How Does Etsy Work? Etsy Business Model – A Complete Guide

Etsy business model

Do you have any questions concerning Etsy and its business model? This blog will teach you about the Etsy business model and how to create passive revenue on Etsy!

About Etsy

Etsy business model

Etsy is an online marketplace where artists can sell customized, one-of-a-kind things to buyers all over the entire globe. Etsy business model is comparable to that of Amazon or eBay, with the exception that Etsy gives exceptional experience to both shoppers and merchants.

On the one front, Etsy assists sellers in selling their handmade items and earning a living, while on the other hand, it assists buyers in owning one-of-a-kind things.
Etsy has grown dramatically as a result of this reality. In 2005, it started as a small website and is now a publicly traded organization with over $360 million in total capital.

A Brief History of Etsy

Etsy began in 2005 when Rob Kalin, a publisher and maintenance worker, and two friends

— Chris Maguire and Haim Schoppik

— were attempting to figure out how to sell their homemade things online.

Then Kalin had the idea of starting an online platform for handmade items, and the three of them founded Etsy in a Brooklyn flat. Throughout the first year, the site increased traffic by introducing new features to assist vendors in gaining exposure.

So, two years later, Etsy has roughly 450,000 registered merchants with annual sales of $26 million. In addition, the company received nearly $3 million in venture capital in 2017.
Dickerson would succeed Kalin as CEO of the company in 2011.

Etsy Business Model

Etsy’s business model is the same as that of other e-commerce competitors such as Amazon in that it delivers a digital platform for purchasing and selling items – specifically, an online marketplace for unique and creative goods. Etsy distinguishes itself from the competition by taking a vertical approach to its e-commerce business strategy – Etsy primarily concentrates on selling artisan items in very specialized categories.

Etsy describes itself as “a realm of rare, extraordinary stuff, from unique handcrafted pieces to vintage treasures.” Sites like Amazon, on the other hand, take a more lateral approach, selling practically everything.

How Does Etsy Work?

Etsy is a worldwide market that connects buyers and sellers.
Etsy’s key selling point is its extensive selection of handcrafted, generic, and one-of-a-kind items available only on the site. Customers can look through the relevant product categories: In addition to many others.

The registration of a seller is relatively simple, encouraging the platform’s expansion in terms of suppliers and goods.

Etsy also provides sellers with the option of having their things paid for, stored, and shipped on their behalf.

As a result, Etsy can compete with similar online marketplaces such as eBay, Poshmark, and Vinted.

Other perks include a forum and Etsy Teams, which allow retailers to network with local sellers and discuss sales techniques.

Etsy’s marketplace can be accessed via the company’s website or as a mobile app from the Apple App Store and Google Play Store.

What is Etsy’s revenue model?

Etsy earns money through listing fees, transaction fees, promotional ads, subscription fees, and payment processing charges. Etsy’s business concept is based on a community.

In the section below, we’ll take a closer look at each income stream.

Transaction Fees

Etsy charges a 5% commission fee for every successful sale made through their marketplace. Other fees include the amount stated by the seller for shipping and gift wrapping.

The corporation kept its 3.5% profit margin for more than 13 years before updating it in 2018. Many sellers were irritated when Etsy announced commission raises, but the site remains one of the cheapest to sell on.

Listing Fees

Each item sold on Etsy costs sellers $0.20 in listing fees. Pattern and Private postings are fee-free. Charges are also levied when a listing is renewed. Listing charges are not contingent on future revenue success.


Premium merchants on the marketplace can sign up for Etsy Plus, a bundle that includes a variety of sales-boosting features. Etsy requires a monthly fee of $10. Members of Etsy can also register free .store domains and save 50% off domain registrations such The offer is valid for the first year of membership and is enabled through Etsy’s partnership with Hover.


The pattern is a website platform that enables merchants to establish their storefronts irrespective of the Etsy platform. Etsy charges a $15 monthly subscription fee. The listing and processing fees on Etsy’s core platform do not apply to sales made on Pattern websites.

When it comes to selling your art online, a platform like Etsy is a great place to start. Etsy’s success is due to its dominant and outstanding business model, which offers a distinct selling value.


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