Ever since I started sharing the results that my wife and I were seeing in her Etsy shop, people have been asking me “What would you do if you were starting over today?”
As we move into the new year, I thought now would be the perfect time to lay out the exact steps that I would follow if I was starting over today.
I’ve made sure to include a few of the things I’ve learned along the way to help make this process go even more smoothly, so make sure to read to the end.
With that said, let’s jump into it shall we?
Step #1: Research and Choose a Solid Niche
The first (and perhaps most important) step in your journey to building a profitable Etsy shop is to research and choose a solid niche.
If I were starting over today, this would be my OBSESSION, until I found something that checked all the boxes.
Before we dive into my favorite ways to find and validate niches, let’s spend just a few seconds talking about what a niche is and what a niche isn’t.
What a Niche IS:
When you hear us using the term niche, what we are referring to is a “specific group of people that share an interest”.
A Niche, the way we use it, can easily be thought of as something that people “like to do/be” or “can identify as”.
For example, people like to fish (they’re called fishermen). People also like to knit (knitters/knitting) or cook (chef/home cook/ baker) etc.
If you find yourself saying something like “I sell mugs” and not “I sell to fishermen”, you don’t currently have a niche!
What a Niche IS NOT:
As you can probably tell from the example above, one easy way of knowing whether you are selling in a niche or not is if you have a product focus.
If when you are talking about what you do, you say…” I sell mugs” or “I sell Blankets” and you’re not listing the group of people you serve specifically….you have a product focus and not a niche focus.
Why Is Finding A Niche Important?
There are several reasons why finding a niche is a must for a successful Etsy store.
First, when you have a niche focus, instead of a product focus, your business is more resistant to any changes that happen in the marketplace.
For example, if you follow the typical advice to choose a product focus or “follow the trends”, you can make money…if you’re among the first people to hop on that trend.
If not, good luck competing!
Oh and even IF you are among the first, you’ll often find your profit margin slowly being eaten away by another seller who has deep pockets than you who can afford to undercut your pricing.
Sounds like fun, right? Not really! At least not to me.
On the other hand, when you use the niche-focused approach, you’re not only resilient to new sellers coming into the market (niche customers aren’t nearly as price sensitive as product-based customers) but you also tend to have a higher cart value…meaning you make more on each sale.
It makes sense right?
If someone is really into fishing and you sell a bunch of really cool stuff for fishermen, they’re likely to buy what they came for AND something else that catches their eye while they’re shopping (kind of like a kid grabbing a Snickers or two in the grocery checkout line).
On the other hand, if all you sell are mugs…they’re going to buy your cool fishing mug, but when they dig around to see what other cool fishing stuff you have for them, they’ll see only mugs, get bored, and leave.
I mean, after all, people can only buy so many mugs, right? And with their “mug needs” satisfied, there’s no reason for them to drop anything else into the cart.
Second, at the end of 2022, Etsy made a few major announcements and rolled out a few key feature changes that make it very plain that they think the future of the platform comes from connecting people with the stores they love.
Although I’m sure there are at least a few people who compulsively collect mugs and might want to buy every design in existence, most people who buy a mug with a slogan on it won’t ever come back to your store, no matter how many offers or push notifications Etsy sends their way.
On the other hand, if they know that when they come to your shop they’re going to see new designs or products related to something they CARE about, they’re likely to come back again and again.
That’s exactly what Etsy wants.
If you’d like to take a deeper dive into the reason why you want to go with the niche-focused approach and why most advice about chasing trends or focusing on a single product type is a terrible idea, I wrote a full article you’ll want to check out here.
With that out of the way, let’s dive into two of my favorite ways to come up with niche ideas and then talk about how I would validate that niche on Etsy.
After all, if you give someone a niche they’ll eat for a day….but if you teach someone to niche, they’ll eat for the rest of their life…right?
Bear with me on this one, I know it might sound a bit silly, but this method has led me (and several students of ours) to create multiple 6,7, and even an 8-figure brand.
The touch list method is as simple as it sounds.
Grab a pen and a piece of paper (or your smartphone if you prefer) and jot down everything you touch for the next 24-48. (If you’re a real perfectionist, yes you CAN include the pen and paper as things you’ve touched).
What you’ll end up with is a very easy way to get a look at “a day” in your life.
You’ll be surprised at the number of things you interact with daily that are unique to you and just how many of them end up leading you down the road to a profitable niche.
Another quick way to come up with a good-sized list of niche ideas is to use the “interest list” method.
Just like with the touch list method, grab a pen and a piece of paper.
Spend a few minutes jotting down the different things you like to do in your spare time (yes, you can write down “watching Netflix”).
Then take a couple of minutes and talk to your spouse, significant other, parents, siblings, kids, and maybe even your neighbor (if you get along) to see a few different things they like to do as well.
Although this typically doesn’t result in as many immediate ideas as the touch list method, you’ll often find that this method leads you more directly to a niche rather than a product (which you then have to turn into a niche).
My suggestion would be to use BOTH methods and see if you find some overlap (you will).
Once you have a few ideas, you can move on to the research/validation stage of the process.
Now that you have your lists of potential niches, we need to spend a little bit of time working out which of the niches on your list are worth our time.
After all, who wants to spend a bunch of time and effort building out a store only to hear the sound of crickets and not the SWEET “Cha-Ching” sound you hear every time your Etsy Store makes a sale?
To get started let’s head on over to Etsy and find out if our niches have the demand to support our goals.
Find The Demand
To find out if there is demand in your niche, the first step is to go to Etsy.com.
From here, simply start by typing in a keyword describing your niche.
For our example, let’s say you like to go Rving or “Camping in an RV” and that is something that should be up on your interest or touch lists.
In this case, the first thing we’ll need to do is type in RV into the search bar (or make it a verb and go with RVing, it works either way) and let Etsy show us the results.
From here, give the results a quick scroll. The first thing you’ll want to see is that there are a variety of different products that show up for the main keyword related to the niche.
It may sound counterintuitive, but if you ONLY see one type of product (like t-shirts or mugs) it can be a sign of a very shallow depth of demand in the niche.
Seeing multiple product types for the main search means Etsy isn’t exactly sure what you want to see, because people looking for things in that niche buy a bunch of different things (that’s a GOOD THING!), this is going to be important when we move on to step #2 below.
Once you’ve seen that there are a variety of different product types in the search results, it’s time to dig a little deeper.
To help us with the next part of this process we like to use a tool called Everbee, which gives us sales estimates for individual products.
You don’t HAVE to use it and can use whatever tool you want to help with this part of the process, but we’ve found Everbee to be the most accurate and helpful tool around AND you can do virtually everything you need to do on their FREE plan!
Product Level Validation
By pressing the “product analytics button” inside of the Everbee tool, we are quickly able to see their sales and revenue estimates for ALL of the products on the first page of the Etsy Search results for our nice (RVing).
Ideally, we are seeing a large number of these products showing consistent demand (an average of a sale or more per day).
Keep in mind that your revenue goals will change which niches have enough demand for you.
If your goal is to make 50k in sales, that means you’d need about 14 sales per day with an average profit margin of around $10.
If it’s to make 100k, obviously you’d need to double that (28ish sales per day).
If most of the products on this first page are selling less than one unit per day, that niche may be great if you’re trying to make $50k but would be a LOT more difficult to make $100k with.
In the case of Rving, we can see that the average product is selling about 16 units per month (or one every other day), which means we could likely do well if our goal is closer to 50k, but we may have to look elsewhere if the goal is to make $100k plus.
Consider Niche Stacking
If you find that your initial niche idea won’t support your revenue goals, you may want to consider niche stacking.
Niche stacking is when you take two (or more) related niches and include them into your store (e.g. rving and motorhomes) to help you reach your goals.
If you’d like to learn more about that process, you may want to check out the full article here.
Finalizing Your Niche Validation
Once you have seen that there are a variety of different products AND that they are selling consistently, move on to the next niche on your list.
It may be tempting to just go all in on the first niche you validate, but trust me…it’s worth going through the rest of your list and seeing which other options might work.
Not only might you stumble into a golden opportunity, but chances are you’ll find a few niches related to “your first niche” that you can add to your store later on and grow even further.
After you’ve made your way through your lists, choose ONE niche to start with and then move on to Step #2.
Step #2: Develop a Product Line
Now that you have your niche selected (congrats by the way) it’s time to move on to developing a product line to serve that niche.
One of the biggest benefits of the niche store model is that our customers can buy a variety of products from us (fingers crossed they buy ALL of them!) and yet it’s one of the biggest things that most Etsy sellers just leave to chance.
To avoid that, let’s start at the same place we left off…the Etsy search results.
Head over to Etsy.com and type in the main keyword for your niche (Rving in our case) and let the search run.
Once the results have opened up take a look at the different products that are selling and choose 3-5 (to start) to create your variations of.
If you want to take this a step further, you can use Everbee to take a look and see how much each product is selling :).
Remember, this initial batch of products is just to get you up and running, you’re going to want to create a launch new products consistently, so don’t worry about waiting for a perfect number of products to launch…just get started!
Once you have your first 3-5 products launched, you’ll want to create a consistent product launch plan.
If you haven’t heard us talk about it before, Etsy has a TON of built-in ways that it rewards stores that consistently launch products and you’ll want to take advantage of it as often as you can!
For more on what happens when you consistently launch products you may want to check out what happened when we launched 30 products in 30 days.
Step #3: Get Traffic and Spend a Little $ to Make Even More $
Even though creating a store and making sales on Etsy is a fairly straightforward proposition, that does not mean that we can use the field of dreams strategy when it comes to getting traffic to our shop.
Although creating your listings in a way that is designed to be search engine friendly and optimized is absolutely a critical part of any solid strategy, the “if you build it, they will come” Mindset only works in the movies.
What most people seem to miss when they are considering using SEO as their only strategy is that one of the biggest factors that can influence where your listing ranks for a given search is your existing traffic and sales on that listing.
It’s extremely difficult to rank well If you’ve never had anyone, visit your listing or even better buy from you.
So how do we get around this issue?
By spending just a few dollars a day on ads.
A lot of times when I bring this up as a strategy I get one of two objections.
First, I will often hear people say that they don’t have a lot of money to spend on ads and are therefore afraid to do so.
I don’t want you to spend your rent or mortgage payment on ads, when I say a few dollars a day, I mean between $5.00 and $10 per day.
If you’re serious about getting your business off the ground and growing your sales, I think we can both agree that investing the average cost of a Starbucks latte per day into your business and getting a return on it is a worthwhile investment.
Second, people will often say that Etsy ads just don’t work… that couldn’t be further from the truth.
While they may not work for EVERY single product (nothing does!), they are certainly worth investing in, especially when you consider the potential return.
Let’s take a quick look at the difference we were able to make in our store over 30 days by spending ONLY $150 on ads ($5 per day).
As you can see from the image above, we were able to net:
- 404 clicks (that’s 404 people that clicked into the listing),
- 49 Orders (49 People Bought Something)
- $1,621.95 In Revenue
So by doing a little bit of basic math, we can see that we gained a more than 10-1 return on ad spend ($150 spent for $1600 in sales) AND 404 people SAW our products (many of whom likely added it to their carts, favorited an item, etc).
On top of THAT, we managed a 12% conversion rate.
Now I don’t want to get too far into the weeds on Etsy ranking factors here, but as I explained above, Etsy LOVES to see traffic and sales coming to your listings (especially when it converts very highly).
This means we not only got the short-term gain of the sales, but also a potential long-term benefit, all while making money along the way!
I can hear a few people reading this screaming at their screens right now saying “Scott, that’s REVENUE…not profit” and I get that.
For reference, we typically net 40% or more (depending on the product) which means our profit was ~$650 or about $500 after all expenses…PLUS we get the long-term benefits of those listings getting traffic and making sales.
I don’t know about you, but getting PAID to make even more sales of my products seems like a GREAT way to invest a few bucks per day.
I understand if you only have a few dollars per day to spend on ads and if you’re working with a limited budget, I would strongly suggest using that money within the Etsy platform.
If you have another $5 to spend on ads you may want to take a look at Facebook Carousel ads.
They can drive extremely qualified (and very inexpensive…. $0.20 or less depending on your niche) to your listings and are a great way to get even more love from Etsy by driving off-site traffic to your shop.
Step #4: Build An Email List
Once you have your listings up and your ads running, it’s time to add a little fuel to the fire by building an email list!
I know it may come as a bit of a surprise, but even in 2023…email is still the single best way to generate sales in eCommerce (if you’re selling on Etsy, you have an eCommerce business!).
Thankfully, we can harness this power very easily in two different ways.
Internal Email List (Etsy Emails)
The very first thing you should do is take advantage of the ability Etsy gives us to collect and use customer emails.
After all, people who have bought from us in the past and like the niche we are in are the PERFECT people to buy more stuff from us down the road, right?
The first step is to use Etsy’s internal marketing tools that allow us to set up automated offers.
Right now, Etsy allows us to automatically send an email when someone buys from us, someone adds something to their cart and doesn’t purchase, or when they favorite an item in our shop.
Head over to your marketing dashboard and spend a few minutes setting up those three offers.
We typically attach a 10% discount for each of those offers (as a way of getting people to come back and buy what they left in their cart…or something else!).
Etsy makes this process extremely easy and setting up all three auto-emails should only take a few minutes…and then you never have to do it again!
Once you’re done, Etsy will automatically send those emails out for us and help us start bringing in sales automatically!
External Email List (Emails You Own)
Once you have all of the automated emails set up, it’s time to move on to creating a list YOU can use to send emails whenever you want.
Etsy again makes this process very simple through its direct connection with Aweber.
If you sign up and create a FREE Aweber account, you can connect your Etsy shop to the email account, and whenever someone purchases from you, they will be invited to join your email list.
If they accept, you have a new subscriber and can contact them whenever you want…cool huh?
Scale Your List
Once you have your list set up to automatically add customers, you may want to scale your list up a bit and add people who are interested in your niche but might not know what you sell yet.
To do that, we like to build a giveaway for our niche.
This is a low-cost way of adding potential customers to your list and can be a very effective way of scaling up your email efforts over the long term.
If you’d like to see the step-by-step method we use, you can check that out here.
Step #5: Create an Amazing Customer Experience
Once you have some sales and traffic coming in, it’s time to move on to step 5 which is creating an amazing customer experience.
Within the Etsy platform, this rewards us in one of two ways.
First, having good customer service and high-quality products is likely to lead to us getting a much higher number of four or five-star reviews.
Additionally, Etsy has what they refer to as the star seller program, which helps get us some additional visibility on the Etsy search results page, which can lead to more clicks and higher conversion rates.
Even if it doesn’t help us rank directly, it’s worth spending a few minutes each day focused on the three areas that Etsy ranks to determine who is and is not a star seller.
How Fast Do You Respond:
The first criterion that Etsy uses is how quickly you respond to customer messages.
To meet the goal here, you need to respond to at least 95% of customer messages within 24 of the message being sent.
This is very easy to do, even if you only have a few minutes, and CAN be added by the use of an auto-reply message.
If you choose to use an auto-responder, you should still log in daily and follow up with any customer messages to make sure their questions are accurately answered.
How Fast and Accurately Do You Ship
The second criterion is that you ship products and send tracking numbers on time.
Here again, the goal is that you are on time with 95% of shipments and since you can automate the sending of tracking information, there is no reason you should miss this one!
What Do Customers Say
The 3rd and final area Etsy looks at to determine if you’re a “Star seller” is customer feedback.
If you sell quality products, are shipping on time, and follow up with customer messages, getting to the 4.8 out of 5 average customer feedback score, should be a breeze!
BONUS Step #6: Holiday Hacking
If you’re trying to be successful on Etsy in 2023 and beyond, following the first five steps laid out in this guide will get you 99% of the way there.
If you’re looking to get a little more out of your store, you may also want to consider what we call holiday hacking.
Holiday hacking is the strategy that we use to create products for all of the major holidays that are likely to be bought for or by our market as gifts.
This one does involve a little bit of planning, typically you want to have products live about 60 days before any major holiday, and should be bolted on after you’ve mastered the first five steps.
You can check out the full guide to Holiday hacking here.
If you’ve made it this far, you should know the five simple steps that I would be following if I was starting over on empty today and you should know how to implement them for your business.
Just as a quick recap they are:
- Research and choose a solid niche
- Develop a product line
- Get traffic
- Build an email list
- Create an amazing customer experience
- Start holiday hacking
You may also want to check out Niche Product Magic Workshop here to see exactly how we would do this by watching us go through the process over our shoulders.