12: Building a Profitable Handmade Business Beyond Etsy

Hello and welcome to the Product Growth Lab podcast hosted by Andrew George and Melissa Fegal. This is the podcast for creative product-based business owners who want to grow their businesses without overwhelm or massive investment. Each episode, we explore actionable strategies, real-life stories, and insights from business owners and experts who know what it takes to succeed. Whether you're just starting out or looking to scale, we're here to help you grow your business on your own terms. Subscribe and join us each week as we dive into practical advice and inspiring stories to fuel your growth journey. This is the Product Growth Lab. Let's get started. So what we're talking about today is how to build a business beyond Etsy, because far too many handmade business owners, they start up, get their shop on Etsy and think, that's it, I have a business. But we're here to tell you why you need to expand beyond Etsy, um, why you should do it, how you should do it. And we're going to start launching a sort of series of episodes. All around how you can do this and how each part works together to build you a kind of sustainable ecosystem, shall we call it, that supports and all kind of drive each other. And that doesn't mean you have to leave Etsy, use it, turn it from your, from like your home to a traffic source is kind of what we're talking a little bit about. So I know it seems like a great platform, but it's really not built for your long-term success. I know far too many business owners who've relied on Etsy, and then for whatever reason, whether legitimate or not, Etsy decides to shut them down. And if you don't have somewhere else to sell that you've been sending your customers to, that's it, your business is essentially gone. So we don't want you to take that risk. We want to kind of give you a nice strategy. Yeah, a safety net. They make sure that no matter what happens, you have a business, you have somewhere to sell, and you have your kind of customers collected somewhere that you can tell them where to go. Do it. Yeah. So why, why are we telling you not to rely too much on Etsy? What are like the hidden downsides that if you're new to business or you haven't considered going somewhere else like Shopify. What, why are we telling you to do this? The, the real main one is that you don't own your audience. Etsy owns your customer list. When people tell someone else about an item and say, where do you get it from? I got it from Etsy. They don't say I got it from name of business. They say I got it from Etsy. And if you want to contact them, Etsy will not like that. They will shut you down. I know one of the biggest shops on Etsy got shut down because they were contacting customers when they shouldn't have been. So Etsy, like, Etsy owns that. They're Etsy's customers. They just give it— they're letting you borrow them, essentially. Like, well, we'll give you some customers and you pay us a lot of fees. And you don't want that. You want to own your own customer list. You want to have a strategy to collect those people, normally on an email list, is what we're going to recommend. And we'll talk a little bit more about that future episode. But you want to start owning your audience. The other biggest one that is just gets worse and worse over time is everything's supposed to change on Etsy when it comes to fees and their policies. And if you don't keep up, you'll get cut out. It's getting harder and harder to make a profit on Etsy. Sometimes I'm like, oh, I really need to increase my prices because look at how much Etsy fees take. But when I get the same order on Shopify, I'm like, oh, Is that it? Is that the fees? Like, I was like shocked. I was so used to Etsy that when I get this China order and it's like, it's not for this much and this is how much we're paying you, I'm like, whoa, that is so much less than Etsy. And, and they keep changing their policies. Also, people who are selling, it was like digital downloads, it's around like AI and, and I can't remember exactly what they changed, but a whole bunch of listings had to come down. And because Etsy changed their policies, they changed policies, well, what did I say, like around white-out cell. And I know for me in the handmade personalized embroidery world, I used to have gift sets and like there were, it was when I first launched and my My first collection was like, it's a chin kind of stuff. There was aprons, it was oven gloves, it was tea towels and stuff. And I would pair it with some other items in a gift set, and those items weren't handmade, which I'd all checked out the policies, was totally fine at the time. There was like a, what did I have, like a baking tray, a wooden spoon, measuring spoon, like I had all this extra stuff and they were nice little gift sets and they sold, especially at Christmas. And then Etsy one day decided, you know what? No, every part of the thing has to be handmade. And I had to start doing that apart from on my own website. That collection's retired now.

They'll get through.

Oh yeah, that's a whole minefield.

That's a vent for another day.

Yeah. Etsy changed policies. I'm following the policies. They are. It's the people who are handmade and they're just trying to follow the policies who end up getting banned and then AliExpress people, dropshippers, managed to slip through. So, these policies are changing. They had around, like, in the past couple of years, they've had this thing where if you get what Etsy deems is too many orders, they'll put your shop on a break. And even here, I totally have the ability to manage all these orders. I'm fine. You can't do anything about it. When you clear those orders, there's a waiting for you before they let you sell again. And like, who wants someone else telling them that they can't make any more orders?

We think someone else controlling your capacity.

Yeah. And the other one that I thought of was, oh, there, there's a new thing, withholding money. Like, they won't always give you all of the money straight away. They'll suddenly go, okay, we're gonna keep most of the money of this order and for however many days before we pay out. And again, if you're not expecting that and your business is kind of running on the, like, I sell stuff, I order stuff, I pay my bills, Etsy suddenly deciding we're going to keep most of your money is, can be like catastrophic. So we don't like Etsy for those reasons. It's actually what they would tell you, don't use Etsy.

And never mind on all of that, there's high competition on Etsy. It's a low barrier to entry marketplace. Which when you're just starting out and you need to get something online, you have a shopping cart, you have a product, you just need to give people a way to give you money, then Etsy is great. But since there's such a low barrier to entry, that's what everyone does. And when you're looking in the marketplace for something specific, it becomes very often on Etsy a question of who's gonna give it to me for the cheapest and get it to me the fastest. And so you have very high competition. You're competing on price, not necessarily the value. And in reality, you're competing on picture. So whoever can have the best photos up there is probably gonna get the most sales unless they're the most expensive, but even then they might still get it.

Yeah. When you go to a shop, what do you do? You say, "Good AM." You go up to the corner and you push from low to high. Specific, like, and then you look and you go, okay, what is like the cheapest one that doesn't look awful? Because there's some people who are not, who shouldn't be selling their stuff on it, who are on there. But it's what you do. You don't like go like, well, let's look high to low. So it really does become about price. And moving away from that, it's like you're not competing yourself. Your listings are competing against each other, not against the 10,000 other people making candles or soap or jewelry on Etsy. Totally changes the game. The next one, the scariest, is you can be shut down overnight. And see it time and time again. There, like, there are people— I've been in a bunch of Facebook groups— there are people who are like, I sell exclusively stolen Disney products and for some reason Etsy shut me down. I'm like, yeah, they should have. But then there's the other business owners who are who have done nothing wrong and Etsy suddenly decide for whatever reason, we're suspicious of you, we're going to shut your shop down. And like, if you're relying on that business and that income and you don't have anywhere else, you've lost your livelihood in a second because of some weird snap judgment of Etsy. And they're really horrible to contact.

Yeah, it's an AI algorithm that shut you down, not a person and trying to get a person to review your case or your products is hell. I had that several years ago when the Amber thing happened and all of a sudden, 'cause a lot of people were selling with the Amber, the baby teething necklaces, and I forget if there was a lawsuit or what ha— I, I forget the surrounding circumstances, but Etsy basically shut down anything Amber and jewelry. So I had a listing that had an amber colored pearl and that listing got shut down just because amber was in the title and yeah, couldn't, couldn't. And even if you go to like just relist that item, they shut you down.

Yeah. And that's one thing is one listing, but when it's your whole shop, mm-hmm. I was like, what do you do? A lot of the times, yeah, I've seen people who their whole shop shut down. They contact Etsy and they're like, oh yeah, we shut down your shop. Do not contact us again. This is a closed case. And it's like, what do you do without being able to like hire a lawyer or something who goes through like Etsy Legal is like the way you're supposed to get around that, which is expensive. And people are like, I make jewelry from my bedroom. I don't have money for lawyers. Like, that's a really scary thing to happen. And you don't want to rely on a platform that's going to do that. And, and we, one of our clients had their listing stolen. It was listed on another site with their images, and Etsy said, oh, you stole this item. And it's like, no, no, this item was sold from me. Yeah, it's like, no, we think this item was sold, we're going to shut down this listing. And I think it was one of our best sellers. It was like, what, what do you do when Etsy just won't listen to you. And the other big one is algorithm changes. And that's had a bunch over Etsy over the years. And like, there's some people who are really great and who really studied Etsy SEO, or like, well, my strategy has never changed. The majority of people are not that focused on Etsy SEO strategies and stuff, and just saw over time, my sales have dropped. And it can be algorithms. I know when Etsy introduced this gift mode thing, it really shook things up and people are like, I just don't get the same sales anymore.

They started doing a localized thing, so they would only show you sellers who were in your area instead of like nationwide or worldwide or whatever. A lot of settings that like automatically turned on even if you didn't want them as a shopper.

Mm-hmm. Yeah. And the free, and the free shipping thing. They, I think they kind of went back on it a little bit, but they were big for a while. Like, we won't show your listings as high if you don't turn on free shipping. And it's, it's always asking the right questions. So like that, I feel like we're going a bit long on the hidden downsides, but those are the big downsides of being on Etsy. So what, how does having your own home change that? Having your own website on a platform like Shopify is what we recommend, but there's a million different platforms, all with their own. Benefits and drawbacks. You own your audience. If you're on your own website, you have 8 billion ways to grow your email list there. You can do pop-ups, you can do landing pages, you can do signup forms in the footer, you can do signup forms on their own page, you can collect consent at checkout. Like, there's so many different ways to build your email list and keep that customer data. You have that list of customers, and even, like, you own that data. That data is in your account. Even the people who you don't have permission to market to, like, you still have their data, Etsy, and like Amazon applies in most of these cases too. Like they own the data and you like do not do anything with that. You lose a ton of the fees. I should have like taken the time and done some direct comparison, but Etsy takes such a massive amount these days. It depends where you are, like in the UK, there's like extra fees, there's VAT on all the fees. So like it's even worse than the US and Like it adds up to a considerable chunk, especially if you've sold enough that you're automatically opted into their offsite ads, which is like 30%, I think, if you get an order through that, that's an extra 30% on top of all the other fees. And it really adds up. Whereas when I get a sale on Shopify, it's like, it's tiny. I like, I should have looked up actual percentages.

I just have a transaction fee on Shopify and it's like 2%. It's wonderful.

Yeah, I just got a big order this week and how much was it for? Oh yeah, here we go. Okay, I got £136 and the fees were £3.22. I'm like, that is nothing. Happy dance. Whereas I don't have an order that big to easily out what it is on Etsy, but I can tell you it would not, it would not be that low.

No, you probably would have made what, like £50 off of Etsy?

Something ridiculous like that. I'm doing some really basic math. Like, I mean, I have months that has around triple the amount of sales of that order. So I divide it by 3. That's, I'll give a calc later.

But Etsy is gonna fee every step of the process, whereas something like Shopify or some of the other platforms, they're just gonna fee the transaction because they have a payment processor. So there's that fee. Otherwise you pay a monthly fee to be on the platform typically, and then, or to use stuff on the platform, and then they don't take anything else. Etsy doesn't charge you to be on the platform, but they're gonna charge your transaction. They're gonna charge your listing. They're gonna charge your shipping, which drives me crazy that they take a fee on shipping. Um, how many others are there, Andrew? There's a whole listing of them.

Um, I'm like, I'm in the back of my shop. If you're, if you're, if you're in the UK, There is— okay, there is— let me look. There is the listing fee, VAT on the listing fee, processing fee, transaction fee. Oh, there's both processing fee and transaction fee. A regular regulatory operating fee, VAT on the transaction, VAT on the regulatory operating fee, VAT on the processing fee, and then postage. Like, it's, it's a lot. I did the math. So like, this is really quick basics, so don't take it as perfect. But on top of that, with sales, like the £3.22 on Shopify, £59.89 on Etsy. So even if I made no other sales this month and I paid my Shopify fees, like the $30 a month, or whatever it is. Still less than Etsy for that one article. So like, it really does make a massive difference. So if you're like, think, if you're thinking, well, I can't afford to be on Shopify, if you're making a couple, like just a couple of hundred dollars a month, like you don't have to ask them, you're probably cheaper if you can get the same amount of sales on Shopify. Like you can cover your fee, your monthly fee for that. And I'm like, I'm not even that cheap for Shopify because I also, I have an add-on to be able to do all the personalizations, actually $10 a month. Campaign and do Shopify.

Yep, me too.

And it still is significantly cheaper to make sales.

Yeah.

Now, even Amazon has a horrible reputation. See, Amazon has a really horrible reputation for being expensive, but I pay less fees on there as well. Etsy has really gotten ridiculous with fees.

Yeah. So sell this, like, why would you be on Etsy? Because we're listening to all these horrible things about you don't own your audience, all these crazy fees, um, everything else going on, algorithm changes, like price competition, all of that. Why would you be there? The one thing that Etsy does have is traffic versus your own website. You then have to drive the traffic. Etsy has done the job of bringing customers in. Whether they click on your products, that's up in the air, but Etsy does have people. So if you can just shift that traffic or siphon off a little bit, go into your own website, you can make a lot more money.

Yeah. And it's, it's not, Etsy has been falling recently. They're not quite what they were and there's a lot more competition. So it's still, you have full brand control on your own site. You don't have Etsy's rules.

So we're switching to the pro of your own website here.

Yeah, we introduced that. Let's do that. Yeah, you don't have to abide by Etsy's rules, policy limitations. Shopify does have some rules, but they aren't that strict. AI and stuff, you're totally free to do. And I think Shopify, the just the selling platform, is really lax. I think there are a few more rules for Shopify as a payment processor, like the, the CBD thing. You can sell CBD on a Shopify shop, but you can't process payments with Shopify. Paid. No, this is just, I've read the terms initially. I had this question before, like they have a page on their website.

You're the only person I know who reads the terms and conditions. So wonderful.

It's a, it's a page on their website. So I didn't read the actual terms, but like you can't, but what Etsy, what Shopify stands, they state on their website, or they did when I read it, could have changed. Keep up with the latest rules. It's like, they're fine with your, you having that on your shop and you're selling it. But if you just have to not use Shopify. Payments to process the transaction. If you're using a different payment processor, I don't know which ones let you do that, but say PayPal does, you can just set up, I think you'd maybe need an app, you can set up where if someone has that in their basket, then it removes the Shopify Pay On Option and they have to pay with a different payment processor. Like there's, I think most of the rules come from Shopify as a payment processor, which also those rules end up coming from places like Visa, MasterCard, and who are strict on certain things. Um, I know if you're in the, if you're in the woo world, um, you often have a lot of trouble because, um, because of chargebacks. Like, if you say, I'm gonna, I'm gonna uplift your spiritual energy, it's really hard to win if someone does a chargeback, because how do you ever prove that? So a lot of business, a lot of payment processors are just like, we're not going to touch that. So Shopify as a platform, maybe you use their payment processor if you're in a certain type of market, but like you can, you're pretty, you're pretty free there. Keep up with the rules. If you're in a, in a difficult market, it's highly regulated, look into it.

Know the rules of your market.

Yeah. Okay. You have better customer relationships. You have direct communication. There's no restrictions, no one to get angry if you send an email instead of doing it through Etsy messages. Like if you say the wrong thing in a minute, like Etsy has some rules on how you're supposed to communicate and you don't have that. It's like my business. Why am I stuck on Etsy? I know, like if people, I don't know what you're supposed to do anymore, but like if people did like a wrong address or something, you had to send something out again. It's like you were up, you were allowed to invoice them through PayPal, not Etsy. And I don't know if that's still true because that seems weird, but like There's rules. Like, there was a time when a delivery went wrong and I was like, I don't want to refund you for this, but Etsy probably would. So I was like, trying to find a really subtle way of putting it in the message, like, you have that Etsy buyer protection thing, complain to them, you'll get your money back, but I'm not going to give it to you. But I didn't know how to say that because like Etsy's not going to allow, going to like do that. And like sometimes people will message you by email and you're like, oh, I don't want like If someone wants to change something, like, I want this in a different color, I'm like, oh, can you please send me the same message on Etsy? Because I need proof that we have this conversation in case you then put in a claim and say, oh, it's in black and you gave it to me in red. If that's actually an email, Etsy won't have your back. If it's in the Etsy messages, then they will. Also, the other thing that I don't really love is if you ever need to contact Etsy about something, they'll read all your messages, which I don't know, I feel it's creepy. I'm like, that's my private messages, go away. Use that to contact Etsy about it. It was a, it was a weird problem on their end. Someone was trying to send me lots of money and Etsy was like, no, don't do that. And like, you nearly ruined my largest ever order. I think still is my largest order to this day. And Etsy was just like, nope, can't check out. And they're like, oh yeah, I read all your messages and this is why I sent you. I'm like, how dare you? That's a total random side note. And higher conversion rates. A well optimized store converts better than an Etsy shop. Because people are shopping around, they're looking at a bunch of listings, like, your conversion rate tends to be lower on Etsy. This is like an overall kind of thing, obviously it depends on the activity. But there's also a whole bunch of links to your competitors at the bottom of your page. You don't, you don't have that on your Shopify. Unless you're trying to give your sales away.

That would be a really good affiliate network right there. You don't want mine, but you want them? They're going to give me a kickback?

Okay.

I don't know anyone who does that.

But like, yeah, Etsy's conversion rate might be fine, but your personal people coming to your shop, it's lower because people are shopping around. They're looking at 10 different listings. They're set on one. They might originally come and clicked on your listing. And if that had been the listing they saw, they would have checked out. But because it was like Etsy, it was like, oh wait. Do you like this one there? You like it? You're like, oh yeah, I like it.

Teach more that are just like it.

Yeah, so you have higher conversion rates on your own shop. I know personally I have, I was really reliant on Etsy and I didn't want to be, but I'd like had a shop on WooCommerce, then Squarespace, then back to WooCommerce. And like, it was always a nightmare and I hated them. And when I finally moved to Shopify, like things changed. It was easier for me to constantly go out and like email and social and be like, shop on my shop. Like I'm excited to get an order. When I had to go into the back end of WooCommerce, like if I got an order through WooCommerce, I'd be like, oh, I have to go into WooCommerce. And Squarespace was worse. But on Shopify, I'm like, I'm excited to go. It's like low fees. It's like easy to see everything. I have all my stock, my stock, like it's. Really exciting to get an order on Shopify. And I have seen much, like, I have the full control, I get people on my email list, I have the higher profits, people know that they're getting stuff from me. I, like, you kind of, like, the whole thing with Shopify is, eh, not Shopify, with Etsy is SEO, and you think, oh, I'm going to lose that. I've, like, lately I've been looking at my stats, SEO with Google has been making a massive driver to my shop. I'm actually, as an email person, I'm Like, sad, that's sad, but like, ooh, why, why are most of my sales new people coming in through Google? I'm like, I'm supposed to be handling repeat customers through email, but like, no, I really noticed an uptick in SEO traffic lately and, and they're, they're much bigger orders. Like that order I was talking about, like, yeah, I got today. It was like Andrew and Terry. I'm like, that's a nice big order. Um, my average cart is way higher on Shopify. I find Etsy has the lowest, because I'm on Amazon as well. Amazon is like the mid one, and Shopify's, and that just is kind of the customer base that's on there. So, now that we've kind of laid the foundation of why, why do you want to do this, we're really going to move into the how, and that is what the next series of the next, it's 5-episode series, so the next 4 series are all going to be about how we do this. So in our next episode, we're going to be talking about setting up a high-converting website. We're going to be talking about Shopify because that's what both of us use. And we've tried enough other platforms to tell you don't waste your time thinking that you should be on a different one. Then we're going to move on to how to drive traffic without relying on ads. And Melissa has, uh, So is it tickled? That's not the word. Unless that's tinkered, I think is the right word to say. Yes.

Unless that's tinkered with ads.

Tinkered with ads. It hasn't tickled anyone. I'll bet.

When they tickle me, but.

Yeah, but for the most part, most of our orders and traffic we've gotten to our business has been through organic traffic. So we're going to talk about how we do that and how we recommend others do it. Episode 4, we're going to talk about how to use email marketing to boost your sales. So that's often repeat. Customers, and I'll give you a little bit about my techniques that I've used to get the vast majority of people who order on Etsy on my email list. When they make repeat orders, it's through my Shopify website. And then we're going to talk about scaling and expanding your handmade business so that you have a nice big home beyond Etsy. So leaving Etsy doesn't have to mean abandoning sales. It means building a more sustainable, profitable business model. You have your organic traffic, you have your SEO and stuff driving to your site instead of Etsy, and you leverage Etsy as more of a traffic source. That's what we're talking about in the email marketing one, is how I get those people on my email list, and it's, it's a traffic source. You want to talk more about this, be sure and join our free Facebook group that you'll find in the show notes for this episode.

Not— no matter what, you can always use the benefit of flash sale to get some money going right now. And we have, if you've never done it before, you're like, I don't know that I'm doing flash sales right. We have a toolkit for you, the Flash Sale in a Snap freebie. So you can grab that by going to theproductgrowthlab.com/flash. That is such a tongue twister, slash flash. And grab that today.

Go to the Product Growth Lab.

Kit.com/flash. Oh, that's it for today's episode. Hope you join us in our next session here on the transferring off of Etsy or expanding your business safety net.

Thanks for tuning in to the Product Growth Lab podcast. We hope you found today's episode insightful and inspiring. If you enjoyed the show, leave us a review. It helps us reach more creative entrepreneurs just like you. Stay connected, keep— follow us on your favorite podcast platform, and don't forget to join our community. More resources, tips, and support. Until next time, keep growing and creating. This is the Product Growth Lab signing off.