New Etsy sellers looking to sell physical products typically have questions about the production process. They specifically want to know how Etsy sellers make physical products and whether they can do the same. Based on extensive research and insights from my personal experience selling on Etsy, I have identified the five main ways Etsy sellers make physical products, along with the suitability of each method for new sellers.
1. Handcrafting – The Unique Route
This production method aligns with Etsy’s soul. Etsy was formed primarily as a marketplace for handcrafted products. It is easier for these products to rank in search results because they are unique and imitation is difficult; therefore, the competition is less. Generally, new Etsy shops struggle to get initial sales due to a lack of reviews and sales history. A handcrafted product offers a new store an opportunity to better connect with shoppers by sharing videos of the production process, thereby bridging the trust gap. Therefore, it can be easier for a new store selling handcrafted products to drive initial sales without spending on advertisements.
Examples: handmade wall art, hand-painted mug, self-assembled toy.
Creator → Made, altered, or assembled by hand → Shipping
Handcrafted products are a distinct niche of their own, as they attract a targeted audience. In fact, according to the study The Handmade Effect, there is a segment of shoppers who value handcrafted products and are willing to pay more. Therefore, you can charge a premium price for these products.
Are handcrafted products high-effort?
When you make a product from scratch, maybe yes.
But if you hand-finish a blank product, then maybe no.
Take the example of a mug. If you make a mug from scratch, from raw clay to final paint, it is labor-intensive and requires specialized knowledge. However, if you source a blank mug and hand-paint it, it is easier than it looks. For selling on Etsy, you don’t need to possess advanced painting or illustration skills to hand-paint a mug. In fact, if you look at top-selling Etsy products, they are quite minimal. Therefore, you are not required to make complex illustrations. However, you need to know how to create a visual appeal using simple designs, cohesive color palettes, and refined listing photos.
Do handcrafted products require a huge upfront investment?
Generally not. When starting out, you do not need to stock finished products in advance. You only need to invest in art supplies and a small quantity of blank products bought at wholesale price to get started. Once you know your best-selling products, you can make them in advance for faster shipping.
Suitability for New Sellers: If you are willing to learn new skills and can invest a small upfront amount, then this can be the best production route for any new Etsy seller. Profit margins are higher with greater visibility in search results. Furthermore, in this era of AI, you are creating an irreplaceable brand with handcrafted products.
2. Your Design + Print-On-Demand (POD) – The Beginner or Passive Income Route
You can use print-on-demand companies to produce products with your digital designs. In fact, most new Etsy sellers take this production route because it requires no upfront investment, unlike other production methods. Print-on-demand websites integrate directly with your Etsy store. Whenever a customer places an order, the POD company gets notified, produces the item, and ships it directly to the buyer.
Creator → Digital Design → Customer Order → POD Manufacturer → Shipping
Major POD companies: Printify, Printful, Gelato.
Example: You create a digital T-shirt design, drop it onto the product, and list it in your Etsy shop.
Suitability for New Sellers: Print-on-demand is highly suitable for beginners. As a new seller, you are testing your product ideas, so it is risky to invest in inventory upfront. POD requires no upfront investment as it is an order-based production. Furthermore, it can be quite overwhelming at first to design, source blank products, handle production, store inventory, and ship products all by yourself. This method helps you focus on creating designs while the rest is handled by the POD company. However, the profit margins are thin due to higher production and service costs. Furthermore, competition is higher because many sellers use the same base product offered by POD companies, for instance, the same sweatshirt style with the same fabric. The only thing that differentiates a product is your digital design printed on it.
3. Your Design + Local Shops – The Intermediate Route
This production route offers a higher level of quality control than POD because you source the blank product, communicate face-to-face with the local shop, physically see the final product, and handle shipping.
Example: You create a digital design, source blank mugs, have them printed by a local shop, and ship them to buyers.
Creator → Digital Design → Local Print Shop → Storage → Customer Order → Shipping
Suitability for New Sellers: This production route is not ideal for new sellers. Many local shops require a minimum order quantity. As a new seller, you are testing your product ideas; therefore, it can be risky to invest in inventory upfront. It is best to start with POD and switch to local shops later on, once your store has consistent sales. You can then bulk-print your best-selling products to increase profit margins and ensure faster shipping, as POD companies typically take 7-14 working days to deliver.
4. Your Design + In-House Manufacturing – The Serious Business Route
This production route offers the highest level of quality control because you handle all aspects of the production process, from sourcing material to production to shipping.
Examples: You create a digital T-shirt design, source blank T-shirts, print with your machine, and ship to buyers.
Creator → Digital Design → In-house Machines → Storage → Shipping
Suitability for New Sellers: This production route is not ideal for new sellers, as it requires a high upfront investment in materials and machines. This production route only makes sense when your products have sufficient demand to quickly recover the cost of in-house machines. After recovering the initial investment, profit margins are typically higher than those of other production routes.
| Print-On-Demand | Local Shops | In-house Manufacturing |
|---|---|---|
| POD company provides blank products | The seller sources blank products | The seller sources blank products |
| No upfront investment | Upfront costs—bulk printing + inventory maintenance | Highest upfront costs—machine cost + inventory maintenance |
| Extensive design and color options | Limited design and color options | Limited design and color options |
| Shipping by POD company | Shipping by the seller | Shipping by the seller |
| Slow shipping (7-14 working days) | Fast shipping | Fast shipping |
| Less quality control | Better quality control | Highest quality control |
| Thin profit margins | Better profit margins | Highest profit margins |
| Best for: Beginners testing products Passive Income | Best for: Advanced sellers Full-time business | Best for: Large sellers Full-time business |
5. Curation and Creative Gift Packaging: The Non-Designer Route
If you don’t want to create a design or a product, you can sell gift baskets on Etsy. Per Etsy’s creativity standards, a specific-theme gift basket can be sold on Etsy if it consists of items personally curated and creatively packaged by the seller to create a unique set. Popular products in this category include spa gift baskets, wedding gift baskets, and hygge gift boxes.
Creator → Different Items → Specific-Theme Gift Basket → Shipping
Suitability for New Sellers: This production route can be suitable for new sellers if you do it strategically. You should start with a made-to-order approach rather than stocking large quantities of items. When starting out, you can pick a specific niche (e.g., a cozy spa gift basket), buy a limited number of items, create a variety of arrangements at different price points, and list them on your Etsy store. You can also make your basket unique by offering a variety of greeting card options, such as happy anniversary, congratulations, thank you, happy birthday, and get well soon.
Nice-to-know
Etsy does not allow reselling except for a few permitted items: vintage items, craft supplies, and party supplies. You can refer to the Etsy help article “Does Etsy Allow Drop Delivery or Reselling?” for more details. You can also consider this route if you are only interested in doing business without any involvement in the creation and design process.