Easiest Way To Start a Digital Product Etsy Shop in 2024 (4 Steps)

Etsy is a well-established online marketplace that had 95 million active buyers in 2023, making it a great opportunity to make passive income with low initial costs compared to other conventional business ventures.

Digital products or digital downloads are non-physical products that are purchased and received entirely online, without any need for shipment. This includes eBooks, templates, digital art, and printables.

The four pillars to starting a successful digital products Etsy shop are:

1. Market Research
2. Product Creation
3. Branding
4. Getting Customers

Let’s now break each of these down into more detail so you can learn everything you need to know about selling digital downloads on Etsy as a beginner!

Pillar 1 - Doing Market Research

Before creating any products, you need to ensure there’s a demand for the product, that people are searching for it, and that the competition isn’t too saturated. This is the most important part of starting your Etsy journey, because even if your product is amazing, if there’s no market for it, then it’s hard to do well!

You can also use this phase to get familiarized with the platform. Become a customer first, and know exactly what the buyer’s journey is like, from adding something to the cart, purchasing it, and so on. You will gain a lot of insight through this!

If you’re unsure which niche to tap into, you can check out my list of 100 profitable digital product ideas here.

Analyzing Competitors

To ensure that the category you are tapping into is profitable, you can analyse other Etsy shops and listings. To do this, I like to use EverBee, which is a Chrome extension tool that you can try out here. There is a free version, but I do recommend the paid version as it allows you to see more valuable metrics.

When you search for a product on Etsy and use the ‘Product Analytics’ section of the Everbee Chrome extension, it gathers data from all the products on the page, including:

• Monthly Sales
• Monthly Revenue
• Total Sales
• Price Point
• Number of Reviews
• Listing Age
• Number of Favorites
• Number of Views
• Shop Age

The page will look something like this:

The 3 most important metrics to look at in this initial phase are:

1. Monthly Revenue - filter this from highest to lowest to get a quick indicator of what the best-sellers are.
2. Listing Age - if a certain listing has recently opened (within the past 5 months) and is doing well, this means there's still a good opportunity in the space.
3. Shop Age - similar to listing age, if the shop has recently opened and is still generating good monthly revenue, it further validates the opportunity there is in the niche.

💡 Remember that these metrics are for individual listings only. So if one listing is doing well, you can just imagine how well the whole shop is doing when you combine all their listings together!

When you click on a specific listing, you’ll be able to see the:

• Listing Title
• Category
• Conversion rate
• Review ratio
• Tags

To go a step further, you can also analyse individual shops. Click on the shop, then again use the EverBee extension to click on ‘Product Analytics’. Now you can see the data from all the different listings for that shop.

During this phase, it’s important to think about your interests, current skills, and goals for this journey:

• What are your interests?
• What skills do you already have?
• What are your short- and long-term plans for the shop?
• Do you plan to build multiple shops?

The answers to these will determine which niches are worth tapping into for you, but objectively seeing that people have done well in the niche you go into will certainly help boost confidence and motivation to know that if they can do it, then so can you too!

Pillar 2 - Product Creation

Once you know what niche and type of products you want to create, you need to identify the different software and tools you can use to create your digital downloads.

💡 There is a lot of hype around AI products at the moment, which is great because you can create a lot of listings quickly. But, something to consider is that if it's really easy for you to do, then it's just as simple for someone else to do too which can make the niche become easily saturated.

That's why I like to spend time creating high-quality products that people can't easily come in and take over the niche. The template space is a great opportunity for this that not a lot of people are talking about.

As for design platforms, Canva is great for creating templates. There is a variety of pre-made templates so you’re not starting from scratch, which you can then customize into your own style and branding so it becomes truly unique.

You should never use a pre-made template as it is because:

• You're not allowed to do that!
• Creating a cohesive collection of products with unique branding will help you stand out and therefore find a lot more success in the long run.

💡Canva is completely free to use. There is a paid version that gives you additional tools, but the free account is more than enough to get started.

If you’re creating your products using Canva, you will need to export them as template links, which you can learn how to do here.

Pillar 3 - Branding

You can create a cohesive branding through your:

• Shop title
• Shop logo
• Shop banner
• Product mockups

Creating a cohesive branding is important because:

• It shows professionalism which helps buyers know that your shop is trustworthy.
• This means people are more likely to trust and purchase from you, and over time you can build authority in the niche.

You can use software such as Canva, Adobe Suites or Photoshop to develop your branding.

One investment I would recommend is getting high-quality product mockups. There are many different sites to find them (including on Etsy), but I personally like Creative Market as they have many different styles, variations and bundles to choose from.

Plus, you will only need to pay for it once, and you can use the same design for all of your listings.

💡Note: You will need to use the commercial license on Creative Marketplace. That is what will allow you to list these on Etsy.

Pillar 4 - Getting Customers

By using Etsy to build your shop, it provides an already-established platform for people to find your products whilst being low-cost to maintain. As mentioned earlier, there were 95 million active buyers on Etsy in 2023. This means you can utilise this audience to gain traffic to your shop with the right Etsy SEO!

How much does it cost to get started on Etsy?

When building a store on Etsy, the only thing you need to pay upfront is the listing fee, which is 20 cents per listing. I always recommend launching your shop with 16 to 24 listings, so with 24 listings, that gives you a total of $4.80 to get started.

💡If you are just starting out, you can get your first 40 listings for free here!

After this, the processing fees for each sale you make are 6.5%. Remember that you are utilising the platform and audience they already have, so this is why they would take a small portion of your sales.

💡It’s really important to build all your products first before launching your shop. If you want to know why or learn more about starting a digital product Etsy shop, you can check out my free masterclass here where I walk you through the step-by-step process in a lot more detail!

Or, if you’d like to watch the full YouTube video for more visual explanations of what I’ve discussed above, you can do so below!

Full Video: Easiest Way To Start a Digital Product Etsy Shop in 2024