The TRUTH about Etsy Print on Demand | 5 Things I Wish I Knew Before Starting

have you ever wondered how to make some income on the side in a way that fits into your existing life something you can do that doesn't require getting another job but relatively easy where you can earn decent money it's certainly a topic I've given a lot of thought to and after looking around for a while I finally settled on trying to sell print-on-demand products on Etsy so how's it going and what have I learned in this video I'm going to tell you a little bit about Etsy so you can see why it's so compelling and then share five things about the reality of selling print-on-demand products that I wish I knew before getting started things you won't hear anywhere else that may change how you think about selling on Etsy I'll discuss them more or less in order of importance building up to the last one being most important and at the end I'll give you my current thinking on whether or not Etsy is a good side hustle opportunity now I'm a software company Chief Financial Officer with an MBA I've got a ton of business experience when evaluating a business opportunity I try to think about it from all the angles with a side hustle business one of the main things I'm thinking about is can I build some kind of a product once and then sell it over and over again with little additional work after the initial investment of time I want passive income having looked into it some Etsy seemed like it could work my interest was in selling print-on-demand products which Etsy does a lot of so I moved ahead I did how to research on best practices and spent at least 50 hours loading up an Etsy store with products to sell through all this I've learned a lot for those of you who don't know what Etsy is it's an e-commerce Marketplace sellers can open online stores inside etsy's Marketplace and list their products for sale part of why Etsy is a compelling place to sell is because it helps the seller in creating and sourcing products to sell and in getting your products in front of potential customers and they have a lot of potential customers Etsy is one of the largest e-commerce marketplaces with over 460 million visits in February 2023 which Compares very favorably to the other marketplaces for a little bit of context Etsy is an American e-commerce company founded in 2005 that owns several Marketplace platforms including etsy.com by 2015 the company had grown enough to become a public company traded on the nastic Stock Exchange Etsy had 2.6 billion dollars in Revenue in 2022 and the company is now valued at 13.5 billion in 2022 the etsy.com e-commerce Marketplace had gross merchandise sales on the platform of 11.8 billion etsy.com's Marketplace metrics are pretty impressive on the platform Shoppers which they call buyers can find a large assortment of handmade customized personalized vintage and craft supply products from all over the world as of the end of 2022 etsy.com had 89.4 million buyers and 5.4 million active sellers there were more than a hundred million items listed for sale on the etsy.com Marketplace my interest is print on demand which is a made-to-order product of the 2022 sales on the Etsy platform about 26 percent were from customer made to order merchandise lastly Etsy has a big International presence in 2022 45 percent of etsy sellers were located outside the United States and 45 percent of the merchandise sold on the platform involved in international transaction so products on Etsy get in front of a worldwide audience of shoppers you can probably see now why I decided to move ahead with Etsy it's huge but of course reading about something and doing that thing can be quite different I learned a lot so with the benefit of experience here are the five things about Etsy that I wish I knew before I got started one a lot of YouTubers are doing videos about how to do well on Etsy making it sound very promising that if you follow their advice you'll make good sales on the platform and yes some people do quite well in Etsy but what has become a lot clearer to me is that for every seller who does well on Etsy far more sell little or Nothing at All digging into etsy's annual report they highlight that they have 5.4 million active sellers that sounds great right however they Define an active seller as those who sold an item or incurred a bill charge in the last 12 months incur to build charge what's that well that would be someone for example that Etsy build for some kind of service even if that seller never sold anything on Etsy having been an equity analyst I'm pretty attuned to the language that companies use and what they do and don't disclose usually companies don't disclose things that don't reflect well in their business here Etsy doesn't disclose how many people have shops on Etsy but sell nothing also they Define active Sellers as both people who did make Sales Plus those who did not make sales but were simply charged a fee by Etsy by combining these two very different things they effectively hide how many sellers on the platform make any sales at all they do tell us however that for the 5.4 million active sellers on their site the gross merchandise sales per active seller in 22 was only 2169 dollars it's not very much they also note in their words that their gross merchandise sales are concentrated in their most active buyers and sellers this means that even though the average gross merchandise sales per active seller was two thousand one hundred sixty nine dollars most of the sales on the platform are taking place in the more successful shops I infer that probably a large portion of active sellers on Etsy actually sell little or nothing making a quick pause here Etsy has active sellers but I have you my wonderful audience who are my active listeners if you're enjoying this video please take a quick moment and hit the like button and consider subscribing too your action tells YouTube to spread the word and helps the channel grow while you're doing that let's watch this cute kitten video thank you kindly for your support now getting back to our discussion list number two Etsy is promoted as an easy place to set up shop and start selling technically that's absolutely true it's not hard to get on Etsy and put up an item for sale however the Practical truth seems to be that to actually succeed in making regular sales on Etsy requires a significant investment of time you need to list Many Many Items some people suggest hundreds before your shop is likely to start getting sales there's a few reasons for this one is there's a lot of competition for buyers on Etsy remember there are a hundred million items listed for sale on the platform by 5.4 million sellers another reason is you really don't know which items will succeed in selling and which won't so you make up for that by listing many items and hoping some of them find buyers the long and short of it is you'll end up spending a lot of time putting up many listings and each listing to have any chance of selling will need to be of high quality with good pictures and descriptions and be properly optimized for SEO all of this takes time three fees fees can add up to price your products to sell to profit you have to get the fees correct in your pricing model when setting your prices be sure that they more than cover all of the fees Etsy charges 20 cents per item as a listing fee a listing lasts for four months translation if you list 100 items on Etsy it will cost you twenty dollars every four months or sixty dollars per year just to keep the listings up even if you sell nothing and remember most items won't sell anything that means the profits from the ones that you do sell has to cover the listing fees for those that don't sell now if an item sells Etsy will charge you a transaction fee of six and a half percent plus a payment processing fee of three percent for a total of nine point five percent of the combined gross price plus shipping fee that you charge the customer plus another 25 cents as part of the payment processing fee in addition and this one is really easy to miss Etsy might charge you an Etsy advertising fee of 15 this might hit you out of the blue Etsy advertises off their site to try to attract customers to their listings if someone off as he clicks on an ad that Etsy RADS somewhere out on the internet and that person comes to Etsy and buys your product then Etsy will charge you a fee of 15 of the gross price plus shipping now you can opt out of this program but if you don't then by default you are participating it's a little hard to adjust your pricing for this because you have no idea how often this might happen so the smart thing to do is just bump up your prices a little to account for the fact that this may happen on occasion lastly you might be charged vat fees for value-added tax on some of your International sales it depends on which country a customer lives in you'd have to do research on this one to understand it better I just want to make sure you're aware of it so it's not a surprise again model your prices so you can set them properly to allow you to make a profit it's really not fun to make sales but lose money at it number four sales tax Etsy collects and remits sales tax for Most states I live in New York and New York is one of the states for which Etsy collects and remits sales tax so at first I thought this meant that I didn't have to worry about sales tax that's true but there's a small but important twist if you use a supplier to provide the product that you then resell on Etsy there are two transactions first you buy a product from the supplier you will pay sales tax on this purchase second you sell the finished product to your customer Etsy charges them sales tax and pays it to the state so if you don't want to pay sales tax yourself when you buy the product from your supplier then you need a resale certificate this certificate will allow you to buy items that you intend to resell without paying sales tax on your purchase to be able to use a resale certificate at least in New York first you have to register with New York State as a sales tax vendor they call it here a certificate of authority to collect sales tax and only once you have this in hand can you issue a resale certificate to the supplier that you're buying from the catch is once you've registered with the state for the certificate of authority to collect sales tax you now have to make regular sales tax filings with the state even though Etsy is collecting and paying them the tax that's owed on sales to your customers so basically we have to file a zero sales tax return meaning you file a return but on it you just tell the state that you don't owe them anything the point is this is an administrative hassle that I wish I knew about in advance wouldn't have stopped me but at least it wouldn't have been a surprise either number five this is the biggie think about Etsy in terms of a simple equation ultimately other than the fun and rewards of selling your Creations on Etsy or any other platform it's a business you invest time and money and hopefully you profit from it so here's the equation how much profit can you make on Etsy in a year the key is we're talking about profit not sales you know that all the videos on YouTube are using sales with titles like make five thousand dollars per month on Etsy that's sales when all that matters is profit your sales might be five thousand dollars but from that you have to deduct for the cost of the product and shipping and Etsy fees and any advertising you buy plus any other expenses you might incur so how much is left is profit divide your profit by the amount of time you spend doing all this this answer is effectively your hourly wage for the time you spend selling on Etsy let me give you a simple example assume you sell five thousand dollars in Revenue in a year on Etsy remember the average is about two thousand two hundred dollars per year and assume your profit margin after all expenses are deducted was 20 percent that means your profit on five thousand dollars of sales was one thousand dollars now assume that in order to sell five thousand dollars a product you had to put up a hundred product listings on Etsy and assume that each listing took you only an hour to prepare this means you spent 100 hours preparing the 100 listings on Etsy for Simplicity let's assume you spent no other time getting set up in Etsy or engaging in marketing activities on other platforms to drive traffic to your store or in answering customer questions or in researching suppliers to use in your store or in buying supplies yourself and making the product yourself and in researching what your prices should be there's a lot that goes into this so obviously I'm potentially leaving out a lot of other time that you may actually spend on this endeavor in order to get sales and make your product but we're keeping it simple so divide the one thousand dollars in profit by the 100 hours of work you did and you'll find you only made ten dollars an hour and like I said we left out a lot of other time you may be spending on this I should point out though In fairness to Etsy this is not just an Etsy issue it's probably relevant to any number of online e-commerce platforms if you sold on your own website so having covered these five items where does that leave us regarding Etsy I've told you why it's probably harder to succeed on Etsy than some people would have you believe if you do choose to launch a store on Etsy if you take it seriously spending the time to research and find good suppliers and making good designs and doing proper SEO and setup of your store and doing best practices for marketing using Etsy and other websites to drive traffic to your store and putting up many many listings of products for sale then you may find some level of success maybe even a lot but if you're just going to dabble and only put up a few items it seems that you're most likely not going to make any sales it doesn't appear to be a quick and easy side hustle at least not initially it seems to require quite a bit of time and dedication before you'll see results so like anything else in life it comes down to whether or not you're willing to put in the time and work if you do maybe it'll work but the data from Etsy suggests to me at least it's not worth it for the average seller if you found this helpful please hit the like button and consider subscribing to see more videos covering interesting topics in personal finance and Entrepreneurship see you in the next one

Channel: William Lee

Views: 262,189

Keywords: truth about etsy print on demand, the truth about etsy, the truth about selling on etsy, print on demand, print on demand 2023, how to sell on etsy, etsy seller tips, side hustles 2023, ecommerce business, sales tax on etsy, how much can you make on etsy a month, etsy fees explained 2023, etsy offsite ads, etsy vat, etsy profitable niches, the truth about etsy pod, the truth about selling etsy pod, etsy print on demand, etsy digital products

Id: __aCduYq3Aw

Length: 15min 21sec (921 seconds)

Published: Tue Apr 04 2023