If you’re a small-business owner hoping to sell online, one of your most important decisions is choosing the right digital home for your products. While there are many factors to consider, between Shopify and Etsy, Etsy may be a better choice for new businesses or those that sell very few items and don’t need to build a dedicated store yet.
Through Shopify, you’ll build a standalone e-commerce store with its own domain name that you can customize and manage however you see fit. Etsy, on the other hand, is a marketplace, like Amazon or eBay, through which you may list your products. It’s not a fully-fledged store, and as you’re working within the platform’s parameters, you won’t have the same, almost unlimited freedom to design and manage your Etsy store as you would your Shopify store. Because of that crucial difference, it’s hard to make a one-to-one comparison of Shopify vs. Etsy — and some business owners use both platforms in tandem.
Consider using Etsy as a testing ground to gauge demand for your products, develop your brand identity and garner a customer base. Then, use Shopify to sell and scale your best-selling products and establish yourself as a fully-fledged brand, while maintaining an Etsy site as an additional revenue stream. Here’s what you need to know about both platforms:
Shopify major features
As one of the most powerful e-commerce platforms available for small-business owners, Shopify is loaded with features that help you build, manage and market your digital storefront from the ground up.
First, you can choose from over 70 professionally designed templates to build and customize your website, using a domain name that you can either buy through Shopify or can easily transfer to your Shopify store. Then you’ll be able to securely accept all major credit and debit card payments, at no additional transaction fee, through Shopify Payments, the platform’s built-in payment processor powered through Stripe, or you can integrate one of 100+ third-party payment processors.
When your store is up and running, you can take advantage of Shopify’s huge arsenal of store management features: save your customers’ personal and billing information, integrate with dropshipping apps, fulfill orders with one click, connect to Amazon or other fulfillment centers, access powerful performance analytics and more.
Shopify is also equipped with robust customer relationship management (CRM) and marketing tools, like built-in SEO tips, integration with all of your social media profiles, blogging and the ability to offer your customers discounts and gift cards. As a cloud-based platform, all updates and changes you make on your Shopify dashboard will automatically sync with the Shopify App, and vice versa.
One tool that business owners find especially valuable is the Shopify App Store, through which you can search and download thousands of apps you can integrate with your store to help you optimize your processes, whether that’s upselling, inventory management, SEO tactics, product reviews or more. Shopify POS is the platform’s in-house software and a range of hardware enables business owners to accept and process payments in person.
Etsy major features
Where Shopify allows you to build your own, standalone store, Etsy is its own platform that aggregates sellers onto its site. Originally, the platform was built as a marketplace on which artists, creators and sellers could sell their handmade goods and vintage items. Note that Etsy isn’t the right choice for resellers, as the platform is a hub for one-of-a-kind, original items.
Etsy is, however, a good choice for side-hustlers, very small businesses or businesses that aren’t ready to put in the sweat equity it takes to build, manage and accept payments through a full-blown online store, as it’s easy to open an Etsy store and start selling through Etsy’s built-in parameters. You can also use Etsy as a supplement to your online shop, whether that store is hosted by Shopify or another e-commerce store platform.
Like Shopify, you can manage your Etsy listings and orders, communicate with buyers and buy and print postage either through an online dashboard or the Etsy App. But unlike Shopify, which allows for integration with third-party payment processors (for an additional transaction fee), Etsy users can only accept payments through Etsy Payments. This in-house payment processor can accept all major forms of payments, including credit and debit cards, PayPal, ACH payments, Apple Pay and Google Pay.
One of Etsy’s major draws for business owners is the ability to tap into the platform’s huge, existing customer base (in 2018, Etsy saw almost 39.5 million buyers), so there’s a little less legwork on your end to attract customers. That said, your listings will compete with those of 2.1 million other Etsy sellers. You can use Etsy’s built-in marketing tools or integrate third-party apps that specialize in Etsy-specific marketing tactics to boost your listings. You can also consult the Etsy Seller Handbook, a comprehensive guide that can answer virtually any question you may have about selling on the platform.
Shopify runs on a monthly subscription model, so you’ll pay a flat monthly fee to keep your store up and running, plus credit card rates for each sale. You won’t need to pay a per-listing fee, which means you can sell an unlimited amount of products, for an unlimited amount of time, without needing to cough up extra cash as you scale.
Shopify has three account tiers, which increase in monthly fee and capabilities:
Basic Shopify: $29 per month, plus 2.9% + $0.30 for online credit card sales, 2.7% for in-person sales or 2% if you use a payment processor other than Shopify Payments.
Shopify: $79 per month, plus 2.6% + $0.30 for online credit card sales, 2.5% for in-person sales or 1% for other payment processors.
Advanced Shopify: $299 per month, plus 2.4% + $0.30 for online credit card sales, 2.4% for in-person sales or 0.5% for other payment processors.
Each Shopify plan offers shipping discounts from USPS, UPS or DHL through Shopify Shipping: up to 64% with the Basic Shopify plan, 72% with the Shopify plan or 74% with Advanced Shopify. Keep in mind that add-ons downloaded through the Shopify App store will cost extra.
Shopify offers a 14-day grace period after launching your store before you’re required to sign up for a particular plan.
Etsy’s standard plan is totally free to use, but it also offers a Plus plan for $10 a month and a Premium plan, which launches this year. As you would imagine, with a paid plan you’ll have access to more tools, including shop customization, email marketing tools and a custom address.
Whichever Etsy plan you choose, you’ll also need to pay three fees:
Listing fee: Listing items on Etsy will cost you $0.20 per item. Listings will only stay up for four months or until the item sells.
Transaction fee: You’ll need to pay Etsy 5% per transaction.
Payment processing fee: Etsy Payment’s processing fees are 3% + $0.25.
Etsy’s listing prices are inexpensive, but its additional fees outweigh Shopify’s — and depending on the volume of your products and sales, you may actually end up spending more for your Etsy page than you would on monthly subscription fees for a Shopify store.
Shopify vs. Etsy: What do business owners think?
To understand how the Shopify vs. Etsy debate operates in the real world, consider what small-business owners think about which platform they use and what advice they’d offer to other entrepreneurs seeking the right platform through which to sell their goods online.
Depends on the products
“Essentially, when it comes to choosing an e-commerce platform, you want to make sure that you’re selling on a platform that attracts the most relevant customer base to the product you’re selling. Etsy is generally a niche marketplace for craft, handmade and vintage items, and is not exactly somewhere you’d buy domestic items like pet food or cleaning supplies, for instance.”
“I love the feature-rich offerings available on Shopify. Not only is the platform really easy to use, but they offer important metrics that are easily accessible to help merchants keep a pulse on the health of their business. These things include average order value, conversion rate, top products in your store, social sources that drive the most traffic to your store, returning customer rate and much more.
I love being able to see a daily snapshot of how my business is doing and where I need to focus my efforts in order to maximize growth. I believe that selling on an independent platform like Shopify is important because you own your own customers this way, and can build up an email list of past and potential customers to not only build community around your brand, but to nurture relationships and increase sales. I look at platforms like Etsy as a revenue stream, which can be very successful, but it’s important to be in full control of your brand by selling independently, as well.”
Driving traffic and diversifying channels
“Shopify is a great option if you’re planning on driving your own traffic to the store. You can do that with Facebook ads, Google Ads, other PPC options or simply by driving organic traffic through social media or blogging. Conversion rates on Shopify stores are generally lower than Etsy listings, but when you drive traffic to your Shopify store, you’re building your own brand. With Shopify, you own your own traffic and your email list, so you can easily cross-sell and upsell your customers.
Etsy is a marketplace that already gets a lot of traffic. Like any other marketplace, you don’t own the traffic that comes to your listing — Etsy buyers are not loyal to your brand, but they are loyal to Etsy. Building an online store on Etsy is like building a business on rented land. As long as you understand that, you can create an extremely successful business, but don’t forget to diversify your channels once you grow. When selling on marketplaces beside several other competitors, your pricing and your listing quality are extremely important to diversify yourself.”
Are you scaling quickly?
“I absolutely love using Shopify. The platform is extremely intuitive, easy to use and has all the tools I need to run a successful e-commerce business. It’s also really good for scaling: as a business grows, you can take advantage of their higher-priced plans that offer more powerful tools. For example, MVMT, which sold for $200 million last year, is on Shopify. And until only recently, the Tesla store used Shopify as well. Also, because Shopify is so popular, there are lots of apps, agencies and contractors that work with Shopify — so there are definitely network effects there.
The way I chose to use Shopify when launching my company was by looking at five brands I admired. By looking through their source code, I saw that all of them were using Shopify. I figured that if Shopify was the platform they chose to run their e-commerce store, then I should give it a shot, too. And now, two years later, I could not be happier with it!”
A version of this article was first published on Fundera, a subsidiary of NerdWallet.