Podcast Summary

How to Sell Your Stuff on Etsy | Ep 208

Episode Title: Turn Your Embroidery Designs Into Passive Etsy Income
Host: Lizzie Smiley
Guest: Lori Thompson
Date: November 20, 2025

Episode Overview

In this episode, Lizzie Smiley interviews Lori Thompson, an embroidery designer who transformed her hobby into a thriving digital product business on Etsy. Lori shares how she began creating and selling embroidery design files, the technical and creative processes involved, her approach to marketing and customer interaction, and how she’s expanding into wholesale with physical products. The episode provides a behind-the-scenes look at the unique niche of embroidery design files, practical advice for aspiring sellers, and insights into scaling a digital business for passive income.

Key Discussion Points & Insights

Lori’s Journey to Embroidery Design Success

• Trial and Error Beginnings: Lori largely taught herself embroidery design (“YouTube University”), starting with a single-needle flatbed machine and eventually preferring the design process over production.

  • Quote: “Most of what I learned I learned through what I call YouTube University because I'm not really good at following instructions… I have to try several times and then if it doesn't work, I go find the shortest YouTube video I can.” — Lori (04:02)

• Switch to Digital Products for Scalability: Lori realized making physical products wasn’t scalable and chose to focus on creating once and selling embroidery files multiple times as digital downloads.

• Technical Aspects of Embroidery Design:

  • Each design is sold in up to 14 different file types due to different embroidery machines’ requirements.
  • Designs require testing and adjustments for quality, making the process more intensive than simple digital graphics.

The Design Process: Tools & Tips

• Software Investment: Lori uses Hatch for her embroidery designs due to its user-friendly features and supportive community. The investment was about $30–$40/month over 2.5 years.

  • “I like Hatch too, because with Hatch, once you're done with your design, you can choose to look at it by stitches where it has the stitches laid out… Or you can have it look more like a photo.” — Lori (13:21)

• Auto Digitizing & AI: While auto-digitizing features exist, Lori stresses that thorough testing and manual adjustments are essential for high-quality results. She sometimes uses AI (Ideogram) to generate coloring pages as design inspiration.

• Mockups: True mockups require stitching and photographing the design:

  • “You have to create the design, put it in your own embroidery software, embroider a test, and then take a picture of that.” (24:52)
  • Digital mockups from the software exist but often look too photoshopped to be effective on Etsy.

Choosing & Pricing Designs

• What Sells and Choosing Your Audience: Lori generally designs products she would personally want—as she sees herself as her ideal customer. She also checks trends on Everbee, walks through retail stores for inspiration, and adapts quickly to what’s in demand since embroidery buyers purchase for immediate projects.

  • “I feel like I'm my ideal customer, and I know me better than I know anyone else.” — Lori (08:54)

• Pricing: Embroidery designs typically sell for about $3–$3.50 each, with simple designs occasionally priced lower.

• File Resizing: Lori frequently offers three standard sizes per design. If customers need custom sizes, she resizes in her software and uses this interaction to build her email list.

Marketing & Customer Relations

• Building an Email List: Lori is beginning to use her list to guide past customers to her new website and provide freebies to foster loyalty and traffic outside Etsy.

• Leveraging Social Media: TikTok and, surprisingly, even infrequent Pinterest posts consistently drive Etsy sales. Viral videos aren’t required for regular traffic.

  • “People will go from TikTok to your Etsy… You don't have to go viral.” — Lori (20:35)

• Customer Support & Reviews:

  • Takes extra steps to ensure happiness, often issuing refunds on mistaken digital orders and messaging customers directly regarding negative reviews.
  • “You cannot put your value completely on reviews… Don't shut down your shop if you get a bad review, don't give up, just keep going.” — Lori (34:05)

Expanding Beyond Etsy

• Wholesale & Physical Product Sales: Lori is experimenting with wholesale, selling embroidered hats and laser-engraved items on platforms like Fair, prompted by requests from local boutiques.

  • Plans to scale by employing her oldest daughter and including more products.

• Future Goals:

  • Build a subscription service on her own website, offering monthly bundles of embroidery designs.
  • Continue growing on Fair and observe if digital bestsellers align with physical product hits.

Notable Quotes & Memorable Moments

• On Auto-Digitizing’s Limitations:

  • “If you don't test it, you won't realize that it has too many jump stitches… or, you know, the stitching is too thick or whatever.” — Lori (10:02)

• On Customer Confusion with Digital Products:

  • “I had a lady not long ago message me and say she never got her order… She just thought it was a patch by the picture even though it says digital download.” — Lori (07:15)

• On the Emotional Side of Handmade Work:

  • “It's neat… to think something I designed somebody else is wearing on a shirt or a hat or a bag… handmade items, it's just kind of cool.” — Lori (30:55)

• On Coping with Poor Reviews:

  • “My very first review I ever got was on this particular PNG and it was a one star… and I'm like, okay, so now I got to shut my whole shop down.” — Lori (34:34)

• On The Learning Curve of Selling on Etsy:

  • “You cannot, reviews are very, very important, but you cannot put your value completely on reviews… just keep going.” — Lori (34:05)

Timestamps for Key Segments

• Lori’s Background & Getting Started: 04:02–06:09
• Embroidery File Types & Technical Aspects: 06:15–08:54
• Design Software Choices & Costs: 13:00–15:37
• Resizing Files & Customer Requests: 16:03–17:19
• Building & Using an Email List: 17:27–18:57
• Marketing via Social Media (TikTok, Pinterest): 18:57–21:32
• Mockups & File Creation Workflow: 23:23–26:08
• Copycats and AI in Design Creation: 26:08–27:12
• Pricing & Repeat Sales: 27:12–27:31
• Transition to Wholesale & Fair: 27:54–30:55
• Customer Connection & the Handmade Market: 30:55–32:15
• Biggest Learning Curve, Dealing with Reviews: 32:15–36:08
• Handling Negative Reviews—Host and Guest Stories: 39:19–42:10
• Plans for the Future (Subscriptions, Website, Wholesale): 43:35–45:50
• Where to Find Lori Online: 47:19–47:39

Actionable Tips & Takeaways for Listeners

• Embroidery Design is a Viable Passive Income Digital Product: While more complex than standard graphics, there’s lower competition, greater difficulty for copycats, and high demand.
• Invest in Good Software: Hatch is user-friendly and scalable, but expect upfront and/or monthly costs.
• Frequent Testing is Essential: Help avoid customer complaints by ensuring designs stitch out cleanly across different machine types.
• Patience with Trends and Products: Sometimes bestsellers emerge from unexpected designs. Keep listing and iterating.
• Customer Communication Matters: Respond to all reviews (good and bad), offer refunds where warranted, and focus on long-term reputation over short-term losses.
• Leverage Social Media: Even modest engagement on platforms like TikTok or Pinterest can drive regular sales.
• Build Beyond Etsy When Ready: Use email lists and your own website to diversify income and reduce platform dependence.

Connect with Lori Thompson

• TikTok: @426digital
• Instagram: @426creative

This summary delivers a detailed, engaging recap of all major topics, providing valuable insights and memorable moments from Lori's journey, with easy navigation for those interested in specific aspects of the embroidery design business on Etsy.