The majority of online customers are familiar with eBay and Amazon as well-known eCommerce companies. More than 300 million people use Amazon every month, whereas 167 million people use eBay. These two marketplace websites are renowned for growing businesses by obtaining substantial profits and generating enormous conversions. But the real question is- Is Amazon better than eBay? How can you tell which will be more profitable for your business?
The buyer demographics, the products they sell, and even how they handle things like shipping and sales vary. In this blog, we’re going over the distinctions between these two eCommerce tycoons to help you decide whether to sell your products on Amazon or eBay because there are strong arguments for both.
What is Amazon?
Amazon is a digital marketplace where independent vendors can sell their goods. It sells over 12 million products of its own brand with a combined total of 353 million items including other Amazon marketplace vendors.
The goal with Amazon is conversions. They concentrate on promoting vendors who have the most appealing goods. As it is not certain you’ll receive conversions, this can appear annoying to third-party sellers. You need to improve your product listings, gather reviews, and offer a satisfying shopping experience to generate the rate of conversion you desire.
Amazon pits rival businesses against each other. Users can evaluate products using comparison shopping choices and select the one that is ideal for them. As a result, Amazon becomes a very competitive market.
Pros and Cons of Selling on Amazon
Amazon is a well-known online retailer, and once you learn to tag your products, they might appear on recommended lists, which could result in a lot of traffic for you.
If you run a small business through Amazon, they will also store your products in their huge warehouses. Compared to using your garage or paying for storage for your products, this can be a big advantage. Access to Amazon Prime customers, who are more inclined to conduct the majority of their purchasing there, will most likely increase your sales.
Let’s look at some of the pros and cons of selling on Amazon-
- Possibilities for attracting huge traffic is high owing to Amazon’s vast customer base
- Amazon has earned customer trust from years of consistent service
- When properly categorized, your products may appear in the list of recommended items on Amazon
- It has overall lower fees than eBay
- Provides more branding opportunities
- Provides fulfillment services for the convenience of its sellers
- In a vast digital product universe, your products might not be very visible
- Has more restricted categories
- Charges extra FBA fees
- More difficulties to list products
- More competition
What is eBay?
In comparison to Amazon, the way the eBay platform works is a little different. The foundation of this platform is a bidding system. Although there is still the opportunity to purchase goods outright, most people employ the highest bidder mechanism to foster competition in the market.
Sellers can list goods that are new, ancient, uncommon, or hard to find using this bidding mechanism. For those who explore the site, it enables a variety of products. Selling on eBay makes it simple for merchants to highlight their brand in the eBay store. More customization options are available, giving you more chances to set your store apart from the competition.
Pros and Cons of Selling on eBay
Selling on eBay can be a simple method to make money from stuff you no longer use or a way to market your creations. The majority of buyers and sellers are accustomed to eBay, and its search engine makes it easy to locate what you need on its marketplace. However, there are certain drawbacks to using eBay as opposed to other online selling sites.
Let’s take a look at some of the pros and cons of selling on eBay-
- eBay is accessible worldwide
- It’s not difficult to create an eBay account
- It has less competition
- Has gained customer loyalty over the years
- Offers fewer category restrictions
- Is relatively easier to list
- You must pay fees where the structure may change from time to time
- Competing against similar sellers is necessary
- If a consumer doesn’t pay, you run the danger of not getting reimbursed for your goods
- Has a relatively smaller audience
- Has less buyer trust
- Offers no fulfillment service
Is it better to sell on eBay or Amazon?
To answer this age-old question we have to assess some criteria based on which we can come to a conclusion.
Ideal sellers for each
The Amazon business model is effective, and a seller can get up and running quickly. The FBA (Fulfilled by Amazon) option makes logistics and transportation expenses easier. However, it is difficult to understand how the products are shown to a broader audience in a short amount of time.
In addition, it’s rather easy to sell items on Amazon in huge quantities and at a premium price. Amazon is a better choice than eBay if strict standards aren’t a big deal as long as a seller keeps making strong sales. To avoid their accounts being suspended on Amazon, increase their credibility, and benefit from the platform’s growth, sellers just need to abide by the rules.
On the other hand, one of the best aspects of eBay is that it provides sellers more flexibility. The development of product listings, shipping charges, and return procedures is entirely under the seller’s authority. Additionally, the fee is smaller, enabling the sale of goods at prices that are more competitive.
eBay is the ideal choice if a seller wants total control over how his or her products are listed and the freedom to set his or her own product limits.
Both Amazon and eBay have been operational since the mid-1990s. Amazon, however, frequently performs better than its rival in terms of customer trust. In fact, one of Amazon’s vision, missions, and principles is to earn and maintain the trust of its customers. And right now, it seems like the focus is working. A recent survey found that 73 percent of Americans think Amazon is a good company for customers.
Another factor that makes Amazon the preferred choice for online shoppers is the simplicity of the return policy. The A-Z Guarantee guarantees that clients will receive a full refund if they are dissatisfied with their purchase or the service they received.
Meanwhile, eBay’s procedure is much more complicated when it comes to returning things and receiving complete refunds. Additionally, sellers on eBay have the option to click the “No returns” box, denying purchasers any redress in the event that they are displeased with the purchase. As a seller, you might think this is advantageous, but your business could actually suffer greatly as a result. You’re telling potential buyers they shouldn’t trust what you’re giving when you set your listing to “No returns.”
Alone, Amazon accounted for 13.7% of the global eCommerce retail market in 2021. This translates into a sizable market share of 41% in the US. In June 2021, Amazon saw a total of 2.7 billion visitors from desktop and mobile devices globally.
It’s also important to point out that 44% of US households have subscribed to Amazon Prime, the company’s premium service. Given how commonplace Amazon is in the US, it makes sense that customers would be prepared to pay more for speedier shipping and cheaper individual item prices.
On the other hand, Walmart has pushed eBay down to third place in the US eCommerce market from its previous position of around 4.3 percent, according to their respective market share figures.
Due to the fact that eBay started as an auction site, pricing has become a central aspect of its purchasing culture. Customers on eBay are less interested in the luxuries offered by premium subscription services and more concerned with price and security.
Although Amazon outpaces eBay in terms of their respective raw market sizes, there is some good news for eBay. They remain a significant player in the worldwide eCommerce market, with more than half of their annual sales coming from tens of millions of non-American customers.
About 4000 of the over 119 million products listed on Amazon’s website are sold per minute. Without the need for clearance, third-party retailers can offer goods in practically every category, from clothing and accessories to toys and games.
However, some Amazon products fall within the gated categories. Fine art, scientific and industrial equipment, food and supplies, and other commodities are among these offerings. There are also restricted items, which need you to give Amazon further details or proof that you meet certain requirements. Cigarettes, lock-picking tools, and magazine subscriptions, for instance, are not permitted.
eBay also offers a huge selection of things for sale. Besides, this eCommerce site is unique as it specializes in the sale of uncommon and collectible items. Due to its emphasis on these special products, eBay does not require sellers to seek extra permission to sell within some categories, such as coins and jewelry. It does, however, maintain a thorough list of objects that are forbidden, such as food, booze, and event tickets.
The best-selling product categories on Amazon and eBay are pretty similar. To be more precise, 13.8 percent of the total is made up of clothing and accessories, while 16.4 percent is made up of gadgets and accessories. The third most popular product on eBay is automobiles– which accounts for 10.5 percent of all sales. 360 automobiles and trucks are bought on eBay every day using mobile devices. Despite being known as the Internet’s garage sale, 81 percent of the 1.1 billion postings on eBay are for brand-new goods.
Despite the fact that Amazon has its own brand, eBay is slightly less competitive in this regard. Regardless, you will face competition on both platforms as it comes with the aspect of running a business.
No matter where you sell, some vendors will set their prices cheap to entice customers and generate a large volume of sales, while others will set their prices higher, basing their sales on quality rather than quantity.
Easier to Sell
When it comes to displaying your things, selling them, and being paid, eBay is speedier and less complicated. Once your goods sell, the money from your eBay purchasers will be transferred directly into your PayPal account, where you can manually withdraw it when necessary. You can list quickly, select your listing format, and sell products.
Sellers can advertise pre-owned, one-of-a-kind, or rare goods on eBay alongside cheaper variations of goods that might sell for low margins but in large quantities.
Nevertheless, Amazon also accepts payments on your behalf but delays bank account transfers for a period of 14 days. Even though the listing procedure is extensive, it is simple.
On Amazon, high-quality things that appeal to a wide audience are typically quite popular. Examples include new clothing, baby products, health and beauty items, dietary supplements, workout equipment, and toys.
The main difference is that Amazon offers the added benefit of their FBA service, which relieves you of all the trouble of storing, packaging, and posting while saving you a significant lot of time and work. But then again, there are other costs to be considered for this service.
You must select one of two seller plans before you can post something on Amazon: Individual ($0.99 per unit sold) or Professional ($39.99 per month regardless of the amount of units sold).
In contrast, eBay gives you 250 free listings each month and charges $0.35 for each additional listing. You should be aware that there are three other major expenses to take into account when selling on eBay in addition to the subscription fees: insertion (listing) fees, final value fees, and PayPal transaction fees (if using it). Other optional extra costs include classified advertising, listing fees for auctions, and advanced listing enhancements.
For the majority of categories, eBay will charge 2.35 percent on the percentage of the sale that is over $7,500 and 12.55 percent on the total amount of the sale up to $7,500 calculated per item. A usual commission rate from Amazon is 15%, which also covers transaction costs. However, if you enroll in Amazon’s FBA program, you will also be charged for outbound and inbound shipping.
Shipping and Fulfillment
The fact that Amazon has its FBA program may be the biggest distinction between eBay and Amazon.
Sellers ship their products to Amazon through Amazon FBA, and Amazon handles all fulfillment and shipping. This eliminates a ton of labor.
Inbound and outbound shipping are both the sellers’ responsibility. On occasion, a seller from New York will ship their merchandise all the way to Los Angeles. This may sound pricey and impracticable, and sometimes it is. However, due to Amazon’s drastically reduced delivery costs, the majority of sellers often pay less for shipment.
You will be responsible for paying storage fees as well with Amazon FBA, which can run up to $200 per month to store a pallet from October through December. Every year, these costs go up, fluctuating between big and little increases.
The potential creation of a sales tax nexus for sellers in dozens of states, which requires them to collect and remit sales tax in those states, is a significant drawback of Amazon FBA.
On marketplaces like Amazon and eBay you frequently have to pay to have your listings show up first in search results. But compared to eBay sellers, Amazon sellers rely on advertising a lot more.
We polled five high-volume vendors in 2018 and discovered that 26.7 percent to 60.6 percent of their sales were attributable to advertising.
But as Amazon advertising prices have grown considerably over time, they may now pose one of the largest dangers to your Amazon business. According to a 2021 research by the Institute for Local Self-Reliance (ILSR), Amazon takes roughly two-thirds of a seller’s profits, a significant portion of which is spent on advertising to finance itself.
On the other side, eBay has increased the number of what it calls sponsored listings, yet the majority of sellers hardly ever utilize any advertising.
Generating more revenue
If your profit margin is 30% and you are selling a product on eBay for a set price of $10, you will make $3.00 for each sale. To generate a respectable profit from this one commodity, you’ll need to sell in enormous quantities.
You are also at the mercy of your bidders if you pick eBay and list your item as an auction, so you might not get the $10 price you were hoping for. On the other hand, you might pay more than $10 in the end.
On Amazon, you will always sell for $10 and always list at a fixed price, allowing you to know exactly where your profit is at all times.
Because of this, the fixed price model made available by both platforms offers a degree of assurance and enables you to forecast and monitor your sales and profit. But then there are the charges to think about.
eBay typically charges a fixed selling fee of 10% (this varies by category), but this excludes PayPal payment processing costs. These normally cost an extra 2.9 percent plus 20p. Amazon charges a standard 15% commission, which also covers the costs associated with processing payments. However, if you use their FBA service, you’ll have to pay extra fees.
The trouble is, your advertised price must consider a variety of elements to decide how much money you will make, including:
- Quality of the product you are selling- The chance is that you can demand a higher price and get that price if your product is of great quality and superior to those of your competitors, and you make sure to convey this in your listings.
- Your rival- Sales will increase if you have little to no competition and a well-liked product.
- The uniqueness of the item- You’ll sell more if your product is in high demand and has a unique selling feature.
- Understanding of your brand– You will be able to demand a greater price for your product if you have a stellar reputation on one or both of the websites because you’ll already have the customer’s trust.
Additionally, if you decide to go that path, Amazon is fantastic for selling things under your own brand, and your company will succeed there.
These all hold true for both Amazon and eBay. The amount of money you make will ultimately depend on your product, your branding, your profit margins, and how well you list, even though you may choose to price your products differently across multiple websites.
An item that might be inexpensively offered on Amazon might command substantial fees from eBay due to the various pricing strategies associated with each company. However, better customer service and a targeted audience may make up for the increased price. Both sites have advantages and disadvantages for sellers, but eBay can be a better choice if you want to build a brand while Amazon might be the best option if you want built-in storage for your goods. This is why specified research based on your products is essential whether selling on Amazon or eBay.