Is It Worth Selling On Etsy? | Do You Need Business Insurance for Etsy? | Business 2021

Is It Worth Selling On Etsy? | Do You Need Business Insurance for Etsy? | Business 2021

Is it worth selling on Etsy?

There is no doubt that Etsy brings something different to the eCommerce table, and its users are multiplying all the time. It’s the powerhouse of buying and selling artisan and handmade items online.

But is it the best option for you? What other options are available? And do you need business insurance to sell on Etsy? So, let's start there...

Do you need business insurance for Etsy?

Business insurance may not be the first thing you think of when you start your Etsy store. In fact, you may have been running one successfully for a long time without having thought about it. Many Etsy sellers never grow their business enough to worry about it.

Still, it should be something that online marketplace sellers consider.

1) Cyber Insurance

While this one may not immediately come to mind, it should definitely be considered when handling customer data. Etsy's seller guide currently states:

"If Etsy and you are found to be joint data controllers of personal information, and if Etsy is sued, fined, or otherwise incurs expenses because of something that you did in your capacity as a joint data controller of buyer personal information, you agree to indemnify Etsy for the expenses it occurs in connection with your processing of buyer personal information."

From this, we can conclude that while Etsy does not require you to have cover, it does render Etsy harmless in any situation where you mishandle customer data.

Under GDPR, the financial penalty for this is high, so both taking out Cyber Liability Insurance and brushing up on your data handling practices come recommended.

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2) Product Liability Insurance

As an Etsy seller, this one might be more important for you to consider than other eCommerce businesses that source and sell products.

Product Liability covers suppliers, distributors, designers and manufacturers for claims of accidental injury, accidental death and accidental property damage due to their product.

In any case of Product Liability, the blame (and the cost) will lie with the party in the supply chain which has been negligent. When you are running a solo operation where you are the designer, manufacturer, seller and distributor, this is usually going to be you.

Even if you are not the one at fault, proving your innocence can still be costly.

Most sellers get on by just fine without insurance, particularly if they're only selling one or two items a month. Only a quarter of Etsy sellers consider their shop a full-time business.

However, some Etsy shops will be selling many items, including homemade products intended for use on skin. If one batch of 50 products turns out to be contaminated and causes harm, you would be liable for that and the costs that come with it.

3) Contents and Equipment Protection

If you are selling physical products online, you may want to consider insuring both your stock and equipment.

Standard cover will include protection for damage and theft of your vital tools and inventory.

For example, you are storing £500 worth of materials in your garage when a burst pipe destroys it all, rendering it unsellable. With contents insurance, you will be reimbursed for the loss so that you can replace the damaged stock without taking a big hit to your business.

In addition to this, Business Interruption insurance is a great add-on for online businesses that contribute a significant amount to your income. Business Interruption will cover your lost income following an insured loss.

For example, say you were storing 30 of your completed products in the previously mentioned garage or a storeroom. Each item takes four hours to make by hand, meaning you've lost 120 hours of straight work with one burst pipe.

Whilst your “stock” cover will replace the cost of your raw materials, your income will be impacted whist you source and remake the stock. In addition, should any equipment need to be replaced, this again can impact your ability to trade and therefore your income.

Your contents insurance will usually only cover the cost of the materials but not the item's actual retail value. With a Business Interruption policy, paired with sufficient proof of historical sales, you will be able to recoup the lost profits/income that go with an insured disaster.

This is where your period of indemnity is important!

Your Business Interruption policy will only pay out on lost profits for however long your period of indemnity is. For instance, you suffer a fire and cannot trade for a prolonged period, it is likely to take some time for your income to return to your “pre-loss” level.  

Your indemnity period needs to be at least sufficient for your income to recover. Typically, business interruption indemnity periods will be 12 months, 24 months, or 36 months. This is why you should make sure your business interruption policy is up to date with an adequate period of indemnity and indemnity limit set in place.

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4) Professional Indemnity

If you are an artist selling original paintings and graphic designs, there is always a chance that someone will decide they are not so original and make a claim of copyright infringement.

It is Etsy's policy that:

"Etsy strives to respond quickly when we receive proper notice of intellectual property infringement by removing or disabling access to the allegedly infringing material. When Etsy removes or disables access in response to a notice, Etsy makes a reasonable attempt to contact the affected member, provide information about the notice and removal, and, in cases of alleged copyright infringement, provide information about how to submit a counter notice."

Outside of Etsy, the claimant may engage lawyers, in which case you will need to lawyer up yourself. Professional Indemnity will cover both the cost of the legal fees and compensation payable to the claimant (should they be successful) up to the limit of your indemnity.

Be cautious, though. Professional Indemnity will only cover you in cases where the copyright infringement was unintentional. We cannot cover unofficial merchandise for copyrighted material - at least not without the seller taking the necessary legal steps to acquire the licences to use that imagery.

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Can you make money fast on Etsy?

Typically, the answer is no. Etsy stores take time, both in the art behind your craft and in building your page and optimising it for potential customers to browse. If you're looking for a quick way to make money, Etsy is not for you.

While there are other ways to create online stores with minimal effort, providing you can make the initial investment, such as Fulfilled by Amazon services, Etsy does not have any fulfilment services to take advantage of.

Can Etsy be a full-time job?

With the amount of work that goes into creating the hand-made products on Etsy, it absolutely stacks up to be a full-time job in hours. However, what you're probably thinking is: does it pay like one?

Like any retail or eCommerce business, your Etsy store will be subject to seasonal demand and can be quite inconsistent.

One casual Etsy seller we spoke to in February '21 said that they'd had a lot of sales in the lead up to Christmas but then had only received one order in the two months since.

Do I have to pay to sell on Etsy UK?

There is a small fee for selling and listing on Etsy. For every listing you put up, you must pay £0.14, which will last for four months. There is also a small transaction fee of 5% when you sell through Etsy (including the delivery charge).

There are also optional costs for Etsy advertising which can boost your business. However, they are not required. More information about this can be found on their website.

Is it better to sell on Etsy, eBay or Amazon?

Choosing the right online marketplace for your business is crucial. While it might be suitable to sell most things on eBay, not everything is suitable to sell on Etsy. Additionally, you might want to consider selling the same products through Amazon Handmade alongside your Etsy and eBay account.

Having a presence on multiple popular online marketplaces can increase your overall reach, potentially resulting in more sales.

Although it is worth considering that Etsy selling fees are lower than both eBay and Amazon handmade.

So how much do handmade/artisan e-commerce platforms charge? Well:

  • Etsy charge 5% of the final transactional cost with a product listing fee of £0.14
  • eBay charge 10% with no listing fee for 1,000 items
  • Amazon Homemade charge 12.24% (very specific! but it will increase to 15% when 2021 ends) with no listing fee; however, you do have to qualify for their Handmade section

However, with Amazon Homemade, you can also take advantage of their Fulfilment by Amazon services, where they will package and ship your products for you. Not forgetting that Amazon is the largest eCommerce platform in the world. It is the Google of shopping.

This means that you get to enjoy the prime badge, which typically sells more in most product categories. While this sounds attractive, it still largely depends on your sales volume.

You should also consider your brand personality. Each Amazon, Etsy and eBay come with their own reputations and implications. Where are your target market likely to be, and what does each site say about your product?

Should I choose Amazon Homemade or Etsy for my online business?

Now that is a question. There is no real harm in using both. However, you will see a difference in income on the same amount of sales on each platform.

The issue with using the full extent of Amazon's services as a small business would be that it just might not be worth the cost. If you are moving a small handful of goods every month, you would be giving up a lot of your profit for something you could have done yourself.

A negative of using a fulfilment service like Amazon would also be a lack of personalisation in your packaging. Many Etsy sellers will personalise their packaging and pack it with their own choice of protection, maybe some extra gifts, business cards, etc.

Amazon will dispatch your products in their uniform way - which is great for mass distribution but maybe less so for those going for the small business artisan vibe.

However, it is worth noting that the Amazon Homemade 12.24-15% seller fee includes all listings and advertising. Meanwhile Etsy charges £0.14 per listing for 4 months, and advertising is something you opt-in for as an extra cost. All these things should be factored in when you make your final decision.

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How To Make More Etsy Sales

While we can't guarantee any winning formula, there are some ways to boost sales on your Etsy page.

  • Search Engine Optimisation - Not only can SEO help your items show up in wider search engines like Google or Yahoo, but Etsy is also a search engine in its own right. Optimising your pages to have the right item names to match the kinds of queries customers will search for. Keywords should be included in both your listing title and product descriptions.
  • High quality, well-lit photographs to showcase your products
  • Make your shipping free.
  • Take note of the items people favourite but don't buy - consider lowing the price if possible, or running a promotion to bring people back in.
  • Send coupons - on Etsy, when someone abandons their cart without buying, you, as the seller, are given the option to send them a coupon to encourage them to buy at a discounted price.

So, is it worth selling on Etsy?

We spoke to another Etsy seller who described the time-consuming processes of calculating the right price to sell their products - and it's not always easy to tell what the right price is.

It's thought that the average Etsy user marks up the raw cost of their product by around 68%, but in that mark-up, there is the cost of their own labour, admin, photography, promotion, dispatch, and customer service.

Etsy sellers try to strike a balance between making the business worthwhile for them as the seller and giving a good price to the customer. Unfortunately, sellers cannot offer their products at cost and, when they do, they do so at their own expense.

Some buyers do not understand how unique handmade items cost so much and do not factor in economies of scale or the amount of experience and artistry that goes into a single item - labour that deserves to be paid for.

Often Etsy sellers describe private messages requesting the seller to sell the item at cost or a reduced rate as browsers can't afford luxury, handmade items but want it regardless. Other users are simply put off by the price and will turn to a cheaper alternative from another eCommerce site straight away.

Meanwhile, that is just one side of the story.

The pros, our user continued, are that you can make your store your own, and if you do your research, you can make a success of it.

Many small businesses operate on Etsy as their sole revenue stream and make a success out of it.

What sells well on Etsy?

Some of the most popular categories include:

  • Craft & Supplies
  • Handmade Items
  • Jewellery
  • Wedding
  • Vintage
  • Home & Living
  • Art & Collectables

In every category, Etsy buyers are looking for unique products of high quality. So, try to stand out! Don't just emulate what other stores are doing.

Try to personalise your Etsy seller profile. With creative businesses, it is often a personality that carries the brand. Introduce yourself to your Etsy customers. Tell them your name, why you love making your product, how long each one takes, where you make them, if you have a family and more.

Many of Etsy's customers will be concerned with ethical consumption. Showing them that you are a real person, working on these items yourself can work wonders on your marketing, especially if you are selling clothing or items that, on the mainstream market, often come from sweatshops.

Etsy is a trusted marketplace

A recent study by Adobe showed that 57% of online shoppers are buying from marketplaces compared to the 13% buying from retailer websites.

It is thought that consumers enjoy the wealth of choice that an online marketplace brings. The ability to put various items from different sellers in one basket is definitely a bonus for anyone looking to shop through Etsy.

Some may argue, "but buyers of artisan goods are different!" No, not really.

Etsy shoppers may come with various motivations, from wanting to support small businesses to simply wanting unique handmade gifts, but they still love the safety and convenience of the online bazaar.

Etsy comes with the benefit of a secure payment system which is an attractive feature for both you and your customers.

Insync for Etsy Store and Online Business Insurance

At Insync, we can arrange business insurance for Etsy stores, Amazon, Shopify, eBay, Depop and more. We can set you up with the right cover at the right price - proportionate to your business's size.4

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