Note: This article covers tax rules (income tax filing, consumption tax, and related thresholds) that are specific to Japan. Requirements will differ in other countries.
These days, the environment and services for selling products online have expanded rapidly, making it easy for individuals and small businesses to start an online shop. This opens up new opportunities even for people who have been making handmade items as a hobby and have wanted to sell them somewhere, but weren't sure how.
This article gives a clear explanation of how to sell handmade products, tips for success, which selling platforms to choose, and the taxes and laws involved in selling — written for those who are new to online selling or thinking about getting started.
Preparing Before You Start Selling Handmade Products
When you start selling handmade products, having the products alone isn't enough to get sales moving. Alongside making your products, here are some points worth preparing in advance to make your handmade sales successful.
1. Decide on Your Target Customer
First, define the customer you're targeting with your products. Setting a target customer helps clarify the direction of your product design, pricing, and messaging. For example, whether you're targeting parents raising children or a younger demographic changes the style, design, and price range of your products.
You should also research competitors to see how similar products in the same genre are sold in the market. Look at similar products and think about what sets yours apart. Originality and a distinct way of presenting your products give customers a reason to choose you.
2. Choose a Selling Platform
There are many platforms for selling handmade products. Options include listing on marketplace-type sites like Rakuten or Yahoo!, or setting up your own EC site with something like BASE or Shopify. Compare the features and selling fees of each, and choose the platform that fits the sales you're aiming for.
For example, if you're new to online selling, it's a good idea to start with a marketplace dedicated to handmade goods, such as minne or Creema. Once your sales stabilize, or if you want to emphasize your own brand identity, your own online shop is a better fit.
3. Calculate Your Selling Costs
Selling handmade products involves not just production costs like materials, but also platform usage fees, and shipping costs including packaging materials.
In particular, monthly fees, per-sale fees, and shipping costs affect your operating costs, so estimate these in advance.
If you only count material costs as expenses, there's a real possibility of ending up in the red depending on your selling price and the effort involved. Since your profit is what's left after subtracting expenses from sales, check the total cost of selling a product, in full, before deciding on a selling price.
Understanding the Taxes on Handmade Sales
When selling handmade products, you also need to understand the related taxes. In particular, if you're operating as a sole proprietor, you should understand how income tax filing and consumption tax apply to you.
If your annual sales exceed a certain amount, you may owe income tax and resident tax, so it's a good idea to consult a tax accountant in advance or check the National Tax Agency's website. It's also worth understanding the criteria for becoming a taxable consumption-tax business and the related filing rules.
Do You Need to File a Tax Return for Side-Business Income?
Income earned from selling handmade products as a side business may also be taxable. Specifically, if your handmade sales exceed 200,000 yen per year, you're required to file an income tax return. Since your profit, after subtracting expenses from sales, is what's taxed, make sure to keep careful track of expenses like materials and shipping costs.
Filing a tax return requires gathering the necessary documents and receipts, so it's a good habit to keep your receipts, delivery notes, and other paperwork organized as you go.
Tax Treatment for Mercari and Other Flea-Market Apps
Sales through Mercari and other flea-market apps may also be taxable. Income from selling unneeded items like clothing or household goods is generally treated as a non-taxable capital gain, so it's not subject to tax. However, if you're continuously selling handmade products for profit, that income may be taxable, so file a tax return as needed.
Reference information:
Mercari: Do I need to file a tax return on my Mercari sales?
National Tax Agency: When a salaried employee earns supplementary income from online auctions, etc.
How to Choose a Handmade Selling Site
Choosing which selling platform to use is one of the key factors in running a stable handmade business. Each platform has its own advantages and disadvantages, and the right choice depends on your target customers and sales strategy. Below is an overview of the main platforms.
| Platform | Advantages | Disadvantages | Examples |
|---|---|---|---|
| Handmade marketplace | ・Attracts customers who love handmade products • Built-in connections and rating system with customers • Simple process to list products |
・Sales/transfer fees apply ・Lots of competition ・Easy to fall into price competition ・No site customization |
minne, Creema, etc. |
| Flea-market app | ・Many users, reaching a wide range of customers ・Can list items beyond handmade products • Built-in connections and rating system with customers • Simple process to list products |
・Sales/transfer fees apply ・Lots of competition ・Need to handle price negotiations ・No site customization |
Mercari, Rakuma, etc. |
| Setting up your own shop | ・Strengthens your brand ・Integrates with social media and email newsletters ・Marketing using customer data ・Can run your own campaigns |
・You need to drive your own traffic ・Requires knowledge of social media, SEO, and ads ・Need to build the shop yourself or outsource it |
BASE, Shopify, etc. |
Handmade Marketplaces
A marketplace dedicated to handmade products is the best option for beginners. Representative platforms include "minne" and "Creema." These sites are marketplaces dedicated to handmade products, drawing many customers who love handmade goods, so even beginners can gain recognition relatively quickly and have a good chance of making sales.
Advantages
- Customers drawn to the platform already love handmade products
- Built-in connections between users, such as follows, and a rating system
- Easy to get started, with a simple process for listing products
Disadvantages
- Sales/transfer fees apply
- Lots of competition
- Easy to fall into price competition
- Can't customize the site's design or features
Flea-Market Apps
Flea-market apps such as "Mercari" and "Rakuma" are also well suited to selling handmade products. A major advantage is the large number of users, which lets you reach a wide range of customers. This is especially good for reaching customers who want to easily buy inexpensive items.
Advantages
- A very large number of users, reaching a wide range of customers
- Can list items beyond handmade products
- Built-in connections between users, such as follows, and a rating system
- Easy to get started, with a simple process for listing products
Disadvantages
- Sales/transfer fees apply
- Lots of competition
- Easy to fall into price competition
- Need to handle the price negotiations that are common on flea-market apps
- Can't customize the site's design or features
Setting Up Your Own Shop
Setting up your own shop allows for more freedom in branding. Representative platforms include "BASE," "STORES," and "Shopify." If you already have a distinct aesthetic of your own, it can be a good idea to build your own original site from the start.
Advantages
- Run your shop with your own design, strengthening your brand
- Drive traffic by integrating with social media and email newsletters
- Run initiatives (such as newsletters or coupons) using customer data
- Implement your own initiatives such as increasing sales, campaigns, and SEO measures
Disadvantages
- You need to drive traffic yourself
- With less built-in visibility, you need knowledge of social media, SEO, and advertising
- You need to build the shop yourself or outsource it
Recommended Handmade Selling Sites for 2024
Here's a selection of selling platforms we recommend for those selling handmade products.
Choose the platform you actually use based on your target audience and selling style for your handmade products.
For First-Time Sellers, or Those Who Want to Start Without Too Much Setup Time: minne
Image source: minne
minne is one of Japan's largest marketplaces dedicated to handmade products. Creators ranging from beginners to professional artists list their work here.
The listing process is relatively simple, which is appealing for those with little online shop knowledge who feel uneasy about the setup. The smartphone app is also easy to use, letting you manage listings and process purchases smoothly even without a computer.
Since there's no initial registration fee or monthly base fee, only a sales fee, it's a platform we recommend for anyone who wants to keep fixed costs low when starting out.
For Those Who Want to Express Their Own Brand Identity and Set an Income Goal: Shopify
Image source: Shopify
If you want to strengthen your own brand, or you're working hard toward a certain level of sales, we recommend setting up an online shop using Shopify.
Shopify is a highly customizable platform packed with the features and apps needed to attract customers, letting you build your own online site without any coding or specialized knowledge. Its strength lies especially in customizing design to establish your brand image, and building a direct relationship between your shop and customers through social media and email newsletters.
Tips for Succeeding at Selling Handmade Products
To run a stable handmade business, product quality and platform choice aren't the only things that matter — branding, sales strategy, and communication with customers are important too.
Show Your Own Unique Aesthetic
Handmade products strongly reflect the maker's personality and story. Because of this, giving your products and brand a distinct aesthetic helps set your work apart from others. By presenting a consistent design and story — not just in the design of your products and shop, but also in packaging and enclosed materials at delivery time (such as delivery notes and thank-you messages) — you leave a strong impression on buyers and turn them into fans.
Tell Your Product's Story
It's not just about selling an object — it's important to communicate to customers the background and concept behind how a product came to be. Include the product's features, the maker's thoughts and commitment, and the behind-the-scenes story of how it was developed on your product pages and elsewhere.
Create Visual Consistency
Visual consistency for your brand also matters. By keeping your logo, colors, and fonts consistent across your brand, customers should be able to recognize your brand or work at a glance.
Getting Customers to Pick Up Your Product First
Among the many handmade products out there, you need strategies to get your product noticed and picked up first. Do marketing that draws customers in while staying true to your branding.
Decide on an Entry-Level Product
One approach is to prepare a product with an accessible, low price point. Offering an "entry-level product" that lowers the barrier to a first purchase can also be effective when you want to sell your main products at a higher price point.
Run a First-Purchase Campaign
Offering a limited-time campaign or incentive can also help encourage purchases. For example, initiatives like "free shipping for a limited time" or "discount for first-time buyers" can help nudge interested customers toward making a purchase.
Stay in Close Communication with Customers
For customers, being able to contact the maker directly is one of the appeals of buying handmade products. Careful, thoughtful communication deepens customers' understanding of you as a maker and can turn them into fans.
Make Good Use of Social Media
Social media is now central to customer acquisition for many brands. It's an essential tool for getting your handmade products known widely. It can drive sales depending on your strategy and execution, without ongoing fixed costs, so anyone selling handmade products should make good use of it.
Grow your fan base through posts about your production process and thoughts on new work, along with direct message exchanges with customers.
Make Use of Word of Mouth
Unlike well-known general goods or apparel brands, handmade sellers tend to have lower brand recognition, which makes word of mouth and reviews from existing customers a trusted source of information for new customers. Consider marketing efforts that encourage word of mouth to spread, such as asking buyers to leave a review.
Start Selling Handmade Products Using a Convenient Platform
Starting to sell handmade products is no longer difficult. These days, the environment is in place for you to use a platform to bring your handmade products to the world. Please use the points introduced here as a reference to start selling.
For first-timers, a marketplace like "minne" or "Mercari" is easy and recommended, but once your sales get going, or if you want to emphasize your brand identity more, we recommend setting up an online shop with "Shopify."
The blog article below explains in detail the process of setting up a Shopify store. Please use it as a reference.
