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The Digital Product Shop Showdown: Etsy vs. Shopify

Episode 65: The Digital Product Shop Showdown: Etsy vs. Shopify

Should you be using Shopify or Etsy to sell your digital products?

This is a hot topic these days and in this episode of The Empowered Business Podcast, I’m sharing my thoughts on this matter in a four-part series all about selling digital products.

You’ll learn the five key points to consider before you make your decision between Etsy or Shopify for your digital product shop.

There are many pros and cons to using Etsy, and I share them in this episode. However, if you are serious about growing and scaling your digital product shop, you’re going to want to take these points into consideration because they could have a huge impact on your growth.

In Today’s Episode We Discuss:

  • The core difference between Shopify and Etsy
  • Customer data and why you need to own it
  • The Etsy terms and conditions you need to know 
  • How you can market your brand on Shopify vs. Etsy
  • The power of controlling the buyer journey
  • Why controlling your customer data and money is crucial to running a business
  • The pros to using Etsy for digital products and who should consider it

I hope you found this episode helpful. If you are brand new to business or business curious, Etsy might be the right decision for you. However, you need to go into it with your eyes open and consider the five key points I shared in this episode before you decide for sure. 

As you can see, I am pretty passionate about building digital product shops. So if you want to work with me on your digital product shop, I would love for you to join me the week of June 5th inside of the Digital Product Accelerator for our training, Simplify Your Sales For More Profit. It’s a free, week-long event that is a combination of short, impactful audio drops and an interactive live training. There’ll be a student panel, a Facebook group, and so much more! You’ll learn so much from this training and we hope you see you there! Register now to reserve your spot. 

Head over to http://monicafroese.com/listen to listen to this episode and previous episodes on your favorite podcast platform!

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You are listening to the Empowered Business podcast. I’m your host, Monica Froese, and if you’re like me, you want to grow a business you love that gives you financial freedom and fits your lifestyle. Every week you’ll get strategy and unfiltered opinions from me and other successful business owners that will inspire you to make big moves in your business. When we work together, we not only grow faster, we also amplify each other’s voices. Are you ready to build your business on your terms? Let’s jump in. Hi friend. I am back with another four part series about, you guessed it, digital product shops. If you are new around here and you are wondering what the heck I am talking about, jump back to episode 57 where I shared how I pivoted my business in 2022 to focus primarily on our digital product shop called The Empowered Shop in a nutshell. I believe all content creators, digital product sellers, course creators, membership owners, or anyone with a substantial amount of content that they’ve created over the years should have a shop to sell their products. A shop provides a cohesive shopping experience and makes selling to repeat customers super easy. My recommendation is to build your shop on an e-commerce platform called Shopify, where you control the marketing, branding, buying journey and customer data. In today’s episode, I want to address a hot topic that’s been coming up a lot. Inevitably, everyone wants to know one thing about starting a digital product shop.

[00:01:37] Monica Why Shopify and not Etsy? It’s a great question and I want to talk about it so you can make the best possible decision for your own business. To start, I think we really need to understand the difference between an e-commerce platform like Shopify versus a marketplace like Etsy. The core difference between the two is that on an e-commerce platform like Shopify, you are in control of everything what you sell, how you sell it, the enhancements you can offer during the buying process, and most importantly, you own the customer data and the right to communicate with your customer even when the order is closed. A marketplace is a third party intermediary that connects buyers and sellers. You are bound to operate your business by the marketplaces, terms and conditions, and you do not have the ability to communicate with your customers after you fulfill their order. In other words, you own almost nothing about the buying journey or the customer data making repeat customers very difficult. One of the first things you learn in business school is this It is cheaper to sell to an existing customer than to acquire a new customer. Now, don’t get me wrong, both are important to a healthy and sustainable business. But the fact of the matter is you really do not have a business if you are not able to communicate with your customer base after they place an order.

[00:03:00] Now, before we go too deep into this topic, I want to preface by saying that I do not think Etsy is bad or that you should not sell on Etsy. That is not my position at all. My position on Etsy is that it can be a supplemental revenue stream that takes advantage of a built in search engine. If people are searching for your products on Etsy, why not take advantage of it? Right. But this is where I see so many people going wrong. Inevitably, if you are trying to build a sustainable business, you are going to need to put effort into marketing your brand. Think about this. Somebody buys something from you and then tells their friend about it. Free advertising, right? That said, Friend is directed to your Etsy shop where they place one order and then they may never come back and see you again. You can’t email them or retarget them because you don’t have the ability to install tracking pixels for platforms like Facebook or Instagram. So basically this organic reach and momentum you start to create is not very leverageable because you don’t own the customer data. And that’s just one minor example. Whenever you spend time or money marketing your shop only to direct them to a third party platform, you are essentially making them a customer of someone else’s business. And in this case, that business is Etsy. It ends up becoming a losing proposition for you to make the central call to action in your business to a platform that is on rented land.

[00:04:24] So let’s dive a little bit deeper. There are five key points I want you to consider before making a decision on whether or not you should build your primary digital product shop on Etsy or Shopify. And the number one thing I want to talk about is the ownership of customer data. I’ve already mentioned this, but I think it’s really important to do something almost none of us do. Read the terms and conditions. Yep. I am that person who actually reads entire contracts before I sign and I encourage my customers to even read my terms and conditions before they purchase things from me. Transparency is very important to me, so I headed on over to Etsy seller terms and conditions and I want to quote a few very important things that I read there. You can find these terms at Etsy.com forward slash legal, forward slash sellers and they are effective as of December 1st, 2022. I’m condensing this down so I don’t bore you. But in quotations I’m going to read a snippet of what is on their seller’s Terms and Conditions page. It says You may receive a buyer’s email address or other information as a result of entering into a transaction with that buyer. This. Information may only be used for Etsy related communications or for facilitate it.

[00:05:46] Etsy transactions. You may not use this information for unsolicited commercial messages or unauthorized transactions without the buyer’s consent and subject to other applicable Etsy policies and laws. You may not add any Etsy member to your email or physical mailing list. Use the buyer’s identity for marketing or retain any payment information. Please bear in mind that you’re responsible for knowing the standard of consent required in any given instance. If Etsy and you are found to be joint data controllers of personal information and if Etsy is sued, fined or otherwise incurs expenses because of something you did in your capacity as a joint data controller of personal information, you agree to indemnify, defend and hold Etsy harmless against any claims costs, losses, damages, liabilities, judgments and expenses, including reasonable attorney fees in connection with your processing of buyer personal information. So let that sink in for a minute. Not only can you not communicate with your buyers outside of that single transaction or future Etsy facilitated transactions, meaning on the Etsy platform. They also said that you are signing up to potentially legally be responsible for such data in the event of a lawsuit. So let’s compare this to what happens when someone places an order through your Shopify store. First, you dictate the terms and conditions of the sale. Second, you get to add the customer to your email list for future communications. Three The chances of creating a repeat buyer are exponentially higher.

[00:07:31] And the real key point I really want you to take away from this is I have heard many people interpret Etsy’s seller’s terms and conditions many different ways, but I really think there’s a key sentence that I read that I actually just want to read again. This information, meaning the buyer email address may only be used for Etsy related communications or for Etsy facilitated transactions, period. So everyone might read it a little bit differently or think the lines a little bit different than what I think. And I’m not a lawyer. I’m not here to give you legal advice, but I think that sentence, in my opinion, is pretty clear and what they’re saying. Now, the next thing I want to talk about, number two is what products you can sell. So think about this. One day you wake up and suddenly your products are against Etsy’s terms and conditions. Your shop is shut down and everything disappears overnight. Frankly, this is one of the worst things that could happen to you when building a brand and rented land. The lack of control you have over everything is pretty scary. I know someone this happened to and I also like to read the terms and conditions myself and this is what I discovered in quotations. This is what the terms and conditions on Etsy tell us what can be sold on Etsy. Etsy is a unique marketplace. Buyers come here to purchase items that they might not find anywhere else.

[00:08:55] Everything listed for sale on Etsy must be handmade, vintage or a craft supply period. Honestly, the narrowness of this took me by surprise. Again, I encourage you to go read the entire section on what can be sold on Etsy and also the section on what can’t be sold on Etsy. But as you just heard, Etsy’s own terms narrow what you can sell on the platform significantly. After reading this, I was actually pretty curious if Shopify had any limitations on what could be sold. So I did some digging. There are some limitations I found at shopify.com/legal/aup. And I think once you read them, you’ll find that they are pretty reasonable, such as child exploitation materials, illegal activities and infringing on trademarks or copyrights. Basically, things that aren’t going to help you build a successful or legal business anyways. The point here is simple if you are selling legal products you own and control the entire experience of your shop on Shopify, you will not wake up one day and find all of your hard work has completely disappeared. Now, the third thing I want you to consider is marketing your brand. Now, I love this one because I think it is easy to overlook when making a decision on where to grow your shop since you actually own your shop on Shopify. You can do a lot of things that you cannot do on Etsy.

[00:10:15] For example, you can have your own domain like mine is power Shop.com. You have control over the presentation of your brand, such as the creative elements you use and the appearance of your shop. You can implement various marketing strategies on Shopify that you can’t on Etsy, such as building an affiliate program. An affiliate program is where you pay people a commission for recommending your products. Now, this is a great strategy for growing your customer base. You can also run off platform ads on places like Pinterest, Facebook, Instagram, TikTok and have complete control over the tracking data so you can make sure that your paid ads are actually successful in leading to sales. In essence, on Etsy, you are put in a box when it comes to marketing your brand. Every store looks the same, same setup, same everything. You have very little control over your own shop on Etsy. Now, the fourth thing I want you to consider is the buyer’s journey and the shopping experience. Essentially what I’m saying is how we actually make more money from the people who are visiting our shops. This is one of my personal favorite because when you own your shop, there are so many awesome things you can do to not only make the customer shopping experience better on Shopify, but also when you control the buying journey through your shop, it will inevitably lead to more money in episode 62. I break down five Shopify enhancements that added tens of thousands of dollars to our bottom line, all of which are not possible to do on Etsy.

[00:11:41] Things like order bumps, enhancements, upsells, unique testimonial incentives that lead to follow up coupons. Welcome offers. Gamification. The list goes on and on. I highly recommend listening to that episode to learn about all of the cool things you can do with Shopify. Now another thing I think is super important to understand about Etsy is that you cannot install your own codes or tracking pixels on your shop. This is extremely limiting when it comes to things like installing pixels for earning paid ads on platforms like Facebook and Instagram. We also use code to install user behavior software called Hotjar, which helps understand the actions people are taking in our shop. It is eye opening to be able to make changes to the buying experience based on what actual real human beings are doing. We also use code that installs a chat box so potential customers can message us in real time and we recover a lot of sales this way. The end result. You can’t control the buying journey or shopping experience on Etsy like you do on Shopify. Now, the fifth reason I want to talk about is your money. This one is arguably the most important and honestly pretty easy for me to explain. When someone buys something on Etsy, they are not paying you. They are paying.

[00:12:58] Etsy. Look at your credit card statement. It will say etsy.com. Why? Because a buyer is a customer of Etsy and not you. When someone buys from my shop, my company URL shows on the credit card statement. Now, I’ve already talked at length about the importance of owning your customer data, but this is super important to understand and I have a real scenario on how the money that gets paid to Etsy is not really your money. When a credit card is processed via Shopify, it goes through my merchant accounts and right into my bank account. When a credit card is processed on Etsy, Etsy needs to then turn around and pay you. It’s processed to them. It goes to their bank account. And recently there was a bank failure in the US that Etsy paid their sellers from. And Etsy sent an email out informing sellers their payments were on hold. I mean, I’m not going to sugarcoat this. That is scary and a very good illustration of what I’ve been saying. Controlling your customer data and money is crucial to running a business. Some of the sellers on Etsy were on the hook to ship physical items, and yet their money to do so was put on hold. That is not a good place to be in. Now, I know I just made a lot of arguments as to why I would pick Shopify over Etsy. However, there are a few pros to Etsy that I want to share with you because I want to give you a balanced look at this.

[00:14:16] Now the first thing is I was recently on a panel with some colleagues of mine and a acquaintance of mine named Sasha. She promotes using Etsy for people who are business curious and thought that was such an interesting term that she used. And what she meant by that was that she was helping people who did not already have any sort of established business, who maybe worked full time or maybe didn’t even know exactly what they wanted to sell. They were just curious about what could happen if they sold some things on the Internet. And she called a business curious. And essentially what Etsy allows you to do is it’s a low cost barrier to entry. So there are definitely more costs associated with building on your own land, right? So building your own shop. There’s more moving parts to that as well. So someone who maybe just wants to dabble and doesn’t really want to invest fully into being in business. Etsy could be a great place for them to start, and I really did appreciate her term business curious in that regard. Now, the second thing is, yes, there is built in traffic on Etsy. Etsy is essentially a search engine marketplace. When you go to Etsy, you go to find something to buy. You use the search bar, you plug in your keywords and you hope that what you’re looking for pops up.

[00:15:41] So because of that, there is built in traffic. Now I propose that you take advantage of that built in traffic after you have established your own shop. However, I cannot argue the fact that if you start Etsy first for sure there is a built in customer base there that you can leverage and that might be very appealing to some people. And the other thing I just want to point out is that there is nothing wrong with having a multi-channel approach. And what I mean by that is why not double dip? Why not take advantage of multiple avenues to make money with our digital products? And so really, in my opinion, this comes down to a question of do I build on my own land first and then go and double dip on a revenue stream on Etsy? Or do I start with the lower barrier to entry on Etsy and then build up and honestly, one way might make more sense to you in one way might make more sense to me. I do tend to work with people in terms of starting their Shopify stores for their digital products. I tend to work with people who already know how to attract people to them, so they basically already have something established, whether they have an established blog and content on their blog, and they have people every month coming to them, whether they’re an established course creator.

[00:17:01] Typically those are the people I’m working with to get their shops up and running. So if you are brand new and you have no foundations to a business and you’re in that business curious category, Etsy may be a good place for you to start. But given everything I told you in this episode, I want you to go in eyes wide open. I want you to understand what your limitations will be if that’s the avenue you choose. Okay, So as you can see, I am pretty passionate about building digital product shops. So if you want to work with me on your digital product shop, I would love for you to join me the week of June 5th inside of the Digital Shop Accelerator. We’ve coined it. Simplify your sales for more profit. This is a free week long event and it’s a combination of short, impactful audio drops and an interactive live training. And we’re also going to be doing a student panel where you get to hear from several successful shop owners. Plus this time we’ve added a pop up Facebook group so you can network with fellow creators and me and my team, and it’s going to be so good and so much fun, of course, too. So you can go and sign up today at Digital Shop experience.com/training. The link is also in the show notes. And during this week long free event, we’re going to be diving into things like how to make the mindset shift from free to paid that content creator to e-commerce shop owner who provides their value through selling.

[00:18:28] That’s right, because selling is serving. We’re going to talk about the real power of having a centralized call to action in your business. That’s your shop and the transformation that you will see when you make that shift in your business. I’ll show you how one low priced product can easily turn into a multi hundred dollar sale, which I have to just put a plug in there that is very hard to do on Etsy, but extremely easy to do on Shopify. And then we’ll do a live interactive demonstration on how you can leverage all of your hard work over the years at scale using a digital product shop. So if you’re in. Head on over to digital shop experience.com/training to sign up. Also tune in again next week for another episode about digital product shops. It surely will not disappoint. Until then. Thanks for tuning in to another episode of the Empowered Business podcast. I just launched a brand new subscribers only podcast called Monica Soapbox. It’s a nice supplement to what I share with you each week here. Monica Soapbox is more laid back where you’ll get unscripted behind the scenes updates on my business and the industry. Head on over to Empowered business.com/soapbox to sign up. See you here again next week.

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