Back in April I wrote an article about the Etsy price increase and compared their pricing to Gumroad as an Etsy alternative.
But I’ve been thinking about what I wrote and realised that I might be wrong.
I still question whether they needed to increase their fee when they’ve recorded over 500 million in profit.
I might wrong to say Etsy see themself as a Gumroad Alternative.
You see, I thought that way because I compared my Etsy account with my Gumroad account.
Of course I don’t have inside information, so this is all speculation.
But I think Etsy are comparing against other businesses.
So if not Gumroad, who are the Etsy alternatives?
- Creative Market,
- Similar digital marketplaces.
Think about it.
Etsy first started as a marketplace for handmade creators to sell and share their work. But over the years Etsy has relaxed it’s definition of handmade and now it feels like most shops are selling digital products.t
Creative Market and Envato are both marketplaces for digital creators to sell assets for other digital creators.
They also take a 30% commission, which makes Etsy’s 10% commission commission seem quite small.
Side note, when you add VAT and compare sale price vs what Etsy takes, it’s actually closer to 14.5% – especially in the UK where Etsy charge an extra fee to sellers to get around the Government’s digital service tax (which is actually owed by large multinationals, not small businesses)
However, on digital products it doesn’t matter the same as handmade items because the profit margins are so much higher on a per item/transaction basis.
I can afford to give up 30% of my digital products as once I’ve created them it costs me very little (other than a bit of promotion or support) to sell the products. The marketplace handles most of the costs for selling each item.
But on my handmade and custom products there is a big cost to creating each item.
Will Etsy become a pure digital marketplace?
I think Etsy has their sights on the digital market places and wants some of that higher commission (and why wouldn’t they?), yet they’re also limited by the large number of handmade creators they still have on their platform.
Since writing my first article I’ve joined an online community of table top crafters. Many of the sellers use Etsy as a shop front, and most products they sell are handmade. Many of the discussions regarding Etsy have been around increased costs and reduced visibility, also the influx of digital products.
It’ll be interesting to see how the Etsy platform develops over the coming years.
- Will they continue to serve both types of creators?
- Will they keep creeping up the fees to edge out handmade creators?
All of the above is, of course, my own speculation and Etsy is certainly an interesting platform that’s enabled many small creators to earn side income and even a full time living. I’m not against the platform at all, but as stated previously I am skeptical.
As for my own Etsy shop, I’m still trying to figure out how best to expand it. Advertising on Etsy for custom made items turned out too expensive.
Long term, I believe digital items will have to be part of my product mix to make it profitable.