Small businesses find success on Etsy

Amazon dominates the online marketplace in the United States and many other countries, too. The online behemoth accounted for roughly 47 percent of American e-commerce in 2020. Yet Etsy is emerging as a promising alternative, especially for small businesses, and is now the second-largest online marketplace in the United States.

Rather than the generic mass-produced goods often found on Amazon, Etsy focuses on unique products, such as handmade arts and crafts. With Christmas approaching, shoppers can find handcrafted Christmas ornaments, custom printed driver’s licenses for Santa’s sleigh, and knitted blankets to keep warm while chestnuts roast on the open fire.

Shoppers can also order custom art and other products. For example, you can commission high-quality oil paintings, which may cost $300 or more. Those on a budget can order custom cartoon-style art for less than $10.

Etsy generated $1.7 billion in revenues in 2020 and $10.28 billion in merchandise sales volume. Much of the sales ended up in the bank accounts of small businesses.

As of 2019, more than 2.5 million sellers had found a home on Etsy. By 2020, total Etsy sellers topped 4.3 million. While 62 percent of Etsy sellers were based in the United States (2020), you could find Etsy entrepreneurs in 234 countries. PlannerKate1, a top Etsy seller, has drummed up more than $1.2 million in total sales.

Still, it’s not all good news for small businesses. For example, Etsy has drawn controversy with its off-site advertising campaigns. Etsy automatically advertised products, taking a 15 percent cut of sales. While smaller sellers could opt out, businesses generating more than $10,000 a year could not, but enjoyed a lower commission rate of 12 percent.