Top 10 Reasons Etsy Shops Fail

reasons etsy shops fail

Reasons Etsy Shops Fail: Intro

I have spent several years researching and operating my shop on Etsy.  During this period, I have seen many shops fail, and very few thrive.  I decided to split these observations into two separate posts.  This post analyzes the Top 10 Reasons Etsy Shops Fail, and it includes detailed tips on ways to avoid these mistakes.  The other post analyzes The Factors that  Make Etsy Shops Succeed.  This is one of the most important posts you can find on the My Handmade Hub Community website.  Please take advantage of this free resource.

These are the top reasons Etsy shops fail and detailed ways to avoid them.  I spent weeks researching and discussing this topic with 20 of the top Etsy sellers.  I was surprised to find that when I asked these owners about the biggest mistakes sellers make, most of them replied with the same or similar answers.  I broke the responses down into categories, and then listed them in order of importance.  The top 10 reasons Etsy shops fail are listed below in reverse order; the most important reason is at the bottom.

 Reasons Etsy Shops Fail: Top 10 List

There are several reasons Etsy shops can fail, but I have decided to detail the Top 10 reasons.  If you avoid these mistakes, you have a much higher chance of success.  There has never been a better chance to succeed in selling handmade items; now is the perfect time to open a shop on Etsy (discover why).

Incomplete Descriptions

Reasons Etsy Shops Fail

One of the common reasons Etsy shops fail is because they include incomplete or inaccurate product listing descriptions.  Shoppers come to Etsy to purchase unique handmade items that they can’t purchase anywhere else.  The descriptions are especially important for items being purchased on Etsy because your customers cannot examine the items in person.  They will focus on the descriptions since they aren’t able to physically hold your items.   If your item is extremely unique, customers might not even be familiar with your product’s purpose.  If you have brief descriptions, customers won’t be comfortable purchasing your products, and you won’t get sales.

The main way to avoid this mistake is to make sure that your listing is accurate, detailed, and and has sufficient length. Instead of assuming that customers understand exactly what your product is, help them by providing basic information and details about each item, as well as guidance about what kind of situations or occasions it may be appropriate for.  You should include some of your personality and make sure you are including language tailored to your target customers.

Insufficient Inventory

Reasons Etsy Shops Fail #9

Another one of the reasons Etsy shops fail is because they don’t maintain sufficient inventory is another mistake Etsy sellers make. Your inventory levels are important because they affect turnaround time, or the time it takes for your products to ship.  It can take a significant amount of time to construct or build your items since they are handmade. Unless otherwise notified, most customers will expect that non custom items are complete and will be ready to ship in a short amount of time. Timing is important because many customers have deadlines and are purchasing your items as gifts for birthdays, weddings, or holidays.  Many times customers procrastinate and make their purchase without taking delays into consideration.  Another mistake associated with inventory is failure to take proper quality control measures. This may result in customers receiving incorrect orders or damaged goods.  This will leave them frustrated, and will also cost you money due to increased returns.

The way to avoid inventory issues is to make sure you build up your inventory as much as possible. It is especially important to build your product levels up before the holidays or other times of peak demand.  It may be necessary to enlist the help of family members or friends to help you if you get extremely busy.  Also, make sure that the turnaround time listed on your site is kept up to date and accurate.  Create quality control procedures to make sure that each order is accurate, in great condition, and ready to ship.

Ugly Pictures

Reasons Etsy Shops Fail #8

Many sellers make the mistake of including blurry, fuzzy, or outright ugly pictures on their shop pages. This may scare potential customers away because they are not able too see what they are buying.

Admittedly, this is one area that I struggled in. You don’t have to be an experienced photographer in order to make your shop look professional. Try to take the product pictures with the best possible lighting.  Some shop owners end up hiring a professional photographer.  This is one area where the sellers I interviewed disagreed.  Some were adamant that pictures should be higher on this list.  I ended up keeping it in this position because I’ve actually been surprised to find that some of my items that sold well early on didn’t have perfect pictures.  Don’t make the same mistake I did; I’m sure my sales could’ve been even higher!

High/Low Pricing

Reasons Etsy Shops Fail #7

Another one of the reasons Etsy shops fail deals with pricing.  Pricing mistakes can go either way.  You can list an item too high, and have nobody buy your product, or you can list your product too low and leave profits on the table.

Look at competitors prices and make sure yours are consistent with others in the marketplace.  You may want to make your prices a little lower when you are first starting out in order to attract attention and undercut the other sellers.  This may end up making the other sellers mad, but this tactic has worked for me, and I use it consistently. It is important to note that I kept my prices lower temporarily, and I was still making a good profit on my products. This is a sign that the product area or category I was selling in wasn’t saturated.  Once you study the market and are experienced, you can use pricing to control demand.

Poor Packaging & Shipping

Reasons Etsy Shops Fail #6

Packaging errors can result in broken products and orders that never reach their destination.  Shipping errors can easily eat into your profits and put you at a competitive disadvantage.  Shipping can be complicated and there are huge differences in price.

One of the main things I underestimated when opening my shop was how complicated shipping and packaging can be.  I really didn’t even think of it until I received my first order, and I didn’t even have a box that would fit the product.  After that first sale, I promised myself that I would never let that happen again.  Have all of your packaging materials selected prior to selling each product.  Make sure to include materials to protect your fragile products.  Take the time to research the different shipping companies to see which one offers the best deal for your item’s specifications.  Save time and money by printing your shipping labels at home.  Most shipping companies offer free packaging supplies to customers depending on the options you pick.  Write thank you letters for each sale by hand!

Inadequate Marketing & SEO

Reasons Etsy Shops Fail #%

Most shop owners don’t give marketing and Search Engine Optimization (SEO) the attention and focus it deserves. If you ignore marketing and SEO, your products will be hidden or buried several pages deep on the search results.  You may be able to make a few sales, but you will have an extremely difficult time growing.

I could write a whole book on Etsy marketing/SEO! There are plenty of free ways to market on Etsy and have your products show up at the top of Etsy (and Google) search results. This includes using the correct tags, headlines, and keywords.

Wrong Product Choice

Reasons Etsy Shops Fail #4

Some sellers make the mistake of focusing on products that will never sell. This is a waste of time and can lead to frustration and eventually giving up.

You can avoid this mistake by completing research PRIOR to deciding what items to sell. Study shops that are selling items similar to yours.  You want to look for items that are popular, trending upwards, and items that . In short, you want items with high demand and low supply.

Wrong Category Choice

Reasons Etsy Shops Fail #3

Similar to choosing the wrong products to sell, choosing an unpopular or saturated category can make it difficult or nearly impossible for you shop to thrive.

You can avoid this mistake by completing research PRIOR to deciding what items to sell. Look for categories that are in high demand and low supply. The best profits in any market are often found in specific niches.

Lack of Networking

Reasons Etsy Shops Fail #2

One of the most important reasons Etsy shops fail is due to lack of networking.  Lack of networking can leave you isolated and will result in you making more mistakes and learning lessons the hard way.  Shops that network usually see positive results in several areas, and not taking advantage of this resource will put you behind other shops.

This is the main method that I used to increase traffic to my site and make sales explode. This is also one of the main reasons I created this site. Interact with other sellers on our Facebook Page or in our comments section. Contact other shop owners for support. Make sure to join relevant Etsy teams and stay involved.

Bad Customer Service

Reasons Etsy Shops Fail #1

The top reason most Etsy shops fail is because of poor customer service.  When I first started my shop, nothing was optimized.  I hadn’t learned how to correctly avoid most of the mistakes I listed above.  Somehow, to this day I still wonder why, a young lady from North Carolina ordered one of my wine racks.  I made sure to offer the best customer service possible to my first customer, and it paid off.  She left me a five star review and it helped more orders start rolling in.  I didn’t even end up making money on the first transaction, but it was definitely worth it.  If I hadn’t provided great customer service for my first customer, she might’ve skipped her review or even worse written a negative review.  My shop never would’ve had a chance.

To avoid this mistake, make sure to focus on your customer’s experience above all else.  Go above and beyond by providing incredible service, which will make you stand out compared to other shops.  Be polite & courteous at all times.  Make sure to respond quickly & accurately to all messages.  Follow up with your customers after their purchase and thank them again.

Etsy is known as a company with terrific customer service.  Learn more about this on my Etsy Overview detailing culture.

Reasons Etsy Shops Fail: Summary

I didn’t do enough research before starting my shop, and I ended up making several of the mistakes listed above in the reasons Etsy shops fail.  Somehow, to this day I still wonder why, a young lady from North Carolina ordered one of my wine racks.  I had only started selling products on my shop a couple of days earlier.  By the time I had paid to ship it, I had a profit of only $5 for several hours of work.  One thing I made sure of was to offer the best customer service possible, and it paid off.  She left me a five star review and it helped more orders start rolling in.  Even though I barely made money on the first transaction, it was definitely worth it.  If I hadn’t provided excellent service to my first customer, she might’ve skipped her review or even worse written a negative review.  My shop never would’ve had a chance.  The moral of the story is:  You can make mistakes in several areas, but as long as you focus on providing excellent service, your shop will have a chance to survive.  Keep learning and improving, and your shop will eventually thrive.

Are you new to Etsy?  Find out How to Open An Etsy Shop.

Let’s keep growing together!


Reasons Etsy Shops Fail: Comments

Do you know of other reasons Etsy shops fail that I forgot to mention?  Do you disagree with anything on this list?  Please leave a comment and provide knowledge to other members of our community.


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