How Does Etsy Work?

If you’ve shopped online any time in the last, say, 15 years, you’ve probably come across a little site by the name of Etsy at least once in your life. While you might not have clicked the link or browsed the products in your Google search results, you’re undoubtedly aware of the fact that Etsy is an e-commerce site that exists alongside some of the greatest titans in the online shopping space.

But what exactly is Etsy? What is the site’s history? How does it work, and what is the Etsy experience like for both buyers and sellers? Here’s what you need to know.

Etsy Explained

Simply put, Etsy is an online marketplace that — unlike Amazon, Walmart, Target, or other e-commerce giants — specializes exclusively in handmade and vintage goods. The site was founded by Rob Kalin, Chris Maguire, and Haim Schoppik back in June 2005.

The trio created the site as a result of a common need: they needed a one-stop shop where they could sell their handmade goods on the Internet. Such a site didn’t exist at the time, so Kalin, Maguire, and Schoppik decided to make one themselves. Thus, Etsy was born.

The company’s name is derived from the Italian word “etsi,” which means “oh, yes!” (Which is exactly what individuals who make handmade products and curate vintage goods were saying back when the site was founded.)

At first, the site was nothing more than a tiny little thing. With only a few hundred users in the early years, Etsy was merely a tight-knit but global community of small-time artists, collectors, and craftspeople. While it didn’t stay small forever, that sense of a tight-knit community that spanned the world remained foundational to the success of the site.

In time, Etsy’s one-of-a-kind mission statement — an unwavering focus on supporting small, independent artists and a commitment to providing a place for high-quality handmade goods to be sold — is what allowed it to grow into the massive online marketplace it’s known and loved as today.

This is also how the site is able to stand out in the face of larger online retailers: No one else can even come close to matching the sheer volume of unique and vintage items found on Etsy. Today, the site boasts nearly 400 million visits a month and more than two million unique sellers.

Etsy: Key Figures

5 Must-Know Facts About Etsy

1. Etsy is an e-commerce platform known best for its focus on creativity and individuality. The site allows sellers to create unique and personalized products or curate vintage goods that might not be found in traditional retail stores. Likewise, buyers are able to purchase one-of-a-kind items and support independent artists and entrepreneurs while they’re at it.
2. Etsy makes money through a number of different charges and fees throughout the buying and selling process. For instance, Etsy charges a listing fee to sell items and takes a percent cut from each sale made. While that might sound like an inconvenience, Etsy’s fees are actually far lower than on other online e-commerce platforms.
3. The Etsy community of buyers and sellers is known for being incredibly strong and close-knit. Etsy users often share tips and tricks as well as advice and support with one another — a valuable resource for sellers, without a doubt. (Especially those looking for ways to better their business, their products, or their policies.)
4. Etsy prioritizes sustainability, as well as social and environmental responsibility, as foundational pillars of their company. In doing so, Etsy asks its sellers to utilize eco-friendly tools and materials. The site also promotes fair labor practices, social justice, and equality in the e-commerce industry.
5. Depop — an app for buying and selling used or vintage clothing — was purchased by Etsy in 2021 for $1.6 billion. It was the most expensive acquisition in Etsy’s history by far, but the company ultimately decided it would be best to allow Depop to continue to operate independently. This speaks to Etsy’s commitment to independent sellers, as well as its mission statement overall.

Here is a brief overview about Etsy and how it works for further reference:

Using Etsy

As you’ve previously learned, there are two main uses for Etsy: buying products and selling products. These are the two sides of Etsy, in essence. One side is for buyers, and the other is for sellers. But what exactly is it like to use Etsy for each one of these purposes? Let’s take a look at the fundamentals of buying products on Etsy, then do the same for selling products on Etsy.

Buying Products On Etsy

Shopping on Etsy begins like any other online shopping experience: with browsing. You can browse Etsy based on categories, or you can search for specific types of items in the search bar at the top of the site.

These categories include anything and everything from jewelry to clothing to home decor to beauty products and numerous other handmade and vintage categories in between. You can also browse by seller and sort the results according to ratings or other specific parameters.

As you shop, you can click on items you’re interested in to read more about the item’s details. This details section should include all the information you need to know about the item, including pricing, sizing, materials used in the product, and any other relevant info pertaining to sustainability, environmental impact, and so on.

The details section should also include a number of photos of the product so that you can see it from all angles before you buy. If you like what you see, you can add the item to your cart and check it out. This process is not unlike the one you’ve gone through countless times on other e-commerce sites.

Once you’re ready to check out, you will be asked to review your cart and confirm your purchase. Once you’ve placed it, your order will soon be fulfilled by a small or independent retailer. On Etsy, this usually entails unique packaging, handwritten notes, and other personal touches.

Selling Products On Etsy

The other side of Etsy’s site is the side reserved for sellers. (After all, what would an e-commerce platform be without the goods and services for sale?) For sellers, the first thing to do is to set up an online storefront through Etsy’s site.

You determine your shop name, your shop description, and the policies you wish to enact through your storefront. (This includes things like shipping and return policies, sales and discounts, and so on.) Etsy also gives sellers the ability to set custom banners, profile pictures, and other customizable features to give your shop a unique look.

Once a seller has established their Etsy shop, they can begin listing items. Each item needs extensive details, including pricing, sizing, materials or ingredients used, and any other relevant information pertaining to things like sustainability or environmental impact. (In other words, you’re hoping to answer all the buyer’s questions about the product before they even need to ask them.)

This is also the point where you upload plenty of photos of your product or item. When an order comes through, Etsy will notify you that it’s time to start packing and shipping the item.

Etsy gives sellers the ability to communicate with buyers. This comes in handy, as some customers may have questions about shipping, coupons, issues with purchases, and so on. After the product has been delivered and approved by the customer, the seller will receive their funds from Etsy.

The platform will take a cut in a number of different ways (including a listing fee, a percentage of the final sale, and a shipping fee). With luck, sellers will create a large pool of repeat customers who keep coming back for more great products and items.

The History of Etsy

From Etsy’s humble beginnings in 2005 to their initial public offering (IPO) in 2015, Etsy managed to grow from a small marketplace for handmade and vintage goods to a massive e-commerce destination that millions called home. For the record: that IPO that came with Etsy’s ten-year anniversary? It raised a whopping $267 million.

With more than a quarter of a billion dollars raised, Etsy was able to continue its widespread expansion and rapid growth, effectively becoming an even better site with more advanced features and even greater services for buyers and sellers alike. Of course, the history of Etsy has not always been so sunshiny.

The e-commerce platform has faced its fair share of challenges over the years. Namely, the struggle of balancing continued growth with the company’s fundamental commitment to uplifting small businesses and prioritizing independent creators.

As Etsy has grown larger and larger over the years, numerous sellers have gone as far as to leave the platform. They’ve even criticized the company for what they perceived as a prioritization of profits over people. Regardless, millions of other independent sellers continue to trust Etsy to this day.

In recent years, the platform has seemingly taken these criticisms to heart. As a reaffirmation of its commitment to the cause, the site has enacted several key changes. These include an increased focus on handmade and vintage items, as well as a greater emphasis on ethical and sustainable sourcing of goods.

Etsy has also introduced a program that makes it easier for small businesses to enter into retail spaces, dubbed Etsy Wholesale. These adaptive responses show that they’re committed to staying one of the most trusted and reliable e-commerce platforms for small and independent creators.

The image featured at the top of this post is ©Sergei Elagin/Shutterstock.com.