Selling on Etsy: Ultimate Truth

Selling on Etsy sounds simple. Create a digital product, upload it, and let the passive income flow. That’s the story many online “gurus” push, but the truth is more complicated. Especially in 2025, where Etsy has over 100 million listings and entire product categories are heavily saturated.

In this article, we unpack the real pros and cons of selling both physical and digital products on Etsy. We’ll highlight the red flags, the risks, and also show you which products are still worth exploring. If you’re thinking about opening an Etsy shop, this is the no-fluff guide you need. Etsy wrote a very practical Handbook on selling on Etsy, we recommend to read that as well.

Selling Physical vs Digital Products on Etsy: Two Very Different Games

Etsy allows you to sell both physical and digital goods, but the path to success looks very different for each.

Physical Products

Includes handmade goods (e.g., candles, jewellery), vintage items, or craft supplies.
Involves real inventory, shipping logistics, packaging, and handling returns.
Higher effort per sale, but often lower competition and better pricing power.

Digital Products

Includes planners, printable wall art, resume templates, Notion dashboards, etc.
Low cost to produce and fulfill, but extremely saturated.
Hundreds of new sellers enter the digital space daily, making visibility, originality, and branding critical.

Reddit threads on r/Etsy are full of stories about sellers launching 10+ digital products only to make zero sales. Why? Because markets like planners, budget templates, and affirmation cards are dominated by sellers with hundreds of reviews, strong SEO, and existing traction.

The “Digital Product Passive Income” Myth

Many content creators and online coaches promote Etsy as an effortless way to make money. The pitch is simple: make one digital download and sell it infinitely.

What they often leave out:

You’re competing with thousands of identical listings.
Many niches are oversaturated.
Success usually requires top-tier design, SEO optimisation, paid ads, and strong branding.

Yes, there are sellers who earn thousands per month from digital downloads, but they’ve often been at it for years, tested dozens of designs, and built traffic both on and off Etsy.

What Digital Products can Still Work in 2025?

Instead of jumping into the typical planner or checklist space, consider more niche or service-oriented digital items. Some lower-competition ideas include:

Digital sewing or embroidery patterns (especially customisable)
Digital party games or quizzes for birthdays, hen nights, etc.
Obscure business templates (e.g. rental inspection checklist templates which in accordance with the law of your country or Spiritual coaching intake forms and progress trackers)
Printable escape room kits for families or classrooms
Language-learning flashcards or teacher-focused worksheets in non-English languages

These niches have less competition and more targeted buyers. They also tend to attract repeat customers and higher conversion rates. The more specific the niche the better.

Tip: Use this formula to discover overlooked Etsy niches:
[Profession or lifestyle] + [specific use case] + template
Examples:

“barber client intake form”
“vanlife itinerary planner”
“ceramics inventory tracker”
“drone flight log”
“succulent watering schedule”

Combine this with Etsy filters: search with “United States” or “Customisable” on, and sort by “Most Recent” to see if it is still actively selling in it. If a product solves a real-world need and targets a niche that people actually spend money in, it’s worth testing.

Less Saturated Physical Product Ideas

Even though physical products require more effort, they can often stand out faster, especially in overlooked or emerging categories. Some ideas to explore:

Customised home décor for very specific spaces, like campervans or tiny homes
Personalised tools or accessories for niche hobbies (e.g., leatherworking, board games, model trains)
Handmade eco-friendly items not easily found on Amazon (e.g., beeswax wraps with custom prints)
Mini batch, hand-poured incense or herbal blends
Vintage restoration kits or upcycled items

These ideas work better when you pair them with storytelling and a unique brand voice, something most large Etsy shops often overlook.

Pros of Selling on Etsy

Built-in Audience: Etsy brings millions of buyers to the platform. You don’t need to start from zero.
Easy Setup: No technical knowledge needed. A shop can be live in less than a day.
Credibility and Trust: Buyers trust Etsy, which helps you get sales without a well-known brand.
Support for Creators: Etsy favours handmade, custom, or unique products.
Great for Testing Ideas: You can validate a product idea here before scaling to your own website.

Cons and Risks of Selling on Etsy You Shouldn’t Ignore

Heavily Saturated Market: Popular categories like planners or jewellery have thousands of listings.
Rising Fees: Transaction, listing, and processing fees can eat into 10–15% of your sale price.
Zero Customer Ownership: You don’t get email addresses or contact info. Etsy owns the relationship.
Algorithm Dependence: One Etsy search update can wipe out your traffic overnight.
Copyright and IP Issues:
- Etsy will suspend your shop for using Disney, Marvel, Nike, or Taylor Swift-related content, even if it’s just a quote or silhouette. You also risk copyright claims from the brands directly, which can run into (ten)thousands of dollars.
- Many sellers face takedown notices even for designs they created themselves if they resemble protected content too closely.
Design Theft and Cloning: Especially for digital files, there’s little protection. Expect copycats, AI-generated clones, or sellers undercutting your exact design.
Limited Store Customisation: You can’t change layout or create unique branding beyond a logo and banner.

How to Get Started the Right Way

Research Your Niche
Use tools like EtsyRank or Marmalead to find gaps in the market, not just high-volume keywords. If you don’t know where to start, look at our 99+ digital products to sell document to get some inspiration.
Build a Branded Shop
Choose a shop name that reflects your niche. Add a bio that connects with your target buyer.
Start With at Least 10 Listings
The more listings you have, the better Etsy understands your shop. Launch with a solid base.
Optimise Titles and Descriptions
Use strong keywords, but keep titles readable. Prioritise benefits over features.
Promote Off-Platform
Drive traffic from Pinterest, Instagram, or even Reddit. Don’t wait for Etsy alone to bring buyers.
Track, Adjust, and Test
Monitor performance. Kill low performers, double down on listings that convert.

Selling on Etsy Might Not Be Right For You If…

You want full control over design, branding, or customer relationships.
You’re in a rush to make quick cash: Etsy rewards consistency, not speed.
You’re not willing to invest time into learning SEO, design, or product photography.
You’re hoping to use pop culture or copyrighted designs to stand out. That path is short-lived and risky.

Selling on Etsy Could Be a Great Fit If…

You already create handmade or digital products and want to reach a larger audience.
You’re passionate about a niche and ready to serve a specific community.
You’re willing to treat Etsy as a real business, not just a passive side hustle.
You’re good at research, product testing, and adapting to marketplace changes.

Conclusion about Selling on Etsy

Etsy isn’t the quick-win platform that many make it out to be. It has real potential, but also real risks. Many of the “easy money” digital product ideas have been milked dry. And legal claims over protected IP are a constant concern if you’re not careful.

For us personally, we think Etsy is oversaturated, especially in the digital products part. We have tried selling digital products, but we haven’t made a sale yet. We will keep you updated on 100kPathway Insights with what we exactly did and if we will make a sale in the end.

If you are really creative, Etsy can still be a great platform to sell your hand-made goods on.

If you have made sales on Etsy with a store started in 2024 or 2025, please let us know in the comments or reach out to us via [email protected].