Guest Post: Why Etsy Was My Marketplace of Choice

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By Ricardo Lugo, Ecommerce & Customer Experience Consultant

The ecommerce industry has seen exponential growth, with 2022 already projected to double revenues from just 4 years ago. A large part of this growth is due to ecommerce platforms that now enable businesses to set up their own online website without any coding experience. More businesses that previously did not have the tech-savviness to do so, can now reach more clients through their direct online channel. 

I was part of this growth when I leveraged Shopify’s platform to start an online custom tshirt clothing store in 2020. However, after some modest success I realized that running your own online direct-to-consumer clothing company requires heavy investment to penetrate a very saturated market. Marketing campaigns became very expensive, and time and resources needed to optimize these campaigns eliminated time to focus on other tasks such as:

  • Designing new products 
  • Researching for new products and trends
  • Writing product descriptions and keywords
  • Running online and offline marketing campaigns 
  • Optimizing the website’s customer experience
  • Managing manufacturing and fulfillment of orders
  • Managing customer service
  • Tracking shipping information
  • Analyzing data and sales performance
  • Tracking taxes and other legal responsibilities

In my first year managing all of these day-to-day operations I struggled with reaching the right customers online. After analyzing my data, I realized that I was being effective in generating repeat purchases, but I was having issues converting customers into buyers once they were on the website. In other words, my customer acquisition cost was through the roof (an industry analysis by Marketing Signals suggests that 90% of online ecommerce businesses fail in the first 4 months of operation in part to this high customer acquisition costs).

There are a lot of options for customers online. Ecommerce may be growing, but so is the competition.

In order to maintain my business profitability, I needed to find a way to increase conversion rates without increasing marketing expenditure. At the time, manufacturing, shipping, and fulfillment represented almost 50% of production costs (I was using a dropshipper to reduce initial investment costs such as warehousing and employees, but they take a higher cut of each unit sold). On top of that I had marketing costs, which along with other expenses like hosting, software, and taxes, reduced my profit margins to minuscule numbers. So, I needed to find a solution that could drastically decrease my marketing expenditure and increase revenue.

The Etsy Marketplace was the Solution

I turned to selling on a marketplace to solve this problem — more specifically, Etsy. Partnering with them meant being part of a very large marketplace that averages ~400 million ready-to-buy visitors per month, at virtually no cost. In less than 60 minutes I had my own online store up and running with more than 30 products imported over without having to spend any monthly fees or hosting costs of any kind.

Other marketplaces provide tools and solutions similar to Etsy such as eBay, Facebook Marketplace, and Amazon. And although Amazon can give you more visitors than Etsy, the process to import products into their inventory system through a dropshipper or third party manufacturer is cumbersome. Inventory management on Amazon is not as intuitive, which can delay the set up process. Additionally, an Amazon business account's monthly cost and fees are higher than Etsy’s. I do recommend tapping into Amazon eventually, but for a young business from a ROI perspective it’s better to start off with Etsy — it will take less time and resources to do so.

On the other hand, Facebook Marketplace and eBay are similar to Etsy in the quick set up and low starting cost, but they are marketplaces more geared towards the resale of products and not for the customized high quality t-shirts that I was offering. 

Marketing Optimization on Etsy

Etsy ultimately was the best solution to increase my marketing effectiveness. My average conversion rate through my own website at the time was 1.1%. When I started running ads on Etsy my conversion rate increased to 3.7%. Their algorithms do a great job of matching your keywords with the right prospective buyers. Additionally, they will increase your position on Etsy while also providing offsite ads on Google, Facebook, Instagram, and Pinterest.

Etsy also allowed me to automate personalized email campaigns. I could send messages with special offerings to particular customer segments such as customers who had already purchased from me, users who had followed the store, or those who had favorited a particular product listing. I no longer have to spend time optimizing my marketing campaigns or improving the customer experience of the site, I could now spend most of my time designing products and listing them accordingly. 

Growing within Etsy

Another advantage I saw with Etsy was that it provides opportunities to grow within their platform. For example, based on customer reviews they can automatically categorize a store as a star-seller (this increased sales by 10% in one particular month for me). It also allows you to integrate with:

Using their full marketing suite allowed my customers to search for a product, view on one of my ads, favorite that listing, receive a special coupon email, make a purchase, receive tracking information, get the order, receiving a thank you email, getting a star-seller review, and make a repeat purchase, without me lifting a finger

I was able to cut down my marketing expenditure by 40% while increasing sales by 20%, which drastically increased my ROI and allowed the business to survive through that first year. 

Ricardo Lugo, Etsy Seller, shares why he chose to work with Etsy to sell custom t-shirts online

Etsy as a Marketplace Partner 

I’ve found Etsy to be a market leader in teaching sellers about ecommerce in general and how to improve your online store in their ecosystem.  Their site provides seller handbooks with instructions and guidance on:

  • Writing product descriptions and keywords
  • Product photography
  • How to be found by prospective buyers
  • Shipping 
  • Branding and marketing
  • Legal
  • Pricing 
  • Taxes and Finance 
  • Productivity (not just the store, but personal)
  • Growth
  • Seasonal tips

Additionally, they provide a community where you can interact with Etsy specialists and other Etsy stores for advice and guidance. Anytime I’ve accessed my Etsy sellers portal there’s a “here’s how we can help your business” vibe. The site is filled with shop advisor tools, shipping advice content and updates and notifications on key trends, seasonal trends, key dates for marketing campaigns, best practices on how to best photograph and record videos from mobile devices, financial dashboards with insights per listing, insights on how shoppers are finding your products, conversion rates and social media data. 

Overall, Etsy was the right solution for my young business to increase reach, sales, improve marketing effectiveness and grow as an ecommerce brand.

Ricardo Lugo is an ecommerce and customer experience consultant with over 7 years of experience in the digital marketing and ecommerce space. Ricardo began his career working in a small advertising firm in which he specialized on social media content creation, and marketing campaigns. Later he made the jump into consulting working in online strategy for Fortune 500 companies. More recently he has started an online t-shirt business that he manages on the side, as well as a digital media business that summarizes books for the spanish-speaking market with over 40,000 followers in just 7 months.

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