Why Every Etsy Seller Needs Their Own Online Store: Building Customer Loyalty, Brand Recognition, and Reducing Costs

Selling handmade products on Etsy can be appealing due to its established audience and user-friendly setup, but there are major limitations that prevent sellers from reaching their full business potential. Relying solely on Etsy may keep small business owners from building strong customer relationships, reducing operational costs, and establishing a recognizable brand. In this article, we’ll analyze the reasons every Etsy seller should consider owning their own website, covering hidden fees, Etsy’s complex search algorithm, and the benefits of full brand ownership.

1. Etsy’s Fees and Hidden Costs: What Sellers Are Really Paying

While Etsy’s user base and accessibility may draw in new sellers, the fees can quickly add up. Here’s a breakdown of the costs associated with selling on Etsy:

• One-Time Setup Fee

Etsy requires a €27 (~$28) one-time setup fee upon opening a new store, which can be a barrier for new sellers, especially if they’re testing the platform and unsure about its long-term benefits.

• Listing Fees

Etsy charges $0.20 per listing, and each listing expires after four months. While $0.20 may seem small, the cost can accumulate, especially for sellers with large inventories. For instance, listing 100 items per month would cost $20 every four months, amounting to $60 annually in listing fees alone.

• Transaction Fees

In addition to listing fees, Etsy takes 6.5% of the sale price, which includes the cost of shipping. For instance, if a product sells for $25 (with $5 for shipping), the 6.5% transaction fee applies to the total $30. This means that on every sale, Etsy is taking a substantial portion of the revenue directly from the seller’s bottom line.

• Payment Processing Fees

On top of transaction fees, Etsy charges a payment processing fee of 3% plus $0.25 per transaction in the United States (fees vary by country). This fee applies regardless of whether a sale is successful or disputed, and when combined with other fees, sellers end up losing over 10% of their revenue on each sale.

• Offsite Ad Fees

For sellers who make over $10,000 annually, Etsy automatically enrolls them in Offsite Ads, taking an additional 12-15% of each sale generated through these ads. This fee adds a substantial burden for successful sellers, especially when advertising costs aren’t transparent.

Total Fees Example: Let’s break down the cost of a $30 sale (including shipping):

• Listing fee: $0.20
• Transaction fee (6.5%): $1.95
• Payment processing fee (3% + $0.25): $1.15
• Offsite ad fee (if applicable, 12%): $3.60

In total, the seller pays $6.90 in fees for a $30 sale, meaning they keep only $23.10—losing almost 25% to Etsy fees alone. By selling directly through their own site, sellers can avoid these high fees and keep more revenue.

2. Etsy’s Search Algorithm: Limited Visibility and Competition

Etsy’s search algorithm, known as “Etsy Search,” ranks products based on various criteria, including relevancy, conversion rate, and shipping speed. While the algorithm is designed to surface relevant items to buyers, it can significantly disadvantage smaller or newer shops for several reasons:

• Established Sellers Get Priority

Sellers with a high number of sales and positive reviews are often prioritized in search results, making it difficult for newcomers or those with fewer sales to gain visibility. Competing with established shops becomes an uphill battle, especially when they have thousands of reviews and a large customer base.

• Relevancy and Tags Limit Newcomers

Etsy encourages sellers to add specific tags to improve search relevancy, but these tags can be tricky. For example, popular tags like “handmade jewelry” or “personalized gifts” are often overused, leading to intense competition. Sellers frequently find their products buried under pages of similar listings, which limits their exposure to potential buyers.

• Paid Ads Dominate Search Results

Etsy’s internal ad system further restricts organic search results. To improve their visibility, sellers must pay for Etsy Ads, which places them in the “Promoted Listings” section. However, Etsy Ads can quickly become costly and aren’t always effective, as sellers often report low ROI on these ad expenses. Relying on Etsy’s search algorithm alone can make it difficult for a shop to stand out, especially if they aren’t able to invest in paid advertising.

3. Why Your Own Store with a Blog Is Essential for Brand Building and Customer Loyalty

Unlike a personal website, Etsy’s platform limits the branding options available to sellers, preventing them from truly standing out. Here are some benefits of owning your own site:

• Full Control Over Design and Branding

Etsy restricts design elements to a basic storefront with limited customization options. On a personal website, sellers have full control over the look and feel of their site, from color schemes and fonts to layout and branding elements. This flexibility helps to create a memorable brand experience that resonates with customers and builds loyalty.

• Ability to Collect Customer Data

On Etsy, sellers are restricted from collecting email addresses or other customer data unless the customer opts into an external newsletter. Having a personal website allows sellers to gather valuable customer insights, such as purchasing behavior and preferences, which can be used for targeted marketing efforts and personalized follow-ups.

• Reduced Competition

A major disadvantage of Etsy is that customers are constantly presented with alternative products from competitors. Even when they visit a specific shop, Etsy’s algorithm shows “Related Items” from other stores, which can easily drive potential customers away. On a personal website, there’s no risk of competition directly on the page, which keeps the focus on the seller’s products alone.

• Opportunity for Better SEO and Marketing

Etsy’s search optimization may be beneficial for attracting Etsy users, but it doesn’t support sellers in optimizing their pages for Google or other search engines. A personal website can be optimized for broader search engine results, making it easier for sellers to reach audiences beyond Etsy’s platform. Additionally, with the flexibility of content marketing, blogging, and social media integration, sellers can drive organic traffic to their own website, reducing their dependency on Etsy.

4. Cost Comparison: Etsy vs. Running Your Own Website

While a personal website comes with its own expenses, these costs can often be lower than Etsy’s accumulated fees over time, especially as a shop grows.

• Domain and Hosting

A basic website with a custom domain costs around $10-15 per year for the domain, with hosting fees ranging from $5-30 per month, depending on the provider. Popular platforms like Shopify or Wix start at around $29 per month, offering more extensive design and marketing features than Etsy. As an alternative, you can create your own store on Linkey, which is free to use until your sales reach $100. Linkey doesn’t take a percentage from sales and instead has a fixed monthly subscription fee of $10.

• Payment Processing Fees

Unlike Etsy, Linkey doesn't charge any fees and you pay only payment processing fees, which range from 1.5% + $0.30 to 2.9%, depending on the provider you use (Stripe or something else). This alone can save sellers several percentages on each sale.

• Marketing and Customer Engagement

While marketing costs can vary, having a standalone website allows sellers to leverage SEO, content marketing, email campaigns, and other low-cost marketing techniques that provide long-term benefits without Etsy’s additional ad fees. Sellers can control their marketing budget and use it to target their ideal audience.

Conclusion: Why Every Etsy Seller Should Consider a Personal Website

Selling on Etsy offers convenience, but for most sellers, the long-term benefits of a personal website far outweigh the drawbacks of Etsy’s fees, competitive search algorithm, and branding limitations. By investing in a personal website, sellers can:

• Increase Profit Margins: Eliminate or reduce transaction and listing fees, keeping more revenue per sale.
• Build Brand Recognition: Establish a unique brand identity and a loyal customer base, free from direct competition on the same page.
• Gain Full Control: Customize design, optimize SEO, and retain access to customer data for targeted marketing.
• Enhance Customer Loyalty: Foster a branded experience that customers will remember, leading to higher repeat purchase rates.

For Etsy sellers ready to expand, the benefits of a personal website are clear: it enables sustainable growth, reduces fees, and gives them full ownership of their brand and customer relationships.