The Shopify vs Etsy Matchup: Which is Best For Your Small Business?

You’ve developed your product line, researched the competition, and are ready to let your small business soar. The next question is: where should you build your launchpad?

Let’s look at two popular places to sell stuff online: Shopify vs Etsy.

  • Shopify is an ecommerce platform that lets you build a branded online shoppable website. You control your site but need sound marketing strategies to attract customers.
  • Etsy is a marketplace for third-party sellers, similar to Amazon and eBay. It has a built-in customer base, and you must operate within Etsy’s platform and rules.

The right home for your small business depends on what you’re selling online and your ultimate goals. Let’s sort through the key features of Shopify vs Etsy to help you decide which digital storefront is best for you.

Shopify vs Etsy: How they work

When you’re selling online, customers need a way to browse inventory, add products to a cart, and pay for them. There are two main ways to reach your target audience — a branded website or a third-party marketplace.

How Shopify is set up

More than one million businesses, mostly small and medium-sized companies, pay a monthly fee and sell online with a website hosted by Shopify.

Shopify’s web-based software offers a wide range of functionality. You can:

  • Build an ecommerce store and customize its look and feel
  • Use your own domain name
  • Manage inventory
  • Set up a blog
  • Create discount codes
  • Sell through channels like Facebook and Amazon
  • Process point-of-sale purchases at pop-up shops and craft fairs
  • Add plugins that let you conduct marketing campaigns

How Etsy is set up

Etsy’s online marketplace brings together third-party sellers who create handmade gifts and collectibles. One of the world’s top online marketplaces, Etsy boasted 2.5 million active sellers in 2019. The site is used mostly by entrepreneurs with limited resources. Most sellers start on Etsy to supplement income and 95% work from home. Only about 18% of Etsy entrepreneurs are full-time sellers on the platform.

With Etsy’s functionality you can:

  • Set up a shop name under the Etsy domain
  • Organize your product lineup
  • Manage inventory
  • Set up sales and discounts
  • Pay to sponsor or feature your shop on Etsy’s main pages
  • Tag your products for easy customer search results
  • Direct message with your customers via Etsy’s chat
Bottom line: Etsy offers a very easy way to get your products online and into the hands of customers. Shopify offers more opportunities to brand and grow your business.

What can you sell on Shopify vs Etsy?

Does one of these choices limit the options for what you can sell online? Let’s check it out.

Things you can sell on Shopify

Developing an all-natural cosmetics line? Selling organic flour? Promoting a fitness routine you’ve developed? Once you create your Shopify online store, you have the flexibility to stock it with any mix of both goods and services you think will appeal to customers. You can set up appointments and schedule meetings for service-based businesses using Shopify.

Things you can sell on Etsy

Etsy has carved a niche for unique, handcrafted items such as jewelry, clothing, home decor, and art.

DIY kits, handcrafted jewelry, homemade skin and body care are all things you’ll commonly find sold on Etsy. Etsy doesn’t allow the sale of services, however, sellers can connect with customers through direct messaging in the platform to offer custom services— like tailoring curtains to a specific length.

Bottom line: You can use Shopify to sell a variety of both goods and services. Etsy is only an option for those who sell handcrafted or vintage items.

Branding your Shopify and Etsy stores

example of a branded shopify store

Branding shapes how customers see your business. You can inspire them to feel special and pampered, bold and adventurous, or socially aware. A brand helps a small business to stand out and, over time, cultivates loyalty.

Branding options on Shopify

Shopify lets you customize an online store that showcases your brand’s personality. Are you selling elegance, playfulness, or vitality? Using the platform’s drag-and-drop builder, you can convey your brand to customers by:

  • Choosing a theme
  • Adding your logo
  • Selecting colors
  • Customizing fonts
  • Creating a brand experience

By shaping your online presence to match the rest of your marketing collateral, you can make sure customers start to recognize and remember your brand.

Branding options on Etsy

Etsy’s own brand is the driving force behind its online marketplace. The platform provides minimal customization for sellers in order to preserve its own look and feel. Etsy customization options include:

  • Uploading a custom Etsy shop banner
  • Uploading your brand’s logo
  • Writing a shop description to tell your brand’s story
  • Add a shopowner photo (that’s you!)
Bottom line: Brand strategy is important to a company’s growth potential. Both options allow you to upload the basics like your logo and custom banners, but you’ll find more customization on Shopify.

Finding customers on Shopify vs Etsy

example of how etsy curates and suggests products to customers

Once you’ve set up shop, you need to get your fabulous products into your customers’ hands. Here’s where Shopify and Etsy vary greatly.

Connecting with customers on Shopify

On Shopify, it’s up to you to entice customers to your site through solid marketing strategies. You’ll need to use the power of branding, social media, digital ads, email campaigns, and other tactics to attract your target audience.

Connecting with customers on Etsy

Etsy is a destination marketplace with loyal shoppers. In 2019, the platform had over 39.4 million active buyers worldwide, and 41% were repeat-buyers. This gives you the potential to reach a built-in audience, but with 65 million listings on the marketplace, there’s hefty competition. We still recommend investing in other marketing outside of Etsy to send customers to your shop.

Bottom line: A Shopify website requires a commitment to marketing strategies to drive traffic. Etsy offers an existing customer base, but without the ability to brand, it can be hard to set yourself apart.

How much does it cost to use Shopify vs Etsy?

shopify fees for setting up an online store

Shopify fees

Shopify charges monthly fees based on the package you choose.

  • Basic Shopify is $29 per month and ideal for new businesses
  • Shopify is $79 per month and ideal if you also have a retail location
  • Advanced Shopify is $299 per month and suitable for growing businesses with more than two retail locations

Shopify doesn’t charge a transaction fee if you use Shopify Payments to accept payment from customers, but you do pay the online credit card rate. Credit card rates on Shopify range from 2.9%-2.4% +30c depending on the plan you choose. It also costs $14/year to buy a domain name through Shopify.

Etsy fees

It’s free to set up an Etsy account. You’re charged fees once you stock your shop and begin selling.

  • Listing fees: $0.20 USD for each item listed, which may stay up for four months
  • Transaction fees: 5% of total charged to the buyer, including shipping and gift wrap fees
  • Processing fees: 3% of the total transaction plus $0.25 USD per transaction. These fees vary by country.

Etsy also advertises on search engines and social media platforms. If you make a sale within 30 days because of their ad, Etsy takes a 15% fee.

Bottom line: The initial start-up costs are lower on Etsy. If your inventory and sales volume increase, a monthly Basic Shopify package may be more cost-effective.

How do you get paid on Shopify and Etsy?

getting paid with shopify

Shopify Payments and Etsy Payments are proprietary systems that let you accept credit cards, Google Pay, Apple Pay and other payments from customers. You don’t need to set up any additional accounts.

Shopify lets you use external gateways and third-party payment providers if you wish (like Afterpay). You must use Etsy Payments.

Getting paid on Shopify

Payments from Shopify customers get deposited into your Shopify account. The funds are sent to your bank in two business days (in the United States). Deposits are paid out daily, but you can choose weekly or monthly payouts if you prefer.

Funds may take an additional two to three days to appear in your bank account.

Getting paid on Etsy

Payments from Etsy customers are deposited into your Etsy Payments account. You can choose to be paid out daily, weekly, biweekly, or monthly. Funds are sent to your bank as scheduled as long as there’s a minimum of $25 USD in your account.

Funds may take an additional three to five business days to appear in your bank account.

Bottom line: Both Shopify and Etsy make it easy for you to accept a variety of forms of payment from customers using their payment systems. Etsy requires a minimum threshold before paying funds to your bank account.

Shopify vs Etsy: The last word

We’ve covered a lot of ground in the Shopify vs Etsy matchup — so which one’s going to help your business thrive?

To sum up, Shopify offers scalability for small businesses that want to brand and grow over time. Etsy gets handcrafted products in front of a niche audience quickly, but lacks custom branding options.

Can you use both Shopify and Etsy?

Sure! You can sell on both if your products fit Etsy’s niche. You can open an Etsy shop with minimal investment and start selling online right away.

If your goal is to expand and build your business, you can add a Shopify store later as you develop your branding strategy and marketing tactics.

What we like most about Shopify

  • Ability to customize and brand digital space for selling online
  • Additional functionality to help grow your business

What we like least about Shopify

  • Requires significant marketing effort to drive traffic to your site

What we like most about Etsy

  • Well-known online marketplace with built-in customer base
  • Easy to open a shop and get started

What we like least about Etsy

  • Lack of customization

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