Shopify vs. Etsy. Which one should I use for my business?
August 06, 2020
If you're just thinking about starting to sell online, you may be wondering about which e-commerce platform to use. What's the difference really and how will it affect your sales and growth? Or you may already be an Etsy seller and want to better understand if you should have your own website to sell on too. Today we'll compare Shopify and Etsy to understand which one is better for you depending on your business goals.
A Full Comparison of Shopify & Etsy
Marketplace vs. Web Store
Etsy is a marketplace meaning that you share a virtual selling space with thousands of other stores. A search of "leather wallet" will bring up 100,000 results, all listings from different stores on Etsy. Etsy has guidelines that allow stores to sell only handmade goods, vintage items and craft supplies. If you have designed something, and worked with a manufacturer to produce it, this is also allowed as long as you specify who you collaborated with. So if you are selling something that doesn't fit into one of these categories, then Etsy is not an option for you. The great thing about Etsy is that setting up a store is incredibly easy so you can open up shop very quickly.
Shopify is an e-commerce platform that allows you to easily set up a store on your own domain, while they provide the technical infrastructure of the online store. Your store is not connected to anyone else's, and there are very few restrictions on what you can sell, but it becomes your responsibility to drive traffic to the website. Store owners must build their store interfaces themselves but with the use of Shopify themes, this is quite intuitive and easy.
Driving Traffic to your Store
Getting customers to your store is crucial for a successful online business and this is one of the main differences between marketplaces and web stores. Because Etsy is a shared marketplace, buyers can stumble upon your product through a search. Your product has some exposure just by being on Etsy. Your product could be on the first page or the 20th page, and that will depend on how unique your product is, how well you have configured your keywords, and your store's popularity. In this way, Etsy does have an advantage. However, the other side of this coin is that your competitors are right beside you. Shoppers can directly compare your listing to the many others on the exact same search page. They have your image, price, and description to go off of to make the decision of who they will purchase from.
On Shopify, you will have to drive your own traffic. No one will likely arrive at your website without something to bring them there and it will take a strategic marketing effort to drive visitors to your website. Shopify offers many tools to assist with an e-commerce marketing strategy, but it is up to you to make and execute a plan, and it will likely be a long road to get the number of visitors you want to your site. Unlike Etsy, once you've got someone to your website on Shopify, there is no direct comparison to your competitors. On your website, you have the ability to use your branding, imagery and messaging to your advantage, and convince people to stay on the site to hopefully become a purchasing customer. You have the opportunity to create an emotional response to your brand and connect with loyal customers. This visitor may stay on your website and make a purchase, or add themselves to your email list in exchange for a coupon because they might be interested in purchasing in the future. This is the hook you want in order to make your next sale easier. It is difficult to make sales, but being able to capture emails of potential customers is crucial to selling, and this is something you do not have on Etsy.
Owning your business
In both the cases of Etsy and Shopify, you technically do not own your store, as certain terms and conditions must be abided to use their services. On Etsy, your store is fragile in several ways. Let me give you two scenarios that would result in your store being shut down. The most common example is a low customer review score. Customers may leave reviews on your store following a purchase. If your store reaches over 1% in bad reviews for the amount of orders you have, your store will be banned. Your business and your audience are gone. Poof. This can be very shocking to a business owner if your entire audience is on Etsy.
Another scenario is that you have been selling mugs with a phrase such as "Good things come to those who hustle". Even though you've been selling this product for years now, someone has just trademarked the phrase, reported you, and you've got a warning for trademark infringement. Guess what? It's at Etsy's discretion if they will close your store. Many stores are closed on their third strike. Business gone. Can you believe that certain words such as "scrunchie" are trademarked so you technically cannot title your listing like that? This uncertainty is a reminder not to put all your eggs in one basket.
On Shopify, it is much less likely that your store will be closed as their terms of service are not so restrictive. But even in the case that your store is closed, your audience knows your domain name, not your Etsy store page. You also have not lost your invaluable email list and your audience will continue to return once you have your website up again.
Etsy has a cheaper start-up cost since you do not need to pay for hosting, but after a certain amount of sales, Shopify becomes the cheaper monthly solution. This suggests that it may be good to validate your product on Etsy before investing in a website. Etsy's costs are quite small. Etsy charges $0.20 to post each product for a 4-month period. Then they also charge a 3-4% + $0.25 transaction fee per sale plus credit card fees. Shopify charges \$29 per month for hosting on their basic plan. They also charge a \$0.30 transaction fee, plus a credit card fee of 2.9%. This hosting fee can be significant for someone starting a business, depending on how many sales it takes you to cover those costs. You may also have one-time costs to hire a professional developer to build your store. Remember that every platform will have similar credit card processing fees and that is simply a cost of doing business.
Business Growth & Goals
Now is when you need to think about the longterm goals of your business. On Etsy, you cannot prioritize growing your independent brand because you are limited in how you can represent yourself on the website. Using a web store, you are in complete control of your branding. You have nearly unlimited options for ensuring that you are targeting the right people to bring them to your store, and building your newsletter list which is the most valuable asset of your business. Shopify offers hundreds of tools to assist you with retargeting visitors on Facebook and Instagram, sending people reminders that they have left something in their cart, asking customers for reviews to build social proof, and more.
Knowing all this, which do I pick? Etsy may be the better solution if you want to try selling your handmade products for the first time. You want to test the waters and are not yet fully committed to driving this business forward. You may be tight on resources and want to quickly set up a store. Etsy can offer your new business some exposure.
Shopify may be the better solution if you want full control over the look and feel of your brand. Your brand may have a small audience already or you are prepared to focus on marketing to bring visitors to your website. You may have the need for powerful features on your website that will help you understand your customers and bring them back to your site for a second and third visit or until they make a purchase. Ultimately, if you want to build a strong business and brand, then Shopify is the platform for you.
How about both? Etsy can be a great place to expose your brand to a large audience. However, as you learned above, your product may appear in a search with 100,000 results and you don't want to compete on price. The best solution would be to drive traffic from marketplace visitors to your website where customers can better understand your brand and offerings. Try running both at the same time to benefit from both platforms.
If you want to start your business on Shopify and need help getting started, browse through the articles on my blog or contact me if you're in need of Shopify development services.