How I’d Sell $5 Products for $10K/mo on Etsy (Copy Me)

[00:00:00]When I added my first $2 product to my Etsy shop, I did not expect much from it. But that $2 product turned into 146 listings that generated over $90,000 in revenue for my shop. And it made up 29% of my transactions across my shop in my entire Etsy career. Now, I've been on Etsy for over 9 years. I built my Etsy shop to over $1.7 million in total revenue. And the strategy that I'm about to teach you today, once you see it in the real world, you cannot unsee it.

[00:00:28]Costco is a great one. I go to Costco, gosh, twice twice every weekend. If you're a mom, you get it. Costco has a rotisserie chicken. It's $4.99.

[00:00:38]Easy, great value, people love it. You go there with that intent, and then you wander through the store, you pick up like a 20-pack of bubble gum, 12-pack of toothpaste, and a three-pack of pajamas, and suddenly you've spent like $200.

[00:00:51]Yes, you got your chicken, but you also spent a lot more money. Costco has sold this chicken at a loss for years. But they do it because that chicken gets you in the door. And then, once you're in the door, customers spend on average $150.

[00:01:04]IKEA does this with a hot dog for a dollar. McDonald's did this early on with their dollar menu. Nike does this with a $49 running shoe, kind of entry-level running shoe. Old Navy does this with dollar flip-flops. Barnes & Noble does this with $5 bestsellers right at the front of the store. And every single one of these companies, they understand something that most Etsy sellers don't. And this is that the products that get someone in the door is not the same product that makes the business profitable. So, a loss leader is a low price point, low margin product. Your primary goal is not to make a profit, but it's to generate a high volume of transactions. And this creates momentum that then elevates all the other listings in your shop, so they will all rank higher in search. So, the goal here is not to lose money, but the profit margin, by design, is pretty thin. Because your profit is thin, it's going to look like a great value to who you're selling to. And if we confuse these two things and try to make everything in our shop the most profitable, it is a huge reason that Etsy shops stall. They rank your listings based on a quality score, and the score is basically built off of different signals. So, click-through rate, conversion rate, order velocity, review rate, on-time shipping, all of these things contribute to that quality score. Order velocity is the one we're focused on right here. How quickly and frequently orders are coming in. The more consistent your shop gets transactions, the higher your quality score climbs, and the more Etsy's going to promote your listings for free.

[00:02:37][music] And think about it, it's kind of like a cycle. More orders, more transactions equals a higher quality score, and a higher quality score is going to lead to better ranking and higher ranking. And when you rank higher, you're going to get more orders.

[00:02:51]So, it all kind of goes in a circle.

[00:02:53]Higher price point products, they have a much slower sales cycle. People take longer to make those types of decisions.

[00:03:00]And yes, it's great for revenue if you get one $100 order at one time, but if that only happens once a month, that creates an order velocity problem. Your loss leader solves that order velocity problem, and it is the product that keeps the orders coming in daily. That signals to Etsy every day that we are a high-converting shop, and all of our listings are worth promoting. Now, let me give you the framework for what makes a good loss leader. It is not just a cheap product. That does not qualify something as a loss leader. A loss leader has to sell. If it's not selling at a high order velocity, it's not a loss leader. The first criteria is that it must have mass appeal. Your loss leader cannot be hyper-specific to a tiny niche or a very small subset of buyers. So, it has to be something that a wide range of people would say yes to without hesitating. So, think broader audience, not narrow audience. The The criteria is that a loss leader should be evergreen. It cannot be seasonal or holiday themed. So, the entire point of a loss leader is to generate consistent daily volume month after month and year after year. The moment a loss leader becomes seasonal, it stops doing its job cuz it will have months it doesn't sell, which means it's not really an effective loss leader. The third criteria is low labor. Now, you are not making money per hour on your loss leader the way you are on your other items. So, if your loss leader requires 3 hours of custom work, the math is not going to math here. It's not going to work. So, your loss leader needs to be something that you can fulfill quickly or instantly, like if it's a digital product or print-on-demand. My loss leaders, the flower heads, were $10 including shipping on average. Etsy fees took a $1.40. The cost including packaging because they were about 1 oz each was about $4, which meant my profit margin was about 46% and my hourly rate since it only took 2 minutes was actually $138 an hour. This is because it took 2 minutes. Now, the fourth criteria is that it is not heavily customized because the more customization a product requires, the more time it takes, the more communication it requires, and the harder it is to scale. So, a loss leader should be as close to ready to ship or instant download as possible. And the fifth criteria, and this is one that most sellers overlook, is that a loss leader needs to be targeting a unique set of long-tail keywords that none of your other listings already compete for.

[00:05:19]If you have 10 loss leaders and they all have the same or similar SEO, you're not really opening yourself up to new traffic. You're basically just competing with yourself. A loss leader cannot afford to be a dead weight listing. Each loss leader should be expanding your keyword footprint, not just duplicating your efforts. Now, I want to make this concrete for you and give you specific examples of loss leaders for each product category. Let's start with handmade shops. Your best loss leader is almost always going to be supplies. So, components or materials you already use and have to make your finished products.

[00:05:52]So, for my own shop, I sold finished expensive floral decor. My loss leaders were the materials, the flower heads, the floral foam, the greenery. If you do handmade jewelry, you could do earring backs or a ring sizer or a jewelry cleaning cloth or polishing cloth. If you sell handmade candles, your loss leaders could be simple taper candles or candlestick holders or wick trimmers.

[00:06:14]Let's say you do handmade giftable items. Your loss leader could be kind of small boxes that are like gifting boxes or organza bags. Now, let's talk about print on demand shops because loss leaders are going to look very different from handmade. So, for print on demand, entire product categories can function as loss leaders. Remember, we want to stay under $15 if possible. So, classic examples would be stickers, mugs, totes.

[00:06:38]All of these have lower price points, high mass appeal, and a large buyer base specifically on Etsy. You do not want your print on demand loss leader to only resonate with like 3% of buyers. You want something that a large kind of general audience would respond to. Now, for digital product shops, the number one thing I see is that people think, "My whole shop is a loss leader.

[00:06:59]Everything is cheap." That does not mean they are effective loss leaders. So, think about like a single printable like a budget tracker or a weekly planner page or a to-do list or habit tracker, something a buyer can purchase for like $1 to $3, download instantly, and actually use it today. So, for digital sellers who are targeting business owners or creators, a good loss leader idea might be social media caption template packs or Canva graphic templates or printable hang tags. And these are all inexpensive to produce, and they attract buyers who would return for your more expensive items as well.

[00:07:32]Now, if you are in the sourced category, there are two ways to do this. You can do craft supplies or components of other things, or you could go the route of items for events and occasions like birthday party favors and decor. Let's say you do jewelry supplies, you could do jump rings. Let's say you have silver, gold, and rose gold. Well, have your most popular color be your loss leader. Let's say you do kind of beating supplies, floral supplies, resin supplies, the same logic applies here.

[00:07:58]So, you want to look at what is your most universally desirable item? If you want to go the route of items for events and occasions, I love the idea of party supplies and party favors. So, maybe it's like a strawberry-themed party party favor for birthday party. So, you can sell literally strawberry-themed party favors under the sourced category.

[00:08:18]Most people don't even realize that. So, in my shop, loss leaders were 15% of my total listing count. So, 146 listings out of 933 listings total. But, those 15% of my listings generated 29% of my transactions. But, more important than the $90,000 that those loss leaders generated directly, they were actually the engine that elevated the other 887 listings in my shop. And every daily order I was getting on my loss leaders helped elevate my other profit and revenue-driving listings. And ultimately, this helped me generate over $1.7 million in revenue. And if you are thinking, all right, I want some specific guidance on what loss leaders to have for my shop, that is the exact type of guidance that we provide in our coaching program. If you want that personalized guidance, I would invite you to book a free call with my team and we can talk to you about your goals with Etsy. Some of you just need a little boost to get things on track. Some of you need a lot more help. But, regardless of what you need or where you're at, we would love to meet with you and put together a game plan. Use the link in the comments or the description to book that free 45-minute call. I hope you apply the loss leader strategy and I'll see you in the next video.