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I know I'm super late to the party, but I wanted to toss in my 2 cents.
I sell on Etsy. I haven't been a seller on there for very long, but here's what I've learned so far. The key thing: You have to think of it as one of many advertising avenues. You can't think of it as your primary sales front. If you do, you'll feel like you aren't getting anywhere quick!
When I was in real estate I had a website, but I didn't rely on it for my business. I also advertised in the Home Book, and listed in the RMLS, and sent out mailings, and did "floor time", and even some door knocking! Oh, and I joined a business networking club. I didn't depend on any one of those things for my business. Instead, I did ALL of them, and I'd get a bit from here and a bit from there and it all added up to a reasonable income for me.
Etsy is the same way. It's just one income source. I also do markets. I also do home parties. I also network among my friends and family because really, word of mouth is the best advertising you can get for the money (it doesn't cost a thing!). Oh, and I have a Facebook page and a blog and I advertise on craigslist. I don't rely on Etsy to sell my products, but hey, $0.20 per listing + 3% is super cheap advertising. I'm also pursuing wholesale accounts, which hopefully will help me turn my sale by sale situation into something more steady like what Mellifera was talking about.
I also think a big part of selling on Etsy is learning at least a little bit about SEO and picking good keywords is half the battle. You can sell things without professional photography, but you won't sell a single soap if no one even comes across your listing because it's buried at the bottom of page 99. There is a really great SEO Team on Etsy, they helped me out TONS! But if you want to learn the basics there's a good book called How to Sell Your Crafts Online. I also read The Handmade Market Place, which is also a great book.
Aside from all that, I've found that the soaps that sell best on Etsy (at least for me) are my brightly colored or novelty soaps. Also, custom made to order items do really well. Something about the internet makes people want to pick everything out themselves, so let them. It's a bit more work on your end, but for me it's worth it because I'm already paid for the item before I start making it - so there's no extra things laying around that I'm trying to find a buyer for. Of course, I just do MP so it's a lot easier to do that way.
But whatever you do, don't discount your contribution to whatever it is you're going to do. Yes, there will always be other soap makers, but there is only one you. And even though lots of people make soap, no one is going to make soap that's exactly like yours. If you like what you make, then someone else will too, and they'll pay good money for it. Don't try to do what everyone else is doing, you'll just put yourself in direct competition with that other person, and the whole time you won't be 100% pleased with your own work. This is an industry with lots of room for creativity and self expression. If at any point it starts to feel like work, then that's probably the time to quit!
Give yourself room to grow into this art. Don't quit your day job. But practice practice practice. And really, if you're going to give it a try then just go for it - you're never going to know everything you "need" to know. You gotta start somewhere! But get insurance!!! That is really step number one.
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