Here’s what I think is happening.
Etsy has two display formats, 5:4 (landscape) and 1:1 (square). If you upload a square image, Etsy must first crop off the top and bottom to make a landscape image. Then from that cropped image, Etsy crops out a square image by cutting off the sides. The result may be an image that looks blown up with missing content.
You can prevent this problem when preparing the image for uploading.
Create your image with a 5:4 ratio. Make sure the product would fit nicely in an imaginary square in the middle of the image. (The imaginary square should be the same height as the image.)
For example, if your image is 2,000 pixels (width) x 1,600 pixels (height), the product should fit inside an imaginary square of 1,600 x 1,600 pixels.
With these specifications, Etsy won’t have to crop the top and bottom to create the landscape image because you already provided it, and the product will still display attractively when Etsy crops the sides for square display.
Note: If you follow Etsy’s incorrect advice and use a 4:3 ratio rather than a 5:4 ratio, Etsy will still need to crop for the landscape view. It won’t be as bad as uploading a square image, but it will still occur.
When I’m editing an image for upload, I actually draw a square around the product just before cropping. The square is a temporary guide for cropping. Then I crop the image in a 5:4 ratio so the top and bottom of the cropped area line up with the square. I make sure the square is centered within the cropped area with equal space on the right and left sides. Finally, I remove the square. Done. Now the image works fine for both landscape and square display.
(full disclosure: I have some older primary images for which I have not yet applied this technique, and I probably won’t bother because they are close enough. However, they are all 5:4 ratio, and when Etsy’s auto cropping for square display cuts off the sides, the product still is either fully or mostly displayed.)
