Hello Readers,
In our last post, we gave you an overview of various platforms that we’ve investigated for selling our products. That post served as an overview and summary of each platform so now, we’ll dive into the specifics.
An Overview
The first thing you need to know about all platforms is that you will most definitely be paying something to leverage the platform. There are a lot of great people and hard workers supporting these platforms. Those people need groceries too, so the platform itself has to be profitable. To do that, they have to collect money from someone. Typically, that money comes from the seller in the form of fees.
Fees can be generally split into processing fees and platform/transaction fees. The processing fees are ones you can never escape and relate to the cost to process credit cards, apple pay, google pay, etc. If you use Square, Zettle (Paypal), Etsy or WooCommerce in person – you’ll still pay that processing fee. These fees vary based on provider but it’s always a percentage of the total cost plus a fixed cost. Usually it’s something like 2.9% + $0.30.
What we refer to as platform fees are those fees associated with hosting your storefront on a specific platform. These vary wildly. Shopify charges a monthly rate while Etsy charges a minimal listing fee plus a transaction fee based on the sale cost of your item.
For our purposes, we generally lump fees together. When we say that Etsy has a 10% fee, what we actually mean is that they charge 6.5% of your sale price for their platform fee and about 3% for the transaction fee. We round up for simplicity.
The platform you choose will likely be driven by budget and sales projections. While we can’t speak to some platforms like Shopify with experience, we can say with some confidence that Shopify is more budget friendly for higher sales volume. Let’s have an example.
Imagine you make 1000 sales per month at an average amount of $20 per sale. Your processing fee is 2.9% + $0.30 per transaction. For Shopify Basic:
| Money | Amounts |
| Total Sales | Inflow: 1000*$20 = $20000 |
| Static Processing Fee | Outflow: 1000 * $0.30 = $300 |
| Percentage Processing Fee | Outflow: $20000 * 2.9% = $580 |
| Shopify Basic (Monthly Plan) | Outflow: $39 |
In that example, the estimated revenue is $19,081. (Note: This is not a calculation of profit as we did not account for product production, shipping, or advertising.)
Repeat that example for Etsy:
| Money Reason | Amounts |
| Total Sales | Inflow: 1000*$20 = $20000 |
| Listing Fee (Per Item) | Outflow: 1000 items * $0.20 = $200 |
| Static Processing Fee | Outflow: 1000 * $0.30 = $300 |
| Percentage Processing Fee | Outflow: $20000 * 2.9% = $580 |
| Etsy Transaction Fee | Outflow: $20000 * 6.5% = $1300 |
Now we have an estimated revenue of $17,620. The Etsy transaction hurts on higher volume.
Just remember, to get a true understanding of what is best for you, you need to also consider your advertising budget. Etsy is a platform with already established shoppers and market share. Shopify is not. You will advertise on both platforms but if you end up spending three times more to advertise your Shopify storefront, it might not be worth it.
In Our Experience
As of the time of writing, we are leveraging the following platforms for selling:
- Etsy
- WooCommerce
- Zettle
Etsy
On a platform like Etsy, you’ll pay almost nothing up front aside from the 20 cent listing fee. Each of these items can have multiple variations for no additional cost. You’ll pay this listing fee every 4 months, when you make a sale and have additional inventory, or when you manually relist an item after it expires. You’ll also pay about 9.5% in transaction fees and there’s a huge emphasis on free shipping. (Read: Another fee you need to bake into your pricing strategy.)
Let’s use one of our favorite examples, I Pooped and It Was Amazing. The hardcover edition of this book costs us approximately $12 per unit to produce and we established a retail price of $24.99 when we first published the book. We listed this book on Etsy at $26.99 and when it sells there, it works out like this:
| Item | Money Flow |
| Book Sale | + 26.99 |
| Listing Fee | – 0.20 |
| Transaction Fees at 9.5% | – 2.57 |
| Shipping (MediaMail Estimated) | – 4.00 |
| Book Production | – 12.00 |
Final estimated revenue for that book sale? $8.22. We used this book as an example because we’ve talked about it here before and it has the highest margin of our books. None of our others can compare.
We’ll talk about product pricing later, but here’s what went into determining this book’s price on Etsy:
- We need to account for marketing and running sales.
- On Etsy, we do not charge shipping so it has to be included in the list price.
- Etsy is also the only platform, currently, where you can request customization from us. Want the book dedicated to your Mom? We got you covered.
So, what do we get for all these fees to Etsy? In our mind, the main advantage is access to a marketplace where shoppers go to find products like ours. Looking for art? We got it. Looking for funny t-shirts? Yep, got that too.
Beyond that, Etsy handles sales tax and transactional emails to the customer. They have an affordable advertising model that allows you to advertise products on the platform and only pay when someone clicks through. Reporting is available to you for revenue, listing views, and what search terms led to your listing. Additional marketing tools are available to you to allow coupon codes and sales. For example, if you favorite one of our items and email is automatically sent to you with a coupon code to try to give you an incentive to complete that purchase.
Oh and unlike WooCommerce, you don’t have to pay extra to print nice packing slips/gift receipts.
WooCommerce
Let’s just say it up front, we like WooCommerce as an extension of WordPress. For all you writers-turned-business-people out there, this might be a natural extension for you to move from blogger to storefront. As mentioned in the last post, we don’t see WooCommerce as an additional cost given that we already pay for WordPress hosting with wordpress.com. (We chose the business plan from the start, which runs about $300 annually.)
At no additional platform cost, we can run a store front and list our products but just running a storefront doesn’t guarantee customers. It’s like that silly philosophy question you’ve no doubt heard, “If a tree falls in the woods and no one is there to hear it, did it make a noise?“
Our WooCommerce storefront is a lot like that.
Our website storefront is useful for anyone that knows exactly which of our products they’re looking for. For example, if you search for our book titles, you’ll find us.
People actively seeking out our books and products are not the concern. These are people we reach through Facebook, in-person events, or other marketing activities and they want our book. We can send them to any trustworthy storefront, really.
But it’s harder to reach people who are just doing random online searches for books. That’s where our WooCommerce shop fits in. It gave us the ability to sell direct to fans and friends while offering better discounts. And it’s attached to this blog, so every reader is a potential customer without redirecting elsewhere. We do incur a processing fee on all sales, though, amounting to about 3% of the total cost and it’s not nearly as refined as the Etsy system.
For example, if you abandon items in the cart on our website, you won’t get any sort of email or notification. Buy something from us and, beyond those transactional “we sent your goods” emails, you won’t hear from us.
This is, in part, due to our philosophy of not being jerks that mass email anyone that thought about making a purchase. It’s also due to not paying for those specific addons.
Etsy, on the other hand, will reach out and remind you about the cart and even offer a discount code automatically. They will also send you a discount code if you buy from us there.
Anyway, what are we getting for our annual subscription and processing fees?
The minimum set of tools to run a storefront. We can list our products, see basic reporting, run sales, and issue coupon codes. You can also extend WooCommerce with just about any functionality using plugins but most of these come at an additional cost. (Core ones, like sales tax calculation are free.) However, there is functionality missing that we wish existed as part of the core package: gift personalization, packing slip generation, and pre-order functionality to name a few.
Zettle
It’s worth noting that we are leveraging Zettle for in-person sales and not using the in-person options for Etsy or WooCommerce though both platforms offer this functionality. WooCommerce is done through WooPayments which you’ll most likely set up if you use the WooCommerce platform. Etsy is done through Square and requires a separate setup but should be easy enough to do.
The advantage you get out of using those systems is inventory syncing. If you have a large Etsy shop and sell the same items in-person, then using Square to accept payments is easier. You’ll pay a $0.20 fee to Etsy for the in-person sale (the listing fee) but you don’t pay the 6.5% transaction fee. The bonus is that your Etsy inventory will accurately reflect what you actually have.
For us, maintaining separate inventories is a huge pain but it’s just how things worked out. It comes down to our initial setup and processing fees at the time. While Zettle currently advertises a processing fee of 2.29%, when we started out, it was 1.75% making it the best on the market by quite a bit. And, to be honest, we hadn’t considered online selling at the time. We were focused on in-person events.
Now? We probably wouldn’t go with Zettle because transaction fees have increased and it’s a wholly separate system making things a bit more complicated when it comes time for inventory review.
Next Time
If you were disappointed that we didn’t dive into other platforms like Shopify, you can see opinions in our last post. We didn’t deep dive into them here because we wanted to focus on the platforms we’re actively using. Experience is the best teacher, after all, and we don’t want to mislead you into thinking we’re experts of every platform that exists.
In our next post, we’ll dive into shipping! Yay!
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