Do You Sell Products on Etsy?

Why Are So Many Online Stores Leaving 3rd Party Platforms?

While services like Etsy can be a great tool for starting your company, it is important to give your business the opportunity to grow and become more profitable. E-commerce marketplaces like Etsy can become costly and expensive between monthly fees, transaction fees, advertising costs, and more.

Once you begin selling goods and services on Etsy or another e-commerce platform, you’ll often find that there is a viable market for your goods and services. At this point, it’s important to become independent and open your own online store that isn’t controlled and limited by a marketplace solution.

Here are a few ways that e-commerce marketplaces like Etsy often limit your profitability and success:

Oversaturating the Market

In 2023, there were over 9 million sellers on Etsy. The overpopulated market of sellers makes it difficult for your products to be seen and purchased. A search result page can only hold so many results, and your products can often get buried or lost in the shuffle.

Compromised Quality Control

If you offer high quality, personalised, or handmade goods, odds are that your products are not receiving the attention they deserve because of the rise in mass-produced goods in Etsy and other marketplaces. You could be doing so much more in sales, but with the influx of low-priced, low-quality goods your products and services are less appreciated and valued in this Etsy-style marketplace.

Instability of the Marketplace

Companies like Etsy are always making changes to their platform, leaving sellers to scramble and adapt to optimisation requirements. Etsy often changes the search algorithm, and this will affect how or if your products are shown to potential buyers. You’re also subject to changes in rules/regulations, shipping costs or mandates, and more.

Rising Transaction Costs

Etsy increased the transaction fee from 5% to 6.5% in April 2022. The platform also charges fees like offsite ad fees and payment processing fees. Etsy fees can significantly lower your net revenue and thin your profit margin. As an Etsy merchant, you’re subject to rising fees with no control. Becoming an independent online retailer gives you the ability to protect your profit margin.

Suspended Accounts and Terminations

Many Etsy sellers have experienced sudden suspensions without clear reasons for this action. Your account can even be terminated. The unpredictability associated with this possibility can put your business, its reputation, and its existence at risk. You can go from being a thriving business to a suspended or closed business in the blink of an eye.

Developing Loyalty to Drive Sales

It’s hard to build loyal relationships with your customers on Etsy because they are ultimately focusing on their relationship with Etsy. They may be loyal to Etsy, but they may not even be conscious of who you are as a business. They see your product that they want but may never even retain the name of your company. Because of this, it can be difficult to drive repeat purchases or develop a rapport with customers. As an independent retailer, you can focus on loyalty and communication/marketing programs to drive continual sales with your customers.