This is a common situation for small sellers. The new Shopify site finally goes live, the owner adds up what Etsy charged over the past year, and the total is discouraging. The immediate reaction is to close the Etsy shop and direct all customers to the new site. For most small shops, however, that decision would cut off the majority of new customers overnight.
This is the central question behind almost every small online seller's setup: marketplace, or your own store? In our view, the answer is not one or the other. It is a matter of assigning each channel the role it performs best.
What are marketplaces like Etsy and Amazon good at?
Their main strength is that they have the buyers. Millions of people open Etsy or Amazon already intending to buy something. A new website, by contrast, starts with no visitors. Each one must be earned through Google, social media, advertising or word of mouth.
A marketplace also provides much of the trust on your behalf. A first-time buyer who has never heard of your brand will still buy through Amazon, because they trust Amazon's return policy. The same applies to Etsy's reviews and purchase protection. On an unfamiliar website, that same buyer hesitates.
Marketplaces are also quick to set up. You can list a product on Etsy in an afternoon. Amazon requires more time and paperwork, but there is still nothing to build.
For a new product or a new maker, we therefore almost always recommend starting on a marketplace. It is the most economical way to confirm whether there is genuine demand for the product.
What do marketplaces cost in fees, rules and customer ownership?
Marketplaces have three significant costs.
What fees apply to each sale?
On Etsy, you pay a listing fee (20 cents US per item), a 6.5% transaction fee on the sale price and shipping, payment processing fees, and a percentage on sales generated through Etsy's offsite ads. On Amazon, there is either a per-item fee or a monthly Professional plan, plus a referral fee on each sale that varies by category and is often around 15%. Fulfillment fees are added if Amazon ships for you.
None of these fees is hidden, but they are easy to underestimate. On a $30 item, the platform's share plus shipping can absorb a substantial portion of what remains after materials. We recommend entering every fee in a spreadsheet and calculating the actual amount retained per sale, product by product. Some products may be losing money on a marketplace without the seller being aware of it.
Who controls the rules?
Marketplaces change their fees, search rankings and policies at their own discretion. A shop that appeared on the first page can drop overnight after an algorithm change. Accounts are suspended, sometimes in error, and reinstatement is slow. This represents considerable risk to place on a single platform.
Who owns the customer relationship?
In our view, this is the most important issue. On a marketplace, the buyer is the platform's customer. The seller receives a name and a shipping address, and marketing to that customer outside the platform is restricted. When the customer wants to buy again, they return to the marketplace, where competitors are only a scroll away.
What does your own store (Shopify, WooCommerce) do well?
Your own store offers better margins and a direct relationship. On your own online store, you pay a monthly plan and payment processing fees, and very little else. There is no referral commission and no offsite advertising fee that you did not choose.
The customer list belongs to you. Customers can subscribe to your newsletter, you know what they have purchased, and you can inform them when the fall collection is ready. You control the design, the story and the photos. You can create bundles, offer gift cards and run your own promotions.
The challenge is traffic. Few people find a new store by chance. Considerable time must be invested in search, social media and email before your own site generates steady sales, which usually takes several months.
We recommend Shopify to most small sellers, as it handles hosting, security and payments with little complexity. WooCommerce on WordPress offers more control and suits businesses that already have a WordPress site, but it requires ongoing maintenance.
How can marketplaces and your own store be combined?
Here is the approach we recommend to most small makers and shops.
- Use marketplaces to identify demand. List your products there first. Observe which products attract views and favourites, and which ones sell. This is market research that would otherwise have a cost.
- Build your own store in parallel. Offer the same products, often at the same price or slightly lower, since you are not paying the marketplace's commission.
- Guide repeat customers toward your store. Always within the platform's rules: a well-designed card in the package with your website address, and an invitation to subscribe to your newsletter rather than a discount code that would breach the marketplace's terms. Each platform has different rules, and they should be reviewed carefully.
- Give customers a reason to buy directly. Exclusive products, early access, bundles or local pickup: something the marketplace listing does not offer.
- Monitor the fees on every sale. Recalculate every few months, as both the fees and your product mix change over time.
Over time, the balance should shift. In the early stages, most sales may come from the marketplace. After a couple of years, the objective is for the majority of repeat business to come through your own site, with the marketplace continuing to bring in new customers.
What should Quebec sellers keep in mind?
If you sell in Quebec, your product pages and checkout must work in French. Marketplaces handle part of this requirement; on your own store, it is your responsibility. It is also an opportunity. Many small online shops in Quebec are English-only or poorly translated. A properly bilingual store conveys a local presence, and that is an advantage Amazon cannot replicate.
Local pickup is also worth offering. It reduces shipping costs, brings customers to your door, and for a small-town shop, it is often what turns an online visitor into a buyer.
In summary, we do not recommend closing the Etsy shop. We recommend treating it as the storefront window rather than the business itself, while your own store remains the core of the business.