designed to showcase handmade goods. “Paper and Party Supplies” is a top-level category at Etsy, for example, as are “Weddings,” “Bath & Beauty,” and “Craft Supplies & Tools.” Amazon Handmade product categories are similarly craft- and lifestyle-focused, although categories like “Handmade Electronics Accessories” and “Handmade Sports and Outdoors” are unique to the Amazon platform.
Sign-up process
- How they’re similar: Both Amazon Handmade and Etsy require banking information and personal information to open a shop.
- How they are different: Amazon also requires tax information, an internationally chargeable credit card, a phone number, and a government-issued ID. Approval of an Amazon Marketplace shop can take weeks, and selling on Amazon Handmade requires an additional application process.Etsy shop approval, on the other hand, is instantaneous.
Payment process
- How they are similar: Both sites offer user-friendly automated direct deposits as a payment option.
- How they are different: Etsy pays sellers through their Etsy accounts, through PayPal, or through the mail, while Amazon pays only through direct deposit into the seller’s bank account. Payment schedules also differ: Amazon pays sellers every two weeks, and Etsy defaults to a weekly payment schedule but allows sellers to change this setting to daily, weekly, monthly, or bimonthly.
Fulfillment services
- How they are similar: Both offer free shipping options and give sellers the option to select their own shipping rates and methods.
- How they are different: Amazon offers Fulfillment by Amazon services, in which sellers ship their products to an Amazon warehouse for storage. Once a purchase is made, Amazon handles the fulfillment logistics. Etsy provides shippers with discounted shipping labels but does not warehouse goods or handle shipping for sellers.
Final thoughts
Although they differ in scale, demographics, and fee structures, Amazon Handmade and Etsy are both powerful online marketplaces, capable of reaching millions of consumers around the world.
Where you choose to set up your shop will depend on your target audience and business model. If you sell a high volume of products at relatively low individual price points, Amazon Handmade, with its fulfillment assistance and free product listings, might be the right choice for you. If, on the other hand, you require few listings and expect to bring in a larger dollar figure per sale, then Etsy’s lower percentage cost per individual transaction will likely compensate for the 20¢ per quarter that you pay for product listings.
If you’re still not sure whether selling on Amazon Handmade or selling on Etsy is right for you, try running the math on a few different scenarios to see which platform is best positioned to help your shop succeed. After all, you’ve put your labor, creativity, and even love into your craft. It’s time to show the world what that looks like.