Etsy Product Research: A Step-by-Step Guide by Alura
Etsy has long been the go-to marketplace for selling quirky, creative, and beautiful handmade or vintage items. Many shop owners are making a full time living on Etsy, creating and selling products customers absolutely adore.
Successful sellers have one thing in common. They sell products customers want. Many sellers make the mistake of wasting time and effort creating and promoting products customers simply don’t buy.
This is why product research is so important. With product research, you can set yourself up for success by understanding your customers’ wants and verify the demand for what you are selling before pouring your heart into a creation.
After reading this guide, you’ll learn how to do product research on Etsy and how to find your new bestseller.
This is what we’ll cover!
- What is Etsy product research
- How to do product research on Etsy?
- Making a list of product ideas
- Scoring product ideas
- Evaluating product ideas
What is Etsy product research
Product research is all about finding a product that has a high chance of success.
The idea is to find a product you know customers are buying, that you can easily rank on Etsy because it has low competition and it can be sold with a good profit margin.
Product research is not about copying your competitors. Simply copying what someone else is doing will not make you successful. Once you find a promising product idea, you need to create something unique and put your creative spin on the idea.
This combination will set you up for success!
How to do product research on Etsy
Now the next question becomes, how do we find these amazing product opportunities?
We do it by following a product research strategy. There are three steps in our process:
- Making a list of product ideas
- Scoring product ideas
- Evaluating product ideas
So, we’ll create a list of product ideas, score these by how well they are selling, how much competition there is and estimate their profit potential. Finally, we’ll compare the product to each other and evaluate the ones with the best potential.
I’ll walk you through how we do this, and give you an example of an analysis we did for jewelry products.
Before you get started, you should get the Alura extension and the Alura product research sheet. You can download them for free here:
Step 1: Making a list of product ideas
The first step is to make a list of product ideas. We want a list of 25–100 ideas, the more the better!
You probably already have a few products you’re considering selling or expanding your Etsy shop with. Start with those and go on more from there!
Add your ideas to the Alura product research sheet, we’ll need this later.
Continue by browsing the relevant Etsy category pages and use that as inspiration for more product ideas.
Once your imagination runs out, I’d suggest looking at products from the following:
- Etsy suggests
- Etsy best selling shops
Etsy suggests
You’ve probably noticed Etsy search autocomplete feature. When you start typing something, Etsy suggests relevant search terms:
These are a goldmine for product ideas. They are a good starting point because those suggestions are actual products people are searching for on Etsy. Try entering a keyword that is relevant to your shop and see what the autocomplete features suggest.
Add the ones you find relevant to your list! We’ll investigate these further shortly.
To narrow down your search, try adding letters (A, then B, then C…) at the end of your main keyword. This way, you can find more niche products.
So, instead of searching for “gold necklace”, try searching for “gold necklace a”.
This provides two suggestions, “gold necklace aquamarine” and “gold necklace amethyst”. These products are more niche and will most likely have less competition!
Etsy best selling shops
A great source of inspiration is craftcounts bestseller list. Here you can see which shops are selling best overall on Etsy. By going to the best sellers by category page you can find shops relevant to you:
Start by analyzing the best selling shop in your category. Navigate to their Etsy store and open the Alura extension:
You can use the estimated sales metric to identify products that are selling well. Alura estimates the number of sales a product has had in the past month. Learn more about how our estimate works here.
Products with a high number of sales are potentially great product opportunities. Add the ones you find relevant to your product idea list.
Continue the search by opening the extension again on page two or shop sections you find interesting.
Now, repeat this process for multiple best selling stores in your niche!
You should now have a list of 20–100 product ideas, now it’s time to figure out which ones of these customers are interested in.
Please note: competitive analysis is not meant to copy your competitors, but to better understand what customers are looking for. Once you find a promising product idea, you need to create something unique and put your creative spin on the idea.
Step 2: Scoring product ideas
Next up is scoring all the product ideas on our list based on demand, competition and profit potential. We’ll go through the following and add the metric to the product research sheet as we move along:
- Verify demand
- Analyze competition
- Estimate profit
1. Verify demand
As a creative person, sometimes it’s tempting to simply make stuff that you enjoy making. But if your goal is to get sales, and not purely personal fulfillment, you have to create something people want or need.
Therefore, our goal is to verify the demand for a product niche before spending countless hours crafting. We want to find a product within a niche where we know that customers are willing to spend their money.
To find the answer to this very important question, use the main keyword that describes your product idea, search for it on Etsy and open Alura:
Alura provides monthly sales estimates for all products on your page.
So, for your product idea, you can see how well similar products are selling. The typical sales estimate gives you an indication of how many monthly sales you can expect for this product.
This is how we validate demand.
Let’s use “personalized bar necklace” as an example. For this product niche, you can see that the typical sales is 21. This means that the expected number of monthly sales for this type of product is 21.
Customers are clearly buying these items and there is a demand for this product!
We’ll add the typical sales number to the product research sheet under Sales:
Now that we have validated demand, let’s move on to see what the competition looks like.
2. Analyze competition
Step two is to evaluate the competition. We want to look at the number of competitors and the quality of the competitors to determine if we can compete in a product niche.
To evaluate the competition, we’ll look at:
a) Number of competitors
b) Quality of competition
If a product niche has a low number of competitors and bad quality listings, it will be easier to rank on Etsy and make sales!
a) Number of competitors
To find the number of competitors, enter your search term, open Alura and look at the total results in the footer. This number tells you how many listings (competitors) Etsy find relevant for a given search term:
A low number of total results is of course better. That means less competition!
The personalized bar necklace search term has a total results of 22,871 listings.
How do you know if that is good or bad? Great question, we analyzed thousands of search terms to find the correct answer and added it to the product research sheet to evaluate it automatically.
The sheet gives you a score from 1–10 where a competition score of 10 is the best. A competition score of 10 means that there are not many listings competing for a product and the quality of competition is low. The competition metric uses both the number of competitors and the quality of competition to give you a score.
So, add total results to the product research sheet and continue with quality of competition to see the competition score.
b) Quality of competition
Favorites is one of the factors Etsy uses to determine listing quality score¹. So if a niche has a large number of favorites compared to another one, the quality of competition will be higher and it will be harder to rank.
Use Alura and take note of the typical favorites number. Add this to the product research sheet and watch your competition score get calculated automatically:
3. Estimate profit
The next step is to estimate a product’s profit potential.
We want to estimate the profitability of a product idea so that we can:
- See if creating a similar product will be profitable
- Factor in profit potential when evaluating different product ideas
Would you rather sell 10 hoop earrings or 10 anniversary rings?
If both of these products had a 50% profit margin, the earrings would bring in an estimated $50 in profit, while the anniversary rings would give $750.
I’d go for the rings.
To be competitive in the market, you will most likely have to charge a similar price as the competition. You can use the Alura extension to find the typical price for your product idea.
Open the extension and add the typical price to the product research sheet.
When you add the price, the sheet automatically calculates your profit potential and gives you a profit score.
Step 3: Evaluating product ideas
Examining your results
Time to see the results!
The product research sheet gives you the results automatically. It evaluates the product idea and calculates a demand, competition, and profit score from 1–10 where ten is the best score.
It also gives you a total score from 1–100. The total score combines demand, competition, and profit to evaluate the product’s overall opportunity.
Let’s see how our personalized bar necklace did:
The total score personalized bar necklace is 59. This is an okay score, but it’s not very good.
You can see that it scores 10 on demand, which is great, clearly, a lot of people are buying this product. But it only scores 4 on competition, which indicates that there are a lot of other shops selling this product and they are hard to compete with. Lastly, the profit score is 5 which is okay but not that great.
Evaluating multiple product ideas
The next step is to go through this process for all of your product ideas. For all the products on your list:
- Search for the main keyword of the product
- Open the Alura extension
- Add the following to the product research sheet: sales, total results, favorites, price
Once you have 25–100 products analyzed, you can investigate the results and compare the products with each other to evaluate which product has the most potential.
On the Etsy product research sheet there is a sheet named results. It automatically creates a summary of your results sorted by the ones with the most potential:
It also contains the main findings of your analysis, and it explains why a product idea was ranked number one:
We did an analysis of 100 products in the jewelry category, download our report to see an example of what the result page looks like.
Evaluating your top picks
The final step is to evaluate your top-ranked products. You should now have a list of at least 5 product ideas you know have great demand, low competition, and great profit potential.
Let’s first start by dropping any product ideas you’re unable to create or simply not passionate about.
Now that we got that out of the way, we’ll investigate the top picks closer and evaluate them based on:
- A creative spin
- Seasonality
- Actual profit margin
We’ll move to the evaluation part of the product research sheet, drop your product ideas there and validate each individual product.
A creative spin
Simply copying what someone else is doing will not make you successful. Now that you have a product idea you know there is a willingness to pay for, in a market that is not saturated, you need to find a way to make it unique.
Your goal should be to find a way to put a creative spin on the product and improve the product idea.
Time to brainstorm. Start with the original product idea, let your brain wander and land in wild places. Write all your ideas down or sketch them out. At this stage, it’s all about finding inspiration and using the original product idea to put your own creative spin on it.
This could be your choice of pattern, design style, materials or a functional detail that sets you apart from the competition. Maybe you can find a way to improve the product? Try analyzing competitors’ less favorable reviews and find out what can be better.
Validate that you can put your own creative spin on it before moving on.
Seasonality
Arguably the best products are those with steady demand and online search volume year-round.
Traffic and sales are steadier, it’s easier to predict future sales and growth, it’s easier to estimate stock levels (if you’re storing stock) and most importantly, you will have a much more consistent and predictable income month after month!
The Google Trend Report is built right into the Chrome Extension to help determine seasonality:
If your product is seasonal, then you will see big dips in the line graph, just like this Christmas necklace. Compared to our gold necklace you can see that it spikes once every year.
Some people don’t mind selling seasonal products, but I would rather sell all year long!
Actual profit margin
Our first profit calculation was just a preliminary estimation based on the typical selling price. Now it’s time to calculate the actual profit potential of the product idea.
This is important so that we can ensure that your efforts are worthwhile.
You can use this profit margin calculator to see your actual profit margin. It automatically adds all Etsy fees.
You should calculate the profit margin for all of the products you think have potential and add them to the evaluation sheet. Try calculating your profit margin as accurately as possible:
What is a good profit margin?
Profit margins differ depending on the category you are selling in. Digital items will, of course, have a higher profit margin as they have no material costs associated with them. If you are selling a physical product, profit margins often range from 10–70%.
The average profit margin for small, medium and large e-commerce companies is 40%. I would recommend making sure you have at least a 30% profit margin.
Price
Your profit margin depends on the price you are charging for your product.
Charging a higher price will give you a better profit margin, but it will most likely reduce your conversion rate. Therefore, you need to consider your competition when pricing your product.
Products priced $15-$50 lie in the impulse buying decision range. At this price range, customers don’t spend too much time trying to find the optimal product. You will see much greater conversion rates for products in this price range.
Learn more about how to price your product here.
Closing remarks
I hope this guide has given you an idea of how to generate ideas and evaluate them when looking for products to sell on Etsy.
Keep generating ideas and applying the methodologies explained in this guide. You will be well on your way to building a thriving Etsy business!
