Amazon Handmade vs Etsy: Best Option for Handmade Sellers?

Updated on:
March 29, 3023

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Handmade sellers are individuals or small businesses who create, design, and produce handmade items to sell to consumers; Amazon and Etsy comprise a large share of the online market for these handmade goods.

Handmade products are often home-based businesses focused on creating crafts, jewelry, clothing, pet supplies, accessories, home decor, games, stationery, and more. Handmade sellers typically use their skills and creativity to create or alter unique products that cannot be found in mass-produced retail stores.

Many handmade sellers operate their own online stores but sell their products through e-commerce platforms such as Amazon and Etsy. Offering items on the Etsy platform or through Amazon offers massive advantages over going exclusively through your own website, but which is the better company for your handcrafted goods?

Amazon: An Overview

Amazon.com was founded by Jeff Bezos in 1994 as an online bookstore in his garage in Seattle, Washington. The company went public in 1997 and expanded beyond books to include other products such as electronics, clothing, and toys. In 2002, Amazon launched its Amazon Web Services (AWS) platform, which provides cloud computing services to businesses and individuals.

Over the years, Amazon has continued to expand its offerings and services. In 2005, Amazon introduced Amazon Prime, a subscription service offering members free shipping and other benefits. In 2007, the company launched the Kindle e-reader and later developed the Amazon Fire tablet.

Amazon has acquired numerous companies, including Audible, Whole Foods Market, and Twitch. In recent years, the company has become one of the largest retailers in the world and has diversified into areas such as healthcare, entertainment, and artificial intelligence.

Today, Amazon is one of the world’s most valuable companies, with a market capitalization of over $1.5 trillion as of 2021. The company is known for its customer-centric approach, fast shipping times, and innovative products and services. The Amazon marketplace for handmade goods is known as Amazon Handmade.

Advantages of selling on Amazon for handmade sellers

Large customer base

One of the key advantages of business owners selling handmade products on Amazon is its large customer base. Amazon customers have made the site one of the largest e-commerce platforms in the world, with over 300 million active users as of 2021. This means that when you sell on Amazon Handmade, you have access to a vast audience of potential buyers, which can be a significant advantage for sellers looking to reach a broad customer base.

In addition to its large customer base, Amazon also offers a number of features and tools that can help sellers reach new customers and increase sales. For example, Amazon’s Prime shipping program allows sellers to offer free two-day shipping to Prime members, which can be a major selling point for customers looking for fast and convenient shipping options. Amazon also offers a range of advertising and promotion tools, such as sponsored products and deals, that can help sellers increase visibility and attract new customers.

Ability to sell both handmade and mass-produced items

For e-commerce businesses, Amazon offers the ability to sell both handmade and mass-produced items. While some handmade sellers may prefer to sell items only in the handmade category, others may want to offer a mix of handmade and mass-produced items to increase their overall sales and appeal to a wider audience. Amazon’s platform allows sellers to do this by offering both handmade and manufactured products in one marketplace.

By allowing sellers to sell handmade and mass-produced items, Amazon provides a unique opportunity to reach a broader audience and increase their overall sales. For example, a seller who creates handmade jewelry may also offer a selection of manufactured jewelry to appeal to customers who are looking for a wider variety of options. Similarly, a seller who makes handmade home decor items may also offer manufactured home decor products to attract customers with different tastes and preferences.

Prime shipping

Prime shipping is a program offered by Amazon that allows customers to receive free two-day shipping on eligible products. This is a major selling point for customers who are looking for fast and convenient shipping options, and it can be a significant advantage for sellers looking to attract and retain customers.

To be eligible for Prime shipping, handmade sellers on Amazon must meet certain criteria. For example, the product must be listed as “handmade” and shipped from the seller’s location. The seller must also meet certain performance metrics, such as high on-time delivery and low cancellation rates.

If a seller’s products are eligible for Prime shipping, they will appear with a Prime logo next to the product listing. This can be a significant advantage for sellers, as products with the Prime logo tend to receive more visibility and are more likely to be purchased by customers.

In addition to Prime shipping, Amazon offers other shipping options for handmade sellers, such as standard and expedited shipping. Sellers can choose which shipping options they want to offer and can set their own shipping rates and delivery times.

Disadvantages of selling on Amazon for handmade sellers

Barrier to Entry

Amazon requires handmade sellers to register for a seller account (known as Seller Central) and complete an application process to sell goods onsite. While this extended signup process ensures all handmade sellers meet Amazon’s standards, it creates slight difficulties that won’t be present if you’re selling handmade goods through Etsy or even your own site.

That’s not to say there aren’t advantages to the hassle. Amazon FBA, Amazon’s fulfillment service, means you’ll be able to ship your homemade goods with Amazon’s famous two-day shipping, giving customers that fast fulfillment they’ve come to expect. Your Central Account gives you access to ads and other marketing features.

High(er) fees

The selling fee structure for Amazon Handmade sellers is similar to that for selling other products on the platform. Here are the main fees that sellers can expect to pay:

  1. Referral fee: Amazon charges a referral fee on each sale, which is a percentage of the total sale price (including shipping and handling). The fee varies depending on the product category, but the referral fee is 15% of the total sale price for most handmade items.

  2. Variable closing fee: In addition to the referral fee, Amazon also charges a variable closing fee on some product categories. For most handmade items, the closing fee is $1.00 per item sold.

  3. Subscription fee: Sellers who sell more than 40 items per month are required to pay a monthly fee of $39.99. However, if a seller does not sell more than 40 items per month, they can choose to pay a $0.99 per item fee instead of the subscription fee.

  4. Shipping fees: Sellers are responsible for covering the cost of shipping their products to customers. However, Amazon does offer discounted shipping rates through its partnership with USPS.

Amazon’s handmade plans are more expensive than Etsy’s, which can affect cash flow (and possibly even necessitate some short-term business financing). However, their plans become more economical as sales increase.

Less focus on unique, handmade items

Compared to Etsy, Amazon Handmade has historically had less focus on handmade items. While the program is designed specifically for sellers who create handmade products, the platform also allows sellers to offer manufactured items, which can make it difficult for handmade sellers to stand out and differentiate themselves from other sellers.

You might sell high-quality handbags on Amazon Handmade with impressive functionality, but you’re going to compete with Louis Vuitton on the same site.

One of the challenges with having less focus on handmade items is that it can make it more difficult for handmade sellers to connect with customers who are specifically looking for unique and authentic handmade products.

While there are many customers on Amazon who are interested in handmade items, the platform also caters to a broad audience of customers who may be looking for a wider range of products, including manufactured items.

Etsy: An Overview

Etsy.com was founded in 2005 by Robert Kalin, Chris Maguire, and Haim Schoppik as an online marketplace for handmade and vintage items. The company’s name comes from the Italian word “etsi,” which means “oh, yes.”

Initially, Etsy was a small community of artists and craftspeople selling their handmade goods, but it quickly grew in popularity. In 2008, the company raised $27 million in funding, and in 2011, it became a certified B Corporation, meaning it met certain social and environmental standards.

Over the years, Etsy shops have expanded their offerings and services to include digital products, craft supplies, and more. In 2015, the company went public and has since acquired several other companies, including Reverb, a marketplace for musical instruments.

Etsy is also recognized for its commitment to sustainability and ethical business practices. The company has implemented initiatives to reduce its carbon footprint, support small businesses, and promote diversity and inclusion.

Today, Etsy is one of the largest online marketplaces for handmade and vintage items, with over 4.4 million active sellers and 90 million active buyers as of 2021. The company’s mission is to “keep commerce human,” and it continues to support independent creators and small businesses around the world.

Advantages of selling on Etsy for handmade sellers

Niche audience of handmade and vintage enthusiasts

Etsy’s niche audience of handmade and vintage enthusiasts is one of the key advantages for sellers on the platform. Unlike other e-commerce platforms such as Amazon, Etsy focuses specifically on handmade and vintage items, creating a unique community of buyers and sellers who appreciate the value of handmade and one-of-a-kind items.

By catering to this audience, Etsy has created a marketplace that allows sellers with Etsy accounts to connect with buyers who share their values and appreciate their products. This can be particularly beneficial for sellers who create unique or specialized items that may not appeal to a broader audience. By reaching a targeted audience of handmade and vintage enthusiasts, sellers can build a loyal customer base and establish their brand in a way that may not be possible on other e-commerce platforms.

Lower fees

Etsy’s fee structure for sellers is designed to be relatively simple and transparent. The platform charges a few different fees, which are as follows:

  1. Listing fee: When a seller lists an item for sale on an Etsy store, they are charged a listing fee of $0.20 per item. This fee is charged regardless of whether the item sells or not, and it covers the cost of listing the item on the site.

  2. Transaction fee: When sellers make a sale on Etsy, they are charged a transaction fee of 6.5% of the total sale price (including shipping and handling fees). This fee covers the cost of processing the payment and providing customer support.

  3. Payment processing fee: When sellers receive payment for a sale on Etsy, they are charged a payment processing fee, which varies depending on the payment method used. For example, the fee for processing payment through Etsy Payments (Etsy’s in-house payment processing system) is 3% + $0.25 per transaction.

In addition to these fees, Etsy also offers a few optional paid services for sellers, such as promoted listings (which allows sellers to pay to have their items appear higher in search results) and Etsy Ads (which allows sellers to advertise their items on and off Etsy).

Etsy’s fee structure is generally lower than other e-commerce platforms, such as Amazon, which can appeal to sellers looking to keep their costs low. The platform also provides a clear breakdown of fees, making it easy for sellers to calculate their earnings for each sale.

Community support

Community support is an important aspect of Etsy’s platform and can take many forms. Here are a few examples:

  1. Forums: Etsy’s forums are a place where sellers can connect with one another, ask questions, share advice, and offer support. There are forums dedicated to different topics, such as marketing, photography, and shipping, as well as forums for specific groups, such as Etsy sellers based in a particular country.

  2. Teams: Etsy’s teams are groups of sellers who come together to support one another and collaborate on projects. Teams can be based on a shared interest, location, or other criteria, and they often organize events, share resources, and offer encouragement to one another.

  3. Education: Etsy offers a variety of resources to help sellers improve their skills and grow their businesses. These resources include online classes, workshops, and tutorials on topics such as product photography, SEO, and branding.

  4. Feedback: Etsy encourages buyers to leave feedback for sellers, which can be a valuable source of support and encouragement. Positive feedback can help sellers build their reputation and attract more customers, while constructive criticism can help sellers improve their products and services.

Disadvantages of selling on Etsy for handmade sellers

Smaller customer base

While Etsy’s niche audience of handmade and vintage enthusiasts is a key advantage for many sellers on the platform, it can also be a disadvantage in some respects. One of the main drawbacks of Etsy’s customer base is that it is relatively small compared to other e-commerce platforms such as Amazon.

This can be a challenge for sellers who rely on high-volume sales or who sell products that may appeal to a broader audience. Because Etsy’s customer base is more focused on handmade and vintage goods, there may be less demand for certain types of products or less competition to drive prices up.

Limited to handmade and vintage items only

One of the defining features of Etsy’s platform is that it is limited to handmade and vintage products. While this can be a major advantage for sellers who create handmade goods, it can also be a limitation in some respects.

The main drawback of Etsy’s focus on handmade products is that it limits the types of products that can be sold on the platform. For example, sellers who create digital products or mass-produced items may be unable to sell on Etsy, which can be a disadvantage if those products are a significant part of their business.

Additionally, because Etsy is focused exclusively on handmade products, there may be less competition among sellers for certain types of products, which can lead to lower prices and profit margins. However, this can also be an advantage for entrepreneurs who are able to offer unique and high-quality handmade items that cannot be found elsewhere.

Less emphasis on advertising and marketing

Compared to Amazon, Etsy has historically had less focus on marketing and advertising and more on creating a haven for retailers. While Amazon invests heavily in advertising and promotions to drive traffic to its site, Etsy has traditionally relied on word-of-mouth marketing and organic search traffic to attract buyers.

One reason for this difference is that the Etsy marketplace has historically been focused on building a community of sellers and buyers who share a passion for handcrafted items, rather than simply driving sales and profits. This community-focused approach has helped to create a loyal customer base and a unique marketplace for handmade goods, but it has also meant that Etsy has been less focused on aggressive advertising and marketing campaigns.

However, in recent years, Etsy has invested more in marketing and advertising initiatives to drive growth and attract new buyers. For example, the company has launched a number of advertising programs, such as Etsy Ads and promoted listings, which allow sellers to pay to have their products featured more prominently on the site. Etsy has also invested in SEO and social media marketing to improve its visibility and attract new customers.

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