Have an Etsy Store? Make Sure It Is Properly Protected

The online marketplace Etsy has gone from a niche craft seller to one of the largest commerce companies in the world. Etsy has millions of active sellers worldwide, most of whom are based in the United States. Many Etsy store sellers rely on the site as a primary or secondary income stream. Collectively, they contribute billions of dollars per year to the US economy.

Etsy sellers tend to be independent workers who seek success on their own terms. But you should have a contingency plan for your Etsy store that considers the worst-case scenario of incapacitation or death. Ask yourself: what would happen to your store if you were no longer able to run it?

Whether it is a primary income source or a side hustle, an Etsy store is part of your legacy and deserves a place in your digital estate plan alongside other digital assets like social media accounts, subscription services, and cryptocurrency.

The Etsy Store Phenomenon

Etsy was founded in 2005 as GetCrafty.com, an online community geared toward female craft makers. Forum users frequently commented that they wished there was an e-commerce site that allowed them to buy and sell the things they made.^[1] The inspiration to create an eBay for handmade goods led to the Etsy platform, which in 2022 boasted 7.5 million active sellers, 95 million active buyers, more than 100 listed items, and $13.3 billion in gross merchandise sales.^[2]

Since going public, some sellers have complained that the company has strayed too far from its do-it-yourself roots. But even as Etsy becomes more of a sales-driven machine, it still serves as an on-ramp for entrepreneurs who might not have started a business otherwise. This was particularly true during the COVID-19 pandemic when Etsy’s business—and stock price—soared to new heights.

Etsy states in its 2021 Seller Census that its sellers reflect the changing nature of work. More than half of them do not work in traditional, full-time employment, and about three-quarters combine income from multiple sources.^[3]

• 
  Etsy sellers in the United States are overwhelmingly female (79 percent) and college educated (55 percent).
• The average age of a seller is forty-five years old.
• For 29 percent of sellers, their creative business, both on and off Etsy, is their sole occupation. For about 10 percent of sellers, Etsy provides supplemental income.
• Around one-quarter have children at home.
• Most (81 percent) are businesses of one that operate from home (96 percent).
• Approximately one-third of sellers use income from Etsy and other creative businesses to cover household expenses.
• On average, their sales increased 34 percent from 2019 to 2021.

Overall, Etsy stores generate nearly $3.8 billion in US household income and contribute $14.3 billion to the US economy, says Etsy.

Etsy Incapacity Planning

Etsy sellers who depend on income they receive from the platform are vulnerable to many different types of disruptions. Some sellers respond to a disruption by putting their shop in vacation mode, a setting that lets a shop place itself temporarily on hold. Vacation mode can be helpful for getting through an illness or other short-term disruption, but sellers should also have a plan for a longer period of incapacity, as a shop paused in vacation mode is unable to generate sales. A guide to using vacation mode is available here.

With an average age of forty-five, Etsy sellers may not be thinking about mental or physical incapacity. In their 30s, 40s, and 50s, however, workers are far more likely to become seriously disabled than they are to die. And most people vastly underestimate the odds of becoming disabled in their working years.^[4]

Etsy’s census figures show that sellers are overwhelmingly solo entrepreneurs. This can make them even more vulnerable to disability since they do not have employer-provided disability insurance.

A seller who is incapacitated may not be able to pause their Etsy shop. And they may want the business to continue during a period of incapacity, especially if they have dependents. This is why it is crucial to have an estate plan that covers online marketplace stores and allows a trusted individual to take the following actions:

• access an Etsy account
• activate vacation mode
• pay subscription fees
• ship items
• issue customer refunds
• edit listings
• list new items
• run Etsy ads

Be aware that Etsy does not allow account transfers.^[5] In addition, it allows only one user, password, and email per shop, so a seller cannot add a person to manage their shop. Sharing credentials is not technically against Etsy’s seller policy. The site allows sellers to use third-party workers, as long as the arrangement does not violate its seller policies.^[6] Share credentials wisely, though, because whoever has access to an Etsy shop has access to the seller’s personal information, including finances.

Etsy strictly enforces its account transfer policy and reserves the right to suspend an account, without notice, if it believes the policy has been violated.

Sellers with questions can contact Etsy directly on their dashboard, under Community & Help. The company’s legal team can be reached at legal@etsy.com.

Closing or Selling an Etsy Store

Prolonged or permanent incapacity may lead to the tough decision to close or sell the shop. Etsy provides step-by-step instructions for closing a shop here.

An Etsy shop may also need to be closed if the seller dies. This possibility can be addressed in an estate plan by providing Etsy account credentials. In addition, the Etsy Help Center provides account closing assistance to estate executors and next of kin authorized to act on behalf of the deceased.^[7]

While it is possible to sell a business run on Etsy to someone else, the new buyer would need to open a new Etsy account and shop. The same is true of an Etsy-run business left to a beneficiary in an estate plan. The recipient would need their own Etsy shop to continue the business. Keep in mind, too, that the owner of the new shop could not sell the original owner’s work, per Etsy’s policy that items must be handmade by the seller.

Etsy rules also state that each shop can have only one owner. Community forum discussions have explored the option of setting up the shop as a legal partnership, with both partners on the same banking accounts. In this case, even if one partner died, there would be no transfer of ownership, as both partners are already owners.^[8] Other sellers maintain that, as far as Etsy is concerned, only one person can legally take ownership of the shop, even in the case of a partnership.^[9]

Do Not Neglect Your Digital Estate Plan

As more of our lives take place online, it is increasingly important to have a plan for our digital assets. Laws and regulations pertaining to data and digital assets continue to evolve. It may be necessary to craft a plan for each digital asset or account, depending on what company holds the account and their respective policies.

In our digital era, an estate plan that does not account for digital assets is incomplete. Loved ones may not be able to access these accounts or receive benefits from them, and they could be lost forever. During a meeting with our estate planning attorney, we can prepare a list of your digital assets and devise a plan that gives your heirs access to them while meeting data privacy laws. Any questions about specific assets, like an Etsy store, can be addressed at this time.

To start planning today, call or contact our office.

[1] Alexis Gebhardt, How an Etsy Founder Turned Ice Cream Maker Feels about the E-commerce Giant Today, CNBC (Apr. 20, 2022), https://www.cnbc.com/2022/04/19/how-etsy-founder-feels-about-the-e-commerce-platform-as-sellers-strike.html. (last visited June 7, 2023)

[2] Key Figures, Etsy: Investor Relations, https://investors.etsy.com/overview/key-figures/default.aspx (last visited June 7, 2023).

[3] Global Etsy Seller Census, Etsy (2020), https://s22.q4cdn.com/941741262/files/doc_financials/2021/q1/v2/GLOBAL-COMPILED_2020-Etsy-Seller-Census_DIGITAL-(1).pdf. (last visited June 7, 2023)

[4] Richard Reich, Disability Facts and Statistics, LifeInsure.com, https://www.lifeinsure.com/disability-facts-and-statistics/ (last visited June 7, 2023).

[5] Can I Transfer My Etsy Account to Someone Else?, Etsy Help Center, https://help.etsy.com/hc/en-us/articles/360040985353-Can-I-Transfer-My-Etsy-Account-to-Someone-Else-?segment=selling (last visited June 7, 2023).

[6] Hiring Freelance Administrative Help, Etsy: Our House Rules (Dec. 18, 2018), https://www.etsy.com/legal/policy/hiring-freelance-administrative-help/243317690157?ref=list (last visited June 7, 2023)

[7] Deceased Members, Etsy: Our House Rules (Apr. 23, 2021), (last visited June 7, 2023) https://www.etsy.com/legal/policy/deceased-members/239384514748?ref=list.

[8] Dizhasneatstuff, Planning My Estate and My Etsy Shop, Etsy Community: Etsy Forums (Mar. 22, 2021, 7:17 PM), https://community.etsy.com/t5/Managing-Your-Shop/planning-my-estate-and-my-Etsy-shop/td-p/133533231. (last visited June 7, 2023)

[9] 2MagpieGarage, How to Add an Equal Partner to My Shop, Etsy Community: Etsy Forums (Mar. 5, 2019, 3:33 PM), https://community.etsy.com/t5/Managing-Your-Shop/How-to-add-an-equal-partner-to-my-shop/td-p/125477493 (last visited June 7, 2023)