Business Tips

Shopify vs. Etsy: Which Platform is Better for Small Business?

Last updated January 2022

Shopify and Etsy are two of the more well-known e-commerce platforms. Both offer many similar benefits and options for retailers. But are different in many ways. To understand whether you should choose Shopify or Etsy — or both — it’s critical to know how each one operates.

If you’ve thought about creating an e-commerce business but are unsure where to start, you’ve likely seen Shopify or Etsy as options. Both platforms offer an “all-in-one” sales solution, appealing to merchants with limited experience or knowledge.

Before you make your decision, there are a few questions you want to ask yourself. Do you want to sell through a website or a marketplace? What are your priorities for your store? Choosing Shopify vs. Etsy depends on your answers.

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How Shopify works for small business owners

Shopify is a complete online e-commerce platform for setting up your online store, even if you already own a physical storefront.

Shopify offers a wide range of tools to run an entire operation but focuses on five core initiatives for e-commerce:

  • Templates and branding tools to define your brand and create the site you want
  • Selling tools for both online and in-person sales
  • Convenient and integrated payment processing tools to accept numerous currencies worldwide
  • A checkout process built to deliver high-conversion rates
  • Marketing and SEO tools to drive traffic and improve your search rankings

Shopify can offer many such services thanks to the abundant amount of features and apps at your disposal.

Major features of Shopify

Shopify offers everything you need, from purchasing a website domain to accepting payments and shipping purchases to your shoppers. Other more specialized features include:

  • Design: You have the flexibility to design your product site in whatever way you wish. And if creativity isn’t your strong suit, don’t worry – Shopify offers a wide selection of templates.
  • No product limitations: Shopify does not limit the type of product you can sell, as long as it is legal and falls within the terms and conditions of the Shopify User Agreement.
  • Access to Shopify apps: Shopify offers quite a bit to help you design and set up your store. But, if you don’t find what you need in one of the templates, you can easily add a feature via Shopify apps to help you with various functions, ranging from social media management to printing shipping labels. Most apps in the Shopify app store are free or low-cost. Apps
  • Marketing tools: Shopify gives you access to a variety of marketing tools, including:
    • Branding: Shopify gives you templates so you can use a consistent brand and theme throughout your store. You can even try the business name generator for inspiration.
    • SEO rankings: Use tools to rank higher with search engines so browsers can find your store.
    • Blogs: Build your audience even more by using a blog for your store, which you can update on your Shopify site.
    • Email marketing: Easily integrate your email marketing tools to help track and reach your potential customers through email marketing.
    • Facebook ads and Google Smart Shopping: With additional marketing dollars, Shopify helps you create advertising campaigns with Google and Facebook to get more traffic to your website.
  • Inventory: Shopify gives you all the tools you need to manage your inventory, including synchronizing with your Shopify sales. Easily monitor what is in (and out) of stock, all within your Shopify dashboard. Even if you conduct sales offline and outside your Shopify site, you still can sync your inventory and keep track of all products coming and going.
  • Pricing: Shopify offers three different pricing plans, each billed monthly.
    • Basic Shopify: A plan for smaller shops or those just starting out costing $29 per month. The basic plan does include higher transaction fees but is ideal for those starting.
    • Shopify: A plan designed for growing businesses. For $79 per month, you have all the basic features, but you have access to tools such as analytics, more competitive shipping costs, and lower transaction fees.
    • Advanced Shopify: For larger e-commerce stores, this plan is $299 per month, but you can add up to 15 accounts. The Advanced Shopify plan has the lowest transaction fees.

As you go through your setup, you have access to various training aids and 24/7 customer support to walk you through your questions.

So how does Shopify compare to Etsy?

How Etsy works for small business owners

Etsy is another e-commerce giant but operates as a marketplace. The goal of Etsy is simple: connect buyers with sellers while focusing on the sale of handmade or artisan products, such as jewelry and crafts, although there are a vast number of product categories available.

One significant advantage Etsy has to offer is the sheer popularity of its site. Etsy had over 4.3 million active merchants selling over $1.3 billion in goods in 2020 alone. Not only is the website one of the most visited websites globally, but the app has over 32 million visitors a month.

Although Etsy is a big business, you can harness this power as a small business owner, whether you have online sales experience or not.

Major features of Etsy

What makes Etsy appealing to buyers and sellers? The platform is highly sophisticated, and its advanced features improve your ability to sell successfully.

  • Website URL: Etsy gives you an exclusive URL address. However, it will always include “Etsy” at the beginning of your unique domain name.
  • Design parameters: Each Etsy shop has to adhere to Etsy’s design guidelines. Fortunately, the company has several resources like “The Ultimate Guide to Branding” to ensure you can incorporate creative ideas into your storefront.
  • Driving traffic to your store: One of the biggest appeals of Etsy is the amount of traffic it receives daily. Etsy vigorously markets itself to bring as many potential customers to the site as possible.
  • Etsy’s marketplace rules: Merchants must adhere to Etsy’s defined parameters for what items are allowed in the market. As long as your product falls under the vintage, handmade, or artisanal category, then you can list it.
  • Inventory: Since Etsy is the platform you use for the sales function of your product, you have to keep track of your inventory elsewhere, such as with a third-party app. Fortunately, there are multiple apps with the ability to sync with your Etsy shop, but it’s an extra step you should be aware of with Etsy.
  • Pricing: Etsy has an entirely different pricing structure than Shopify. Setting up an account and your storefront is free, and you don’t have to pay a monthly fee either. But, each Etsy listing is subject to a $0.20 listing fee, and you pay a 3.5% transaction fee per sale in addition to payment processing fees. Extras like a Patterns site or a custom domain cost an additional $15 per month.

Since Etsy is a marketplace, you are responsible for your marketing outside and within the platform. The focus is on your “shop” and the products within your shop. Your goal on Etsy is to rank as high as possible when browsers search for the keywords related to your product in the Etsy search engine.

Comparing Shopify vs. Etsy — which is best for business?

The two platforms are unique, although the end goal of selling products is the same.

Another way to think of Shopify is to compare it to a large shopping center. The shopping center gives you the designated space to sell, but you are free to build your store just the way you want.

Etsy is more like a farmer’s market. Etsy allows “local” vendors to come into its pre-fabricated premises and set up a stand to sell unique items while adhering to the rules of the farmer’s market. Each vendor can sell and accept any payment method it chooses but must do so within the parameters of the market.

So which platform is best for a small business? The answer is whatever works best for your business model. And the best part is, you have the ability to take advantage of both Shopify and Etsy — you do not have to choose one or the other if both appeal to you.