Etsy Dropshipping Guide (What Beginners Need To Know Before Using The Platform)

November 14, 2023

The 2 ways to do dropshipping on Etsy are:

Start an Etsy store and outsource your products from a third-party provider.

Buy Etsy products and sell them on your e-commerce site.

Etsy is not your typical dropshipping supplier. In fact, they do not explicitly support dropshipping. And so, dropshippers may encounter difficulties along the way. These challenges can lead to limited market reach, lower income, and even business failure. Make sure to observe Etsy's dropshipping rules and restrictions to avoid potential problems.

You can, for example, do your own research or take up a dropshipping course to learn the in's and out's of the industry. It's important to how to do dropshipping the right way if you want to make money and increase your chances of success. 

Aside from dropshipping, local lead generation is another great business idea. It requires a smaller investment capital to start. lesser time investment, and bigger potential for earning passive income. 

How to do dropshipping on Etsy

1. Start an Etsy store and outsource your products from a third-party provider.

Your first option is to start your own store on Etsy and then outsource production to another company. This is acceptable as long as you’re involved in designing the products. Besides, Etsy’s terms and conditions dictate that allowed handmade items are “made or designed” by the sellers themselves. 

When taking this route, however, be ready to handle order fulfillment once buyers start purchasing your goods. Also, take note that your supplier should be from a different platform since sourcing and reselling products within Etsy is forbidden.

2. Buy Etsy products and sell them on your e-commerce site.

As an alternative, you can purchase directly from Etsy merchants and then resell them outside of Etsy - which is your own e-commerce store. With this, you will enjoy greater freedom and control in your dropshipping operations since you won’t be limited by Etsy’s restrictions.

Etsy is an e-commerce marketplace that specializes in selling handcrafted items, vintage goods, and craft supplies. The platform was founded on June 18, 2005 by friends Rob Kalin, Chris Maguire, Jared Tarbell, and Haim Schoppik. At the time, Kalin was a newbie furniture maker struggling to sell his crafts online. In a Brooklyn apartment, the four later started the Etsy platform as an e-commerce marketplace where craftsmen and artists can sell their personalized creations online.

Etsy product categories

The Etsy marketplace currently has 15 top level product categories, namely:

  • Accessories
  • Art & Collectibles
  • Bags & Purses
  • Bath & Beauty
  • Books, Movies & Music
  • Clothing
  • Craft Supplies & Tools
  • Electronics & Accessories
  • Home & Living
  • Jewelry
  • Paper & Party Supplies
  • Pet Supplies
  • Shoes
  • Toys & Games
  • Weddings

Is Etsy good for dropshipping? 

Etsy can be good for dropshipping because it’s a reputable online marketplace. Many consider the platform as a quality source for interesting drop shipping products, such as handmade products, vintage items, and craft supplies.

Buyers frequent the site because they know sellers are legit and the products sold are unique. In their annual report with the US Securities and Exchange Commission, Etsy shared they had over 100 million items in their marketplace as of December 2022. Moreover, the site has connected 7.5 million vendors with 95.1 million customers. 

What are the pros and cons of dropshipping on Etsy?


Unique products. Etsy is home to millions of exclusive and high-value products. As such, it can be a great supplier for your dropshipping business.

Fast and free shipping. Etsy offers fast and free shipping in many of their products. In fact, domestic delivery may only take 1 to 3 days.

Fewer competition. As a source, Etsy is particularly challenging so not all entrepreneurs consider it as their first choice for dropshipping. The platform is known for its restrictions which means you get the advantage of having less competition for your business.

The potential for high profit. Typically, dropshippers earn 10% to 30% profit margin from the products they sell. On Etsy, you are selling one-of-a-kind handmade or vintage products and so customers are usually willing to pay higher. You can get a profit of up to 40% or more, so it can help you generate dropshipping passive income.


Product limitations. Because of Etsy’s strict rule of selling unique handmade pieces, vendors only get to sell limited product types. This could also mean fewer goods for you to dropship, compared with usual dropshipping suppliers that cater to a wider range of products and brands.

Etsy fees can be costly. The website requires a $0.2 listing fee per item and a 5% to 6.5% transaction fee. Also, the global currency conversion is worth 2.5% fee. If you want to build a custom website, you can use the Etsy Pattern tool for $15 per month.

Slower growth. Since Etsy isn’t really designed for selling mass-produced products, you can’t expect to grow your business quickly.

What challenges can you face when dropshipping on Etsy?

Some challenges you will face as you dropship on Etsy include:

Etsy doesn’t support dropshipping

You can’t resell on Etsy

1. Etsy doesn’t support dropshipping

Technically, Etsy does not directly permit dropshipping. Although there are hacks to bypass the restrictions (such as outsourcing the production of goods you've designed), some dropshippers decide to skip the platform altogether. Instead, they go straight to using dropship-friendly ecommerce sites such as Amazon Handmade, Big Cartel, eBay, Shopify, and others.

2. You can’t resell on Etsy

Reselling is strictly prohibited on Etsy - particularly for handmade items. This is because Etsy requires products under the category to be made or designed by the sellers themselves. For example, you can’t sell repackaged or rebranded commercial items. Additionally, you’re not allowed to sell products made or designed by other sellers. If you’re selling antiques and craft supplies, you won’t have to worry about this rule.

What items are best to drop ship on Etsy?

The items that are best to dropship on Etsy are “homewares and home furnishings, jewelry and personal accessories, apparel, craft supplies, paper and party supplies, and toys and games.” According to an Etsy report, these 6 retail categories brought “approximately $10 billion, or 86% of 2022 GMS (gross merchandise sales).”

Meanwhile, cloud-based dropshipping platform AutoDS shares that the “top-caliber Etsy dropshipping items to source” are:

  • Beanie hats
  • Minimalist necklaces
  • Makeup mirrors
  • Neon signs
  • Floral wall art prints

How does Etsy pay you?

Etsy pays sellers through Etsy Payments, the primary way of getting paid on the platform. Once your Etsy shop signs up for Etsy Payments, your customers can start using different payment options such as:

  • Credit cards
  • Debit/bank cards
  • Apple Pay
  • Etsy credits
  • Etsy gift cards
  • Google Pay
  • PayPal (where available)
  • iDEAL (Netherlands)
  • Klarna installment payments (Australia, Canada, Spain, UK, USA)
  • Klarna Invoice (Germany)
  • Sofort (Austria, Germany)

Etsy likewise clarifies that vendors using Etsy Payment won’t need “to have an account on any of these services to receive money from them.” Sellers receive direct deposits on their bank accounts.

Is dropshipping on Etsy worth it?

Dropshipping on Etsy can be worth it if you know how to do it right. Despite its restrictions and limitations, Etsy has proven to deliver sales and profits. As you operate an Etsy shop or use it as a dropshipping source, it’s important to observe the ground rules to stay true to the platform’s purpose. 

A platform that brings consistent sales

etsy dropshipping review

YouTuber and dropshipper Makayla Piluso shared that she earned over $76,000 in one of her Etsy shops using the print-on-demand business model. According to her, she sold her designs on Etsy and used Printful for production.

“I did not have a lot of products and I was not doing a lot of work,” she said. “All I did was upload a few listings and got consistent sales throughout this year.”

An underrated dropshipping supplier

Ecommerce and entrepreneurship expert Bryan Guerra of Shopify Dropship Mastery also made a short YouTube video where he described Etsy as “an underrated supplier for dropshipping.”

He also added, “There are plenty of things that you can list from like t-shirts, mugs, tote bags, and aprons, for example, that can't be found on Amazon because they're typically from smaller third-party sellers that have print on demand designs exclusively on Etsy.”

In a separate video, he also recommended Etsy “for dropshippers currently banned on Facebook marketplace or if you're just looking for another place to diversify and dropship on another platform.”

Dropshipping ruined Etsy

Meanwhile, some users aren’t exactly thrilled about the presence of dropshippers in the Etsy marketplace. In a thread, one Redditor wrote that dropshipping has “ruined Etsy,” taking it away from its original purpose.

The post reads:

“Etsy was a great concept for the people to be able to sell handmade unique pieces… But like all other e-commerce the website attracted vultures. Some (alot) people now just find cheap factory made goods from Alibaba/Amazon/Craigslist and then jack up the price and start selling on Etsy.”

etsy dropshipping guide reddit review

What are other dropshipping platforms and tools you can use?

Other dropshipping platforms and tools you can use include:

As you sell on your Etsy shop or outsource products there, you should also consider other suppliers and providers. While it may require more time and money investment on your end, doing so could also lead to bigger earnings and a better dropshipping process. 

What is Etsy?

True to their vision, Etsy is now known as a site where people “come together to make, sell, buy, and collect unique items.” The company website also adds that they’re also “a community pushing for positive change for small businesses, people, and the planet.”

Aside from their ecommerce website, Etsy also has an app available for download via the App Store and Google Play where it has a rating of 4.9 stars and 4.8 stars respectively. According to Etsy, sellers can use the app to access order information, manage orders, track shipments, and more.

Related Articles on Dropshipping

Final thoughts

Doing Etsy dropshipping can be tricky so it’s also best to explore other options out there. If you’re determined to use the platform, stick with their rules so you can avoid getting your Etsy shop banned or suspended. Also, we’ve shared other platforms and tools that can help take your dropshipping business to the next level.

Meanwhile, those willing to consider other online business models may want to try local lead generation. The rank and rent model, for example, can be a great way to earn passive income from home.

As a dropshipper, most of your time will be spent monitoring customer orders and shipments. With lead generation, you will focus on ranking websites and pushing them to top search engine results. Another advantage of lead generation is that it’s a less saturated market. Instead of competing with thousands of dropshippers, you’re only going against 20 or so small businesses in a specific geographic area.

Ranking “house cleaning Brigham City Utah” or “house cleaning Brigham UT” will only take a few weeks. It will not be as hard as attracting buyers as a new dropshipper. As you rank a website, it will be much easier to find business owners to rent out your digital property to. This means you can earn continuous income as willing clients happily pay you monthly for the traffic and leads you generate for them. 

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Ippei Kanehara

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