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Does Etsy Do Layaway? Here’s What You Can Do

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One of the many things to consider when you’re starting your Etsy shop is whether to offer layaway or reserve options to your customers and how to do so in a way that’s beneficial for all parties involved.

We’ll help you sort out what you need to know when setting up these options for your store!

Does Etsy Do Layaway?

Etsy does allow for a layaway option, in which the shop owner and the buyer can set up partial payments until the product is paid for in full. There is also an option to allow a customer to reserve an item, which is a bit different from a layaway.

Do Etsy Shop Owners Typically Offer Layaway or Reserve?

Whether to offer a layaway option in Etsy is really up to the shop owner. For some sellers, particularly those selling bigger ticket items such as jewelry or bridal gowns, having a layaway option makes a lot of sense.

It’s a good way to accommodate more customers, especially if, for example, they’re making purchases for their wedding or special event and want to maintain a careful budget.

There’s a difference between putting an item on layaway and reserving an item.

With layaway, you and your customer can decide on an arrangement, such as length of time between the initial down payment and the final payment, and the buyer slowly pays the full price of the product over time before they receive the item.

When a customer reserves an item, however, they’re basically requesting that you hold the item for a couple of days so they can purchase it in full when they have the funds.

However, some sellers choose not to give their customers a layaway option because it can open up some potential problems. Every item in your shop that’s on layaway or reserve is an item you can’t sell. When a customer pays full price at once, that’s money in your wallet and a product out the door, so you can start featuring more inventory.

Consider Non-Refundable Deposits

Another issue you may run into is people changing their mind on the item on layaway before they’ve paid it off. When this happens, you’ve got a product that isn’t moving, and you’ve not only lost the sale, but you’ve also had to turn away any other potential buyers for that item while it was being held.

The best way to avoid this if you choose to offer the layaway option is to require a non-refundable deposit and make it clear to the customer before the layaway is agreed upon.

This non-refundable deposit would essentially be the first payment towards the product, but if the customer chooses not to follow through with the sale, they know ahead of time that this means they forfeit that first payment from their refund.

A lot of Etsy sellers recommend that the non-refundable deposit you charge should be equal to half asking price of the item, to make sure that the customer is committed.

What’s the Process on Etsy for Layaway?

To enable layaway in your Etsy shop, follow these simple steps:

  • Set up a Paypal business account:
    • This will allow you to make invoices and specify “allow partial payments” so that the buyer can pay off the item over the time you’ve agreed upon.
  • Enable “Other” payment methods in your Etsy shop:
    • To do this, log into your Etsy account. Go to Shop Manager > Finances > Payment Settings. Select “Enable Manual Payment Methods” and check “Other.”

You’ll want to remember to edit the item listing in your Etsy shop so that both the listing title and item description clearly say that the item is reserved for a specific customer.

Once the item is fully paid for, have your customer go to the reserved listing and select “Other” as the payment method. You can then process the order just like any other.

The reason to use the “Other” payment option is to ensure that Etsy still gets their agreed-upon fee. 

You’ll also want to make sure and get the customer’s email address so that you can easily send invoices on the schedule you’ve arranged with the customer.

How Do I Reserve an Item Without Putting It On Layaway?

Sometimes a buyer will request that you hold an item for them so that they may purchase it in full at a later date. To do this, simply:

  • Put “RESERVED for (customer’s username)” at the beginning of the listing title and in the item description:
    • Make sure that the listing title is very clear because this doesn’t prevent other customers from being able to purchase the item. (Note: it’s also good to get permission before you use the customer’s name, or ask if there is another name they’d like you to use)
  • Upload a photo to the listing that designates the item as reserved:
    • This can help customers to differentiate it from the rest of the listings in your shop.
  • Send the listing link to the customer for whom you’re holding the item:
    • Just like with layaway, you’ll want to make sure to keep good communication up with the customer as well.

You can also make a private, custom listing for the customer. Simply enable the custom request tool in your Etsy settings.

A private listing will make it so that other customers are not able to purchase the item. 

Because reserving an item doesn’t require a deposit from the customer, it’s best to keep the reservation time limit short and make sure the customer understands how much time they have to purchase the item before you put it back up for sale in your shop.

For How Long Can An Item Be Reserved?

How long to keep an item on reserve is once again up to you, as the seller. You can choose whether you want to allow reservations at all. Without a down payment, there may be more risk of a customer not following through on the sale.

Every day that an item in your shop is reserved is a day that you can’t sell that item. 

It’s best to decide for yourself how long to keep an item on reserve. Some sellers will only hold items for 24 hours, but most hold items for three days at the most. 

Just be sure to clearly communicate your policy to the customer requesting to reserve an item, so that there aren’t any misunderstandings and they know what to expect. 

For example, if a customer asks you to reserve an item on a Thursday because their paycheck comes in the next day, you can tell them something like, “Sure! I’ll hold it through the end of the day on Sunday. If you don’t purchase it by then, I’ll assume you’ve changed your mind and put it back in the shop.”

As long as you are open with the customer, you should be able to manage your layaways as efficiently as possible!

Will Products Cost More When Customers Use Layaway?

The price the customer pays for the item when using layaway is the same as the regular asking price in your shop, just paid in smaller increments.

However, there may be an additional cost to you as the seller, in terms of your time and effort.

Rather than having the asking price paid to you upfront, you’ll be receiving smaller amounts parsed out over time. Plus, you’ll have to keep track of the regular invoicing and make sure that the customer is making the agreed-upon payments.

You also take a bit of a risk of the customer canceling the order after they’ve put it on layaway, and while a non-refundable down payment may give you at least partial security, the time the item is on layaway is still lost time in which the item could have been purchased by another customer.

What are the Pros and Cons for Offering Layaway?

There are many pros to offering layaways in your Etsy shop.

If your shop sells higher-ticket items, offering layaway as an option for your customers can mean you’ll make more sales because while your buyers may not be able to purchase an item for a hundred dollars or more, a payment plan might fit better into their budget.

However, if your prices tend to be on the lower end, it doesn’t really make sense to offer layaway, because it’s a lot of extra effort and potential risk for you, for what will ultimately be a small payoff.

A lot of sellers have said they don’t seem to lose sales by not offering layaway.

If you do choose to offer a layaway option, just make sure to have your policies clearly stated in your Etsy profile, and keep clear communication with your customer.

You want to make sure that every layaway ends in a finalized sale rather than a cancellation so that you continue to make profits.

It’s Up to You to Decide

You can choose whether or not to offer layaway and reserve options based on your customer needs, your product price range, and what amount of effort you’re willing and able to put forth to track invoicing and follow up with customers.

The most important thing is that you decide ahead of time what kind of policy you’d like to uphold so that your layaway plan works for you, and be sure to make this policy clear to your customers.

Always maintain good communication with your customers about your processes.

Ultimately, good customer relationships are key to a successful business.

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