This is such a broad and confusing topic, but I get asked about it ALL the time, so I thought I might try and write a post about my experience of these two things... be warned, it's quite long!
Well, Etsy is great, and I love it, but it's pretty hard to sell things in such a ginormous place. How on earth are you supposed to get noticed and if you do have an Etsy Shop, how do you convince people that your products are actually worth it... they can only see photos, then there is the shipping side of things... no instant gratification for mail order, especially if you are overseas. And then if you put Etsy into the context of the internet, which is an even bigger space with even more competitors and distractions, it's all a bit daunting! In some ways, I'm tempted to say that Etsy selling is cheaper than market selling, but when you take into account the time you spend taking pictures, writing descriptions, and promoting your item online such as through twitter, facebook, relisting etc. it probably isn't. It's all quite time consuming and whilst I'm pretty comfortable with it now, it was overwhelming and stressful when I first started. The good thing is that you can begin to build a network of people who love your work and who are really supportive of what you do, and who begin to help you promote your work with you, just because they like it. It can also be great market research, you get to see who is hearting what and you start to figure out the good and the maybe not not so good points of your products.
There were 171 000 new members in July on Etsy, that takes into account buyers and sellers, but it's rather staggering, and when researching this whole concept earlier in the year, I remember doing the maths that the view to purchase ratio is 300/1. So for every 300 views, someone buys something.
And I think it's only fair at this point that I mention that I have a Bachelor of Visual Communication where I majored in photography and imaging, so programs like Photoshop and Illustrator are second nature to me and I'm pretty handy with a camera... not everyone has this advantage!
The markets are utterly different. For starters, you have about 100 or so stalls, so the marketplace is tiny in comparison, and so are the number of competitors, and when selling handmade items at a market, you will always have a competitive edge over people selling cheaper imported items because you know your product so well, and often that passion alone can sell things! Plus people expect things like this at a market, it's often the very reason that they came. Almost everything on Etsy is handmade, and the people looking are often crafters themselves, and so are harder to impress than your average non-crafty type!
The markets are time consuming too! You spend a whole day there, but you spend much more time in prerparation for them. Nothing worse than looking silly in front of potentional customers and the general public, plus you need to make sure that you have much more stock than you can sell. When I first did the markets, I didn't know what to expect, I find that I usually sell about a quarter to a third of what I take, I've had a couple of days where I managed to sell half of my stock, but then I had that horrific day which I posted about a couple of weeks ago, where I barely sold a thing! And you should always stay put until the end of the day... I made $220 as I was closing up last Saturday, and I always sell at least 2 things when I start packing up!
So the positive side of the markets is everything that is negative about Etsy. You're right there, people can see, feel, smell your product, they can hold them and compare them with your other items, they can buy 2 for a little bit of a discount and they don't have to worry about postage costs and waiting. The crowd doesn't have to be internet savvy and they don't have to know about the wonders of Etsy, facebook, twitter, flickr or your blog to find you, and you can give them a funky little postcard with your name on it and they can specifically find that Etsy shop later on if need be. You will always sell more on a bad day at the markets than a good day, or sometimes week, on Etsy.
For me, I'm trying to use the two in unison. I get a lot of tourists at the markets and they don't always want to be carrying around an extra soft toy on their travels, so they want to go home and go online and have it posted them, they've already seen it and know that it's worth the money and the waiting. And you've just made someone else aware of the greatness of Etsy- of the online craft community!
Hope this helps someone out there!