How to Build a Handicraft Online Marketplace like Etsy

The concept of e-commerce has been around as long as the Internet itself. Online marketplaces are now as common as real-life supermarkets and stores. The options of online shops are endless with new places appearing every year. Yet, there is something different about the Etsy marketplace and its popularity even in such a dense competition. After all, it is one of the oldest e-markets that has been going strong for more than 15 years. But why is that and what makes Etsy so special?

So, Etsy is strictly a peer-to-peer marketplace that allows personal transactions between creators and sellers. The platform doubled its sellers (from 2.6 to 5.5 million) and had an 80% increase in buyers during the past two years. The site is active across 250+ countries with about 90 million users visiting it each year worldwide.

Such a recent wild growth of Etsy’s market value also indicates what a promising idea an online handmade marketplace is. No wonder new versions of similar sites appear every year. However, not many of them can withstand the competition among each other, not to mention the giants awaiting them at the top. That’s why these new businesses better enter such an industry prepared. Learning the Etsy story and its place in the current market should be of help.

In this article, we will look into what makes an Etsy handmade marketplace so special and popular among customers and sellers, how to build a marketplace like Etsy, and what it takes to compete in the online handicraft business among other marketplace giants.

What is Etsy and how does it work?

So, what is Etsy? In short, Etsy is the most prominent  online marketplace for selling handmade items. It’s a P2P marketplace where people can share items of their creation, such as jewelry, clothes, homemade recipes, arts, etc. The goal of Etsy’s creators was to give crafters and artists a place to promote and sell their goods.

Hence, such a place not only encourages artists to continue their line of work but gives them the tools to monetize their creations. No big names, corporations, or popular brands have a spot on this site.

Now, how accessible and profitable is it to navigate a handicraft marketplace like that for sellers and crafters? Etsy works just like any other e-commerce site. Users can open the platform, browse it, search for the preferred items, make online purchases or start their personal selling pages where they can promote their arts, create a name for themselves, and build an audience.

Of course, the main difference here is in who can and cannot start storefronts on the site. For instance, Etsy has only recently allowed brand sales. However, these must be personal brands with unique items for sale; thus, nothing massively manufactured. The resale of handmade products is also forbidden.

In addition, the platform lets users handle most product operations, from storing to shipping. Thus, unlike many other online marketplaces, Etsy carries minimum customer service burdens like warehouse management, delivery, etc. Etsy sellers are responsible for their own inventory, shipping, tracking, and other services.

Overall, Etsy’s operation model is rather straightforward. So, how does Etsy work exactly?  Here are four simple steps any user can follow to get started on Etsy.


  1. Registration. Crafters need to log in, enter their personal data like email and phone number, describe their shop (choose categories, write descriptions, etc) and start filling their shop. Buyers log in to have a profile for storing their shopping history, saving favorite shops/items, and interacting on the platform.
  2. Search. Buyers can freely browse the platform, seek products they like, and place online orders.
  3. Payment. The deal is complete when buyers pay for an order on the platform after placing the desired items in their shopping cart.
  4. Review. Buyers also have the ability to comment on their purchases, leave ratings, photos, and full reviews.

These four steps lay in the foundation of any marketplace for handmade items. For the most part, users interact with each other, negotiate deals, ask for additional information, and arrange delivery methods. In turn, the platform focuses on its initial goal – to help bring the buyers and sellers together, while offering a secure place to complete crafts purchases online.

Etsy’s success story

Etsy’s story starts in 2005 in a Brooklyn office. Back then, Etsy’s creators Robert Kalin, Chris Maguire, and Haim Schoppik decided to open a platform for artisans to sell their goods online. The overall building process took less than three months. Over the next two years, Etsy creators worked on attracting new sellers to the site.

By mid-2007, Etsy made its first $1 million in sales. By 2008, the platform had $27 million in funding, more than half a million sellers, and 50 employees. The platform’s success was undeniable.

In 2009, Etsy was earning up to $13 million per month with its fame growing on an international level. In a year, Etsy reached 5 million active members while selling over 60 million items.

In five years, the company went public with an initial $1.8 billion valuation. In 2020, Etsy made it into the top five US e-marketplaces. The global pandemic has greatly affected customers’ shopping habits, forcing them to focus on online purchases more often. As a result, Etsy’s revenue growth showed a 128% increase compared to 2019. From 2020 to 2022, Etsy reported a 130% GMS increase.

The marketplace reached its peak in active users back in 2021 with over 96 million people operating on the site. In 2021, Etsy reported a record-high GMS of $13.5 billion. Its consolidated revenue in 2022 was $594.5 million.


Top 5 Etsy competitors

Learning Etsy’s story and functionality are essential for building a similar marketplace. However, to compete alongside it, one must also need to learn about similar platforms that followed Etsy’s steps. After all, Etsy is not alone in its drive to connect creators and buyers. The artisan platforms are nothing new to the current market.

So, here are the top five examples of Etsy competitors worth knowing about:

Amazon Handmade

Amazon Handmade is part of the total Amazon marketplace. Here, a seller lists items for free and pays very little commission for services. However, to participate in the sales one needs to pay for a subscription ($40).

Overall, it’s a little space inside the Amazon universe where crafters can promote and offer their handmade products. Of course, in such a marketplace artisan sellers face extreme competition among each other and bigger brands.


Although eBay is not focused solely on handmade items, it is still popular among artists, vintage collectors, and other crafters. This is an auction marketplace where people can list their items based on the minimum bet. Usually, an item goes to the highest bidder.

This revenue model includes rather high commissions from each sale (10-20%) plus a subscription. However, the listing is typically free as long as you post fewer than 50 items.

Big Cartel

Big Cartel is another old-timer in the industry. Launched in 2005, the marketplace has been a reliable platform for artists and creators ever since. Currently, it also allows small brands started by craftsmen. It’s one of the most affordable platforms on the market, with no obligatory subscription, transactional fees, or listing fees. In a way, it’s a platform similar to Etsy, yet its exposure and progress have not been as prominent.


This UK handmade marketplace works similarly to Etsy. With a minimal subscription and a small listing fee, artists can place their crafts and services on the platform. The commission on Folksy makes 6%, allowing rather good deals on unique products and handmade items.


Bonanza prides itself on being one of the least ordinary online marketplaces in the US. Sellers can start their business on the site, promote their products, and build relationships with their customers online. It’s a popular platform among aspiring artists and entrepreneurs.

Typically, sellers face no or little listing fee and pay no commissions. The subscription, however, can rise up to $170 per month, depending on the level of needed services and sales one completes in a month.

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Of course, these are only a few bright examples of Etsy’s main competitors online. In reality, the pool of online marketplaces for handmade goods and similar is much larger. Yet, not all competition can withstand the first few months/years in the industry. Here is how to create a website like Etsy that can face even the big players.

How to build a handicraft online marketplace like Etsy

Lastly, it’s worth learning how to build a marketplace like Etsy. Of course, all craft marketplaces will have something in common and some differences to compete with each other. However, the development process for all of them is rather similar.

So, here is how to create an online marketplace like Etsy in five steps.


1. Define your niche and audience

Of course, having the idea to build a marketplace similar to Etsy is not specific enough for the first development stage. Hence, you should start by defining your future platform’s target audience and their needs.

For example, these are three main customer groups to expect in the marketplace for handmade products:

  • sellers – creators and artists who try to make a living off their art;
  • buyers – people who seek for one of a kind items online; and
  • small businesses – entrepreneurs trying to promote their brand.

The focus on the buyers and sellers will help you determine the characteristics and specifics of your handmade marketplace. Since the industry is overcrowded, finding the right niche with a specific audience may determine the platform’s future success.

It means each platform should define its value propositions to each customer group:

For sellers & small businesses:

  • an opportunity to open up and customize a personal shop online,
  • global reach, and
  • shop management tools for sales optimization.

For buyers:

  • shopping convenience (easy search, fast payments, international shipping, etc);
  • unique handmade item choices; and
  • a friendly online community.

Hence, any development plan should find out what their audience needs, likes, expects, and how it will differ from similar selling sites.

2. Solve the chicken-and-egg problem

Running an online marketplace for handmade crafts means dealing with individual sellers. However, how does one attract those sellers and crafters to a new marketplace? After all, to sell, one needs customers. Though, to have customers, the platform needs goods to offer. So how to attract both at the same time? That is, in a nutshell, a chicken-and-egg problem of any Etsy-like marketplace.

Solving such an issue requires a solid marketing plan. For one, a new platform may target local and/or well-known artists. Such crafters can come with an already acquired audience, which solves the lack of customer problems too.

Read also: Smart Strategies to Attract Sellers and Buyers to Your Online Marketplace


3. Choose a revenue model

All e-commerce online marketplaces have several options for monetization. Let’s see the Etsy revenue model along with its current rates:

  • Commission

The platform charges around 6.5% of the final cost (product + shipping + wrapping, etc.) for each successful transaction on the site.

  • Subscription

A monthly subscription is often offered to sellers. It costs $10 per month. Such an option opens up to customers a higher variety of tools, special services, extra customization offers, discounts, etc.

  • Advertisement

A marketplace can promote sellers’ items on and off the site for special fees. Sellers can choose an ad budget based on the platform’s plans or personal preferences. All ad bidding is voluntary, and sellers choose the budget for themselves. In some instances, sellers pay for advertisements only in case it leads to a sale.

  • Listing fees

Sellers have to pay small listing fees ($0.20) per each item they put on the side. Such a fee can last up to several months or till the item is sold.

The great variety of monetization policies is both liberating and challenging for newcomers. Choosing the wrong monetization strategy may sink the whole project once it is open for the live audience.

A revenue model should work for all parties involved – sellers, buyers, and the marketplace. Finding such a balance takes a lot of testing. It’s best to try several options with the MVP’s help before finalizing any decision. An MVP will show how well users react to each model, and what monetization process fits the marketplace’s interests best.

Looking to develop a marketplace like Etsy?

We at Eastern Peak can help you create an online marketplace for handmade goods that can face even the big players. Let’s get in touch!

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4. Choose key marketplace features

An Etsy online marketplace has separate lists of features designed for buyers, sellers, and admins. All special features should help users feel in control of their operations, making shopping easy, engaging, and convenient. Let’s see some examples.


  • a dashboard – easy access to overview essential data in real-time to monitor and analyze activities on the site;
  • commission and tax control – an ability to introduce transaction fees and tax regulations;
  • customer management – an ability to interact with customers, solve organizational issues, and build a loyal customer base;
  • listing management (category, items, stock) – a process of checking, organizing, and observing listing information; and
  • analytics – reports on the site’s statistics that inform and interpret common patterns, measure trends, notifications of behavior changes, etc.


  • product search – organization and categorization of products will make the item selection easier;
  • in-app chat options – the feature allows buyers and sellers to communicate on the site;
  • favorites – buyers can save preferred items or shops in their profiles;
  • shopping cart – a place where buyers can review, manage, and complete their orders;
  • payment methods choices – a feature for easy and fast transactions on the site;
  • review/ranking options – an option to leave a comment or ranking about the quality/satisfaction of the purchase; and
  • shopping and transaction history – a chance to review personal shopping history, repeat purchases, and analyze previous transactions.


  • creating personal pages/stores – a chance to open and customize selling pages;
  • in-app chat options –  the feature allows buyers and sellers to communicate on the site;
  • product management (stock, order, transactions) – an ability to organize and view items for sale, analyze their amount, popularity, etc.;
  • shopping management and history – a feature for checking requests for orders, shipping status, sold record, etc.; and
  • store analytics – an option to analyze sellers’ activities on the site and provide them with useful information based on their annual/monthly actions.

These are only some of the core features of Etsy that most online homemade marketplaces share. Of course, the list is not limiting developers to seek additional, unique features for getting an upper hand in the competition.

5. Etsy-like marketplace development

Sure enough, one needs a solid marketplace development strategy in order for this to work. For example, it’s often recommended to build the platform from zero for higher scalability and control over the platform. However, such an approach will require a good development team.

Overall, the development processes start with defining a target audience. It is a determinative factor for choosing the design, functions, main features, revenue model, etc. Thus, it involves extensive brainstorming sessions with the development team. The product development also includes support after the release, bug discovery and fixing, feedback analysis, and improvement.

The scale of the entire project will depend on such factors as a company’s budget, time limits, and the complexity of the product.

We at Eastern Peak have extensive experience with marketplace development. See our marketplace portfolio to find out more in-depth information about our recent cases. 


Get help making a website like Etsy

Starting a website like Etsy can turn into a rather promising business. Sure, there is lots of competition on the way. Yet, no handmade goods marketplace is the same. So, there can be enough space for everyone, as long as you find the right approach, define your target audience, and choose a smart development strategy.

As an example, view a video testimonial below of the Bizzabo event marketplace – the world’s fastest growing event technology company that empowers event marketers to manage, measure and grow professional events across the globe via their online event platform.


How to get started?

The product discovery phase is the best first step you can take to lay a solid foundation for the development of your online marketplace. It includes a functional specification, UX/UI design, and a visual prototype that will give you a clear vision of the end product. On average, this phase takes 4-6 weeks.

The product discovery phase can help you:

  • define a full scope of work and develop a roadmap for building a marketplace
  • set a realistic budget for your MVP and plan your resources
  • test the waters with your audience using a visual prototype
  • craft a convincing investment pitch
  • get to know your team

Our specialists at Eastern Peak can easily help you develop a marketplace like Etsy using their experience in the matter. So, don’t wait and schedule a free consultation with our team to discuss all your queries.

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