Should You Sell on Amazon or eBay?
Should you sell on Amazon or eBay?
For the past 20 years, Amazon and eBay have been the most dominant ecommerce marketplaces. With ecommerce continuing to grow year after year, there have been hundreds of thousands of sellers that have built successful businesses in both marketplaces. For a new seller, it may be difficult to figure out which platform best suits a new seller’s needs. Each marketplace has its advantages and disadvantages, we will explore some of them below.
eBay is an ecommerce marketplace that facilitates transactions between B2C (business to consumer) and C2C (consumer to consumer) products. Since the inception of the company, eBay has not sold its own products on their marketplace. They offer software services that sellers can leverage, but they don’t sell directly to consumers. eBay currently has over 180 million users globally and they have well over a billion active listings.
Specialized products: eBay is one of the best places to sell specialized products like handcrafted products, vintage items and art. On Amazon, most of the products are new and are household items that need to be replenished routinely.
eBay provides sellers a different customer audience that intentionally go to eBay to look for specialized products. This is huge for sellers that have a particular niche they specialize in like antique items. It’s extremely difficult to sell those kinds of products on Amazon, so eBay is by far the better alternative.
No first party seller: A great benefit of eBay is that there’s no first party seller. On eBay, you are mainly competing with other sellers; if you were to compete with eBay in addition to that, it would make selling products harder. eBay is a very asset light company, they provide sellers with all of the resources they need to sell products and they stay out of the way.
In contrast, Amazon competes directly with sellers and they have access to sales data. Since they own the marketplace and have access to data, they are automatically the best seller for many profitable products. This conflict of interest doesn’t occur with eBay.
Auctions: One of the best features that eBay has for sellers is the ability to auction an item. For sellers that sell on Amazon, the price is fixed. This works great for Amazon because they are not primarily in the business of auctioning. In contrast, eBay has the best auctioning platform on the internet. If you are selling a pair of shoes, you can list them for auction and that also gives you the ability to add a “buy now” feature on the product.
This allows you to either get your desired price (the buy now) or a higher price (the auctioned price). This works well with a lot in-demand products like limited edition apparels, shoes and more. Depending on the niche of products you want to sell, eBay may be the more profitable option of the two marketplaces.
Fees: Fees can be a deterring factor when it comes to selling on eBay. First, there’s the insertion fee. When you start selling on eBay, the first 200 listings are free each month then you have to start paying $0.35 per new listing. This may seem small, but it can quickly add up if you’re running a sizable business. Certain categories like heavy industrial machinery and commercial printing have insertion fees of $20.
In addition to the insertion fee, there’s a final value fee for each item sold on the platform. The final value fee for most categories like electronics, books, etc. can range from 10-12% of the value of the product sold. If you add these two fees and any shipping related charges, you are likely to end up with razor thin profit margins unless you are selling high-ticket items (>$100). Also there will be a monthly fee if you decide to upgrade from the free plan to an actual eBay store.
Returns: Returns can be one of the biggest pain points for sellers that sell on eBay. When selling on Amazon FBA, Amazon handles all of the customer service issues. On the other hand, eBay requires sellers to take care of all disputes, inquiries and returns. If you’re selling 10 items a month and you get a return, that’s not a big issue.
The problem comes when you are actually running a business and get 100 returns. Without employees, you can easily spend most of your work day on returns and customer service. This is still a great pain point in the seller experience on eBay that has yet to be solved.
Inventory and shipping management: To succeed on eBay, you need to list as many profitable items as possible. This can be easy in the early stages, but as you scale up you can find yourself having thousands of items in inventory and you have to ship all of the sold items yourself.
This will likely require a lot of manual work and a lot of time. This is a huge issue because as you scale up in your business, your overhead will also scale simultaneously. This will eat up some of your profits in addition to the time you could be spending on working on your business.
Why do sellers prefer Amazon FBA?
Amazon FBA is very different to eBay in a lot of ways. First, Amazon FBA is an asset heavy business; this means that Amazon is actually involved in all of the aspects of the business (inventory management, shipping, returns, etc) in addition to providing sellers with software for operations.
It took Amazon over 20 years to have the best fulfillment network in the world and sellers are very lucky to take advantage of that and provide quick shipping for customers. In many aspects, Amazon has solutions for the problems eBay sellers encounter routinely.
Benefits of FBA
Inventory and shipping management: Amazon FBA is the best solution for sellers worried about inventory and shipping. With Amazon FBA, you send your products into a fulfillment warehouse and Amazon takes care of everything else. It’s really that simple. If there’s a return, Amazon handles that; if the customer wants expedited shipping, Amazon handles that also.
This allows sellers to focus on revenue generating aspects of their business like finding profitable products and shipping them in. A seller can scale to over 7 figures annually in sales without needing a warehouse or forklift or anything like that.
More demand: Amazon has literally hundreds of millions of customers that are ready to pay for products right now. Although there are successful eBay sellers that make 7 figures, how many similar sellers are on Amazon? There are over 23,000 Amazon sellers that make over $1 million in sales annually and there are nearly 1,000 sellers that sell over $10 million annually on Amazon.
With hundreds of millions of customers on the platform and Amazon’s vast fulfillment network, there’s endless business opportunities for sellers that are willing to put in the work. Amazon cannot source and sell all of these products on their own, they need sellers to succeed in order for their company to succeed.
Prime: If there’s any important differentiator between Amazon and eBay, it’s Amazon’s prime membership program. Amazon Prime is the single most successful subscription program in history. With hundreds of millions of customers having prime memberships, prime products are extremely popular and in high demand. Sellers who send their products to an Amazon FBA warehouse will gain access to these incredibly valuable customers.
Since many prime members prefer convenience, prime products are often more expensive than merchant fulfilled products due to the 2-day shipping provided by Amazon. Getting access to prime members alone is one of the best benefits of selling on Amazon.
This covers why many sellers prefer Amazon FBA. I would recommend trying both platforms out for yourself and see first-hand how your experience is like. Try them both out and double-down on what works best for you and your business.