Etsy is a thriving online marketplace where people can buy and sell handmade items, vintage goods, and craft supplies. It works in a similar fashion to eBay or Amazon, but with a more specific target audience and further restrictions. Etsy enables small businesses to seek a wider audience on an international level. There are plenty of benefits of having an online store, such as minimal start-up costs, no rent or zoning fees and little to no loss.
Here are 5 things you should know before ‘setting up shop’ on Etsy.
1. How to Create a Shop
You will need to create a free Etsy account then set up your shop online. To create a shop you need to provide language preferences, country, currency, and the name of your shop. Choosing a shop name comes with some specifications (eg. You cannot use the same name as another Etsy member, it must be 4-20 characters in length).
After this you can add your products to your shop, choose your payment methods and then set up your card details. You can then open your shop and start selling. You can also choose to add details such as a biography of yourself, shop policies, shipping details etc.
2. Fees
Etsy tends to have more fees than other online stores. Joining Etsy is free, however there are listing fees, transaction fees and payment fees added onto every order. Listing your product onto the website costs $0.28 per listing. Once you sell the product, there is a 5% transaction fee. If you use Etsy Payments to process the transaction, then there is a 3-4% plus $0.25 payment processing fee. These fees are automatically deducted when you make a sale. Etsy also has a range of offers, such as Google Ads, Targeted Offers, and currency conversion, which all incur separate fees.
3. What Can You Sell?
Unlike other online marketplaces, Etsy has quite specific requirements regarding what can be bought and sold on the site. You can only sell handmade goods, vintage items, and crafting supplies. Etsy outlines the specifics on their website. In summary, handmade items must be made and designed by the seller. Vintage items must be at least 20 years old. Craft supplies don’t have to be handmade, however they must be used for the creation of an item or for a special occasion.
Etsy also outlines what cannot be sold on their website. This includes prohibited items, resold items, and anything that violates their policies. They also emphasise the importance of providing accurate and honest information about your product.
4. How Will You Receive Payments?
There are many ways you can receive payments through Etsy. A key feature is that overseas buyers are able to pay in their local currency, which is reassuring to your customers. Etsy offers payments using PayPal, Apple Pay and Etsy gift cards, and all payments are protected. Etsy will receive the money and deposit payments into your bank account weekly, fortnightly or monthly.
5. Seller Protection
Just like in physical stores, you may come across unsatisfied customers and disputes. Etsy has a Seller Protection policy in place to help deal with these disputes and protect its sellers. In order to be eligible you need to meet the requirements of the policy. Note that the seller protection is optional.
6. Legal Requirements
A store on Etsy is essentially a business, so you will need to comply with the same requirements needed to open a business in Australia. This involves registering your business name with ASIC and obtaining an ABN. Depending on your earnings, you will also have to pay income tax or GST and lodge your tax returns with the ATO. You can find out more about opening an Etsy store in Australia with this seller handbook or this LawPath guide.
Choosing to open up an Etsy shop can launch your small business and enable you to reach a much wider audience. Although there are several fees and requirements involved, it can be a very cost effective and time-saving way to make your business profitable.
Don’t know where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.
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