OK, for a start I am not an expert and everything I learned so far is from the forums on Folksy and ETSY. Recently there have been a lots of threads called I am closing my shop, thinking of closing my shop etc. Most of them were posted by new sellers. Every thread had one answer - PROMOTE. That's the word in online business (and really in any business). So how to do this?
1) Twitter - it is a great way of getting your name out there. Try to build as many followers as you can. When I started I followed one person - then followed some of that person's followers. Many of them return the favour and follow you too. At the moment there is a tool on twitter called suggested friends. I go there regularly and follow nearly all of them - again they usually follow back. The thing is when you tweet the link to a certain item in your shop and you have let's say 500 followers - it gets to audience of 500 within a second. And then - they might retweet it. And if a person with 2000 followers retweets your link - that audience gets much bigger.
2) Facebook - build a fan page. Invite all of your friends, most of them usually join. To get more fans go to the forums and post your link in one of the facebook threads. You can also do a giveaway on fb - I run one now and within 2 days I got 150 fans more. It is good for advertising as again if you post a link to your shop it gets to another audience.
3) Forums - very good way of promoting. Join the conversation even if you just say congrats to your new baby arrival in the baby arrival threads. There might be someone who likes you avatar, visits your shop and even might buy something. There is also an awful lots of advice on the forums. I think that I spent my first month of this business just hanging around them.
Also do not be afraid to ask questions and if you are being put off by some of the arogant forum posts, just ignore them. There are people like that everywhere.
4)Listing - Don't try make fortune with 7 items in your shop. You need stock, a lots of stock. Some people say 50, on ETSY even 200. I have only 40 and I am working hard everyday on getting more. List regulary, best is everyday - to stay in people's minds.
5) Get your Google Analytics account, and ETSY has a great tool - www.craftopolis.com. You can see a lot about your shop's traffic and visitors which might help you to understand it better.
6) Blog - as you can see this is another way how to promote but also get connected with you followers=potential customers. You can again do a giveaway to get more followers. Folksy sellers do blogs every friday - Folksy Friday where they introduce other items from different Folksy shops - helping each other to promote - http://www.facebook.com/home.php#!/group.php?gid=117111094972895.
7) ETSY Treasuries - this is a great ETSY feature and you get to know other sellers and they get to know you. I always retweet them and facebook them and also post in the forums.
All I can say is promoting is the way you get the customers to your shop. The above is just basics. There are many other ways of doing this, just read, listen and look for it. I hope that helps a little bit.