Their are several ways you build your online business in your own town.
Do you have a Facebook Business Page? Market to your friends and family and their friends, you will build up a local network quickly. Share with them info about local events and offer them special deals if they shop your online store. Start a group with your local fans and offer them free shipping or even delivery for that extra special touch. Need info on setting up a Facebook Fan Page check out Eleen.com Promote you Etsy shop on Facebook.
How about joining a local Etsy Team? I am a member of Chicago Style Crafters and it has been great to have other local Etsyans to talk with and do special marketing projects to build our businesses. I know there are not local groups for every city, but if you have one it is worth the time to participate.
Try these offline options, participate in art and craft shows. This is a great way to get you name out there. I did several show when I started out making jewelry and I still do a few. They helped me build my business and after a while I was know as the jewelry lady in town. I still go out and run into someone who calls me the jewelry lady.
Consider joining a networking or parenting group. It is a great way to meet new people and to spread the word about your business. I did a couple of post about networking Join a Local Group and Network and Networking. Teaching a class will make you as an expert in your medium and it can be fun to teach. Need some ideas about getting started teaching check out this post Teach a Class.
Marketing locally will help your business grow as friends and family start to spread the word.
Have any other tips to share, leave a comment with your ideas.