How To Create An Online Marketplace Like Etsy

Do you have a unique product and want to build a platform to sell it? Or, are you a business owner who wants to develop a C2C marketplace as efficient as Etsy to become the best artisan platform in the market today? Sounds similar to your aspirations? You have landed at the right place to find the best solution to your questions. Here, you will get a comprehensive guide to creating a website like Etsy. 

Etsy boasts an impressive 96.4 million daily customers, making it a major player in the artisan platform space. However, this shouldn't prevent you from building an online marketplace like Etsy. Instead, it's a reminder of the vast market potential and the many opportunities for success for you as an artisan platform entrepreneur.

Let's kickstart your journey to become the next most successful and efficient online marketplace platform! 

I. Is It That Easy to Create an Online Marketplace like Etsy?

Etsy is today known as a global marketplace with buyers from around 80 countries and sellers in around 234 countries. 

But was this always the story of Etsy? No. In 2005, Etsy founder Rob Kalin was an amateur furnituremaker who struggled to sell his furniture. Partnering with Haim Schoppik and Chris Maguire, he then created Etsy. Within a few months, the platform attracted thousands of buyers and sellers.

Today, Etsy is a public company with a net worth of $20 Billion.

Though it took Etsy around two decades to be a successful e-commerce marketplace, you can do the same in a few days. Today, it is easier than ever to build an e-commerce marketplace website like Etsy. How?

The three major push behind it are: 

• First, e-commerce marketplace companies are growing very fast and growing vertically! Unlike a horizontal marketplace, which sells a wide variety of goods and serves multiple industries (e.g., Amazon or eBay), a vertical marketplace ( e.g., Mybageecha, Gabbar Farms) specializes in a single product category or industry segment. Founders have countless opportunities to build and scale their marketplace businesses. What it demands from you is focus and specialization.

• Second, you don't need to break the bank to start a marketplace. Gone are the days when business owners primarily allocated their capital to initial inventory investments. Marketplaces similar to Etsy make the process easy cutting the need to buy supplies, negotiate contracts with suppliers, or even manage logistics. Your marketplace users now do it all by themselves. All you have to do is to provide them with a platform to meet their potential customer.  

• Third, the easy availability of multivendor marketplace builders like Shipturtle. We can help you validate and launch your idea. When you need to advance, the software offers you a chance to add custom features with minimal costs compared to creating a platform from scratch.

II. Features of B2C/C2C Marketplace Website like Etsy

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Etsy - a platform to buy and sell handmade and unique products- has become the go-to online marketplace for independent entrepreneurship and artisanal craftsmanship. If you also want to crack the code of what makes Etsy a household online store name in the world of e-commerce, you must be familiar with the core features that support its user-friendly interface. Let's dig into this information.

Platform overview

• Business Model: Etsy operates on a multivendor marketplace model where artisans, small businesses, and independent creators list their products, and Etsy facilitates sales through its platform. Etsy takes a commission on each sale and charges listing fees.
• Focus: The platform focuses on handmade, vintage goods, and craft supplies, allowing small-scale sellers to reach a global audience.
• Scale: As of 2023, Etsy boasts over 7.5 million active sellers and more than 95 million active buyers, making it one of the largest craft-focused platforms in the world.

For buyers

1. Search & discovery

• The feature of filtering search by price, location, and item specifics streamlines the customer's product discovery progress.
• Detailed product listings & customization options help the buyer make a calculated and mindful decision.

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2. User reviews and ratings

• When shopping online, the customer needs some feedback on the product to build trust.
• Etsy has an honest review and rating corner on the platform for the sake of transparency and brings marketplace solutions.

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3. Conversations and messaging 

• The direct conversation with sellers helps with orders, payment queries, or any shipment-related issue.

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4. Shopping cart and transaction

• Buyer can easily add the item from multiple sellers and process for payment quickly.
  
• Multiple payment gateways, such as credit cards, PayPal, and the Etsy payment system, ensure a safe and secure option.

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5. Etsy’s buyer protection program

• Etsy reassures buyers that they are protected if items do not arrive, arrive damaged, or do not match the description.
• This helps build trust between buyers and sellers on the platform.

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For sellers

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1. Seller onboarding and verification

• Sellers can sign up with just an email address, and the platform guides them through setting up their shop, creating listings, and understanding Etsy policies. "Sell on Etsy" option enables users to be both buyer and seller from a single account.
• Etsy provides clear guidance through its Seller Handbook and tutorials, covering topics like photography, marketing, pricing, and customer service.
• All items listed must be handmade, vintage (over 20 years old), or craft supplies. Sellers may be asked to provide evidence of their product creation process to prove authenticity.

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2. Product description and customization options

• Seller gets to make a detailed description of their products with high-quality pictures, prices, and product credits.
  
• Etsy offers some listings with customization options, enabling sellers to offer products tailored to individual preferences.

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3. Sales and promotion updates 

• Seller gets to create their coupon codes to offer discounts to their customer. It encourages the customer to buy from the platform.
  
• Sellers can pay to have products showcased prominently in search results and category pages, which can increase their visibility.

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4. Shopping cart and payment

• Sellers can manage and process orders directly from the shopping cart.
  
• Sellers can use Etsy's integrated payment system, along with options like credit cards and PayPal, for secure transactions.

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5. Etsy community & compliance

• The Etsy Community Forum provides a space for sellers to ask questions, share advice, and learn best practices directly from Etsy and other sellers.
• When selling on Etsy, sellers agree to follow the terms of service. This helps the seller ensure they are legally compliant.

III. Incorporating an Etsy-Style Registry into Your Marketplace: A Key Feature for Success

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As an entrepreneur looking to build a marketplace like Etsy, incorporating a registry feature similar to Etsy Registry can be a strategic move. Here’s how and why you should integrate it into your business model:

Attract new customer segments

By offering a registry feature, you can tap into an entirely new audience—individuals planning special events who want to create curated gift lists. A registry appeals to users looking for:

• Weddings and Anniversaries: Couples can create gift lists featuring unique home décor, personalized keepsakes, and custom artwork for their new home.
• Baby Showers: Expectant parents can list one-of-a-kind nursery décor, custom baby clothing, or handmade toys.
• Housewarmings: Individuals moving into new homes can choose artisan home goods, furniture, and décor for a truly unique space.

Why it matters: When you cater to these events, your marketplace becomes more than just a place for casual purchases—it becomes a destination for meaningful, one-of-a-kind gifting experiences.

Enhance vendor sales with custom and personalized gifts

Etsy Registry capitalizes on its artisans’ ability to offer personalized, handcrafted items. If you implement a similar feature, your marketplace vendors can significantly increase their sales by targeting customers seeking customized gifts. Allowing vendors to offer personalized items within a registry enables them to:

• Upsell: Custom products often come with a higher price tag due to their bespoke nature. Vendors can charge a premium for customized work.
• Build Relationships: Providing personalized items creates a deeper connection between buyers and vendors, fostering repeat business and brand loyalty.

Actionable Tip: Ensure that your vendors have an easy way to add customizable options (like names, dates, or special messages) to their product listings, and make this process seamless for buyers.

V. Building a E-Commerce Website like Etsy: A Step-by-Step Guide for You

Creating a successful marketplace website depends on a few key things: creating a supportive community, creating a user-friendly interface, and being able to adapt to what your customers need.

Following is the guide that will help you create a site like Etsy: 

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Understand your niche and customer 

Since you're creating this website to serve a community of customers, understanding their needs is the first step in building a successful website. 

You must also effectively navigate the niche, understand trends, analyze influencers and direct/indirect competitors, and monitor benchmarks.

If the niche of your interest is overcrowded, first figure out what makes you different and what unique value you can offer to your customers. It will also help you to stay ahead of your competitors in the peer-to-peer marketplace.

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Launch your website as early as possible  

Launching your website as soon as possible gives you a competitive edge. As you onboard a group of early users, get their candid feedback. This will help shape your strategy.

The majority of markets ought to prioritize developing the supply side. Once you integrate the supply, you can begin serving your early client.

Know that no success is overnight. The marketplace grows with each passing day. Once you start adapting to forthcoming customer demands and adding features to unlock values, you start improving your core platform. Launching a website quickly gives you time and liberty to ensure you develop a marketplace with features that are in line with users' demands.  

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Tackle your marketplace growth strategies

Marketplaces use a wide range of growth marketing strategies. Among them are:

• Content marketing
  
• Paid media
  
• PR
  
• Social media advertisement
  
• and word-of-mouth marketing
  
  

Test it all to see which strategy suits you the best. Examine which tactics give a promising output, then test the techniques to see which ones perform the best. Iterate continuously and ensure you have a coordinated strategy to optimize marketing expenditures across all platforms. 

A solid understanding of the important market variables to monitor gives you an edge. Don't limit your attention to the big picture, such as transaction volumes or user counts; instead, delve deeper to gain a more detailed understanding of performance and identify more effective strategies to invest in expansion.

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Get a website design easy to navigate

To create the best website design for your online marketplace like Etsy, you should think about how your website visitors will use it. Here is the most recommended way to create an incredible UX design:

• Use one font for design, and a maximum of two for headers and text
• Ensure the font size is comfortable for reading: Choose large font if your audience are millennials or switch to medium font if your audience are Gen-Z!
• Hire an expert to work on micro-interactions across your product pages.
• Understand that a modern business needs a design compatible with mobile and tablets due to their long-term usability. 

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Choose a fitting revenue model 

Discussing the monetization strategy has already given you a glimpse of how the revenue model of Etsy works for an online marketplace website like Etsy. 

You can make money from your Etsy-like website in many ways. For instance, you can charge transaction fees, offer subscription tiers, list fees, premium services, ads, sponsored content, cross-border fees, host physical market events, and more.

Get inspired: Monetisation strategy of Etsy

Etsy's business model is very similar to that of other marketplaces like eBay and Amazon. It is a peer-to-peer marketplace that offers a platform for selling and buying unique, creative, and handmade products. 

But why do artisans and buyers like Etsy as their go-to online marketplace website? It's because Etsy is free for buyers to use. They just pay for the products they buy, and that's it—no extra fees.

Etsy's monetization strategies are centered on the seller side of the platform. The platform enables sellers to list and sell their products, and Etsy earns fees based on sales and services provided.

Here is a breakdown of Etsy's monetization strategy:

1. Transaction fee: 6.5% of the sale price
   
2. Subscription charges: $10 for getting Etsy plus a subscription
   
3. Pattern tool fee: $15/month
   
4. Listing fee: $0.20/ item
   
5. Order fee: varies with the seller's bank account location
   
6. Advertisation charges: depending on the product category and country of advertisement
7. Currency conversion charges: 2.5% of the net sale amount