Selling on Amazon vs. eBay: Differences, Profits, Fees [For Sellers]
Thinking of starting your dropshipping business? Or reselling on either Amazon or eBay? Perhaps your retail business? And, you have not decided yet where to start.
In this article, we will answer all the questions you might potentially have and break down each one of the platforms. Moreover, give you some guidelines as to which one of these online stores ideas might be right for you.
Usually, when people think of selling on either one of the marketplaces, the first thing that comes to one’s mind now is that you can either sell your own product or sell someone else’s.
In fact, there are many different ways and strategies you could use to not only get some extra cash on the side but to really bring in some sustainable profits.
These are the four most popular and practiced ways people do business on Amazon.
- Retail arbitrage
- Private labeling
- Creating your own product
- Retail arbitrage is when you physically walk around in supermarkets like Walmart or Costco to find a deal there and sell it on Amazon. You cannot just take any item and put it on Amazon, you need to find deals, or item whose value is higher than the price. You will be usually looking for discounts, BIG DISCOUNTS. This method requires you to have quite the experience and understand what sells and what does not.
- Wholesale is somewhat the same logic, applied to many items. You buy items from the manufacturers directly and sell it to consumers on amazon. In this case, you most probably buy not from the established brands or anything of that sort, you buy the cheap Chinese produced product and sell it a bit more than cheap
- Private labeling is almost like wholesale, but instead of selling the item as you bought them. You put your own label on top of it. It would look like this, you buy directly from the manufacturer, most probably in China, once the products are shipped to your warehouse or house, you then label then with your brand and put it online on Amazon to sell. Amazon FBA is going to be of immense help if you only let it.
- Creating your own product works exactly the way it sounds. In this method, instead of buying from a Chinese manufacturer or any other manufacturer and giving them some profit as well. You skip this step and create your own product. And sell that on amazon. You are not only required to have good salesperson skills but all around a good businessperson, you need to be.
These are the ways the people use to make money on eBay:
- Yard sales
- eBay Stores
- Yard sales are when you find items on flea markets and flip them on eBay. It is quite similar to retail arbitrage because you can also sell those cheap discounted items not only on Amazon but also on eBay as well. The only difference is that you cannot sell the ones you found on flea markets on Amazon for they don’t allow used objects to be sold.
- Consignment is when you create auctions for other’s products and when sold, receive a percentage. Or sell items off of the shelf of the thrift shops on eBay. This one requires a bit of documentation and hassle. Because you are not only responsible for taking photos or marketing the items but also for everything else as well.
- eBay Stores are when you have your own products to sell, or you have control over the products to a certain degree. It might be something like private labeling or creating your own product from amazon’s list.
- Dropshipping is like the most talked about topic of the last decade among all the people who either wanted to start a business or known someone who did. In case if, you are not one of those people and have missed the fun. Dropshipping can simply be explained in the following way: you sell the products of someone else on eBay.
- Wholesale/retail is basically the same as what you do on Amazon except on eBay.
Now that we know ways to make money let us have a look at some of the important statistics on the for your eCommerce business to see how well they are doing, and how these numbers might help us to achieve our goal.
This chart shows the amount of traffic they have received within the last 6 months. While this is just the traffic only, we still can understand that there are more people visiting the websites. It means there are more potentials in the marketplace.
Below the graph shows the total revenue of both amazon and eBay, the numbers are shown in billions.
Obviously, the revenue of the company does not say a lot about how much you can make, but the more money there is to be had, the more chances for you to grab some.
Now let us look at the demographics of the users on both platforms, below is an entertaining infographic that gives all this info and more about sales figures and shopping online in general
Despite the amount of traffic, they receive you might be willing to find out more about your competition, about how many people are actually there to sell and how many there to buy, if so, well even if it is not so, let us uncover the numbers behind these questions.
Amazon had over 5 million sellers in 2019. But this number keeps on increasing every month adding about 100k new users, While eBay has more than 25million sellers.
Although don’t jump into conclusion to think that eBay has way more sellers and fewer buyers, it is so, but most of those seller accounts are not the ones that are working, or even active, those are the accounts of most of the beginners who left the platform after the first difficult case ever arrived.
And even though Amazon has 5 times fewer sellers than eBay, those guys are killing it, well quite a few of them.
- There are 25,000 Amazon sellers who are making more than $1 million per year.
- There are 200,000 sellers making more than $100,000 per year.
Now we know what traffic they have and what age they are and what they most likely look for, even though you could never ever tell why someone is on Amazon apart from guessing to buy something )). So we are going to look at the number of users accessing both platforms as our next important data
Amazon has 310 million customers to Ebay’s 167 million
Now let us quickly run through the fees for both of the marketplaces. One thing to keep in mind is that it is quite hard to give you the clearest analysis and breakdown of the costs and fees associated. FBA (fulfilled by Amazon is a program where Amazon takes care of all the logistics of your product and customer service side) puts the whole calculations in danger in terms of transparency. But this is a good program and is used by 58% of Amazon sellers or top 10,000 sellers.
eBay, on the other hand, does not have any program to help you, which means you will be worrying about the shipment of your products. This sometimes costs cheaper or more expensive than amazon’s service, it all depends on the product, and its location and weight.
You might get some customers overseas and it is going to be your responsibility to make sure they receive the item on time and intact. However, if you focus more on the US, and Canada it might be cheaper. Whichever the case selling on eBay is going to involve a bit more hassle and headache in terms of delivery of your products.
Since you are going to be shipping your products, you also need to consider the storage costs or issues. This might seem like a problem that is prevalent in both scenarios, but most of the sellers on amazon send the products and goods straight from the manufacturer to the amazon store. This is unless you are the manufacturer yourself.
Now let us talk about the costs that you are going to have to endure. As most amazon sellers use FBA we are going to assume you will do the same.
There are four main expenses involved with eBay.
- You have to pay a $.35 listing fee to have your products on the eBay marketplace.
- You need to pay a 10% final value fee on your products
- You also need to pay a 2.9%+$.30 credit card processing fee to Paypal
- You need to finally pay for the packaging and shipping of the goods sold to the customer.
It is much simpler with amazon, for there are only two associated costs with sellers.
- You have to pay a 15% commission to amazon that includes credit card processing fees.
- You also have to pay for the FBA (fulfilled by amazon) service, which usually depends on the size and the weight of the product.
Now let us assume you are selling a product that weighs about 10oz and sells for $20 and shipping by USPS, which is why packing is free
In this hypothetical example selling on ebay comes out more expansive than amazon however it varies on the size of the product, if it is something small and/or weighs less, Ebay might come to being competitive.
Overall, in terms of the costs, you will have to endure, the amazon is cheaper.
Now, which platform requires more customer support?
It is no secret many people start their customer journey on Amazon or at least they look at the price somewhere else and immediately compare it with amazon.
Not only that records show that 40% of US households have amazon prime, which means they are willing to pay a bit extra to receive the Amazon special perks like same-day shipping cheaper prices and access to free movies, e-books, streaming on twitch and on and on.
So, amazon customers look for value and are more loyal than eBay, on the other hand, eBay customers look for a bargain by nature since the auction system.
So the main difference judging by these is that you will need to do more to keep eBay customers happy, while with amazon there is little required and possible to do, why it is not possible you say? we will go through all the details of that in the next chapter.
eBay is known to a place for a lot of new people to start thus it is the place you establish yourself as a brand. And the way eBay works, in fact, allows you to do that, for example, you will have access to customer’s email address and their phone. Of course, having does not mean much if you won’t use it, but with a little bit of a creative email marketing, you might be able to turn them into your own customers.
However, Amazon goes on great length to claim its customers, and you will not have access to any of the details of the customer, in fact, you will not even know who bought your goods or products, if you are wondering why. Amazon wants to make sure that the buyers are satisfied and also are less likely to leave the amazon marketplace.
Even though you have many opportunities in branding and establishing your brand with eBay, especially the possibility of having a storefront. It has another disadvantage which is pretty much clear and consistent no matter what we compare. And it is that eBay has the reputation for selling used goods and collectibles.
Also, amazon makes you jump through more hoops before listing your products, even then it does not allow all the categories of products, one small example is that no one can sell apple products. But they have who bunch of restrictions like that on the listing.
eBay, though is quite chill, when it comes to permissions on the listing, because you could basically list anything from your basement and sell it on eBay. If amazon requires the UPC codes or other identifiers to listings, you don’t need to provide anything on eBay.
Now, this is too much of a talk, let us break it down even further and organize it in a more accurate and comprehensive way. so, now we will give the pros and cons of both platforms in terms of selling on their marketplace. Here we go:
Pros of selling on amazon
- For starters, Amazon is about a 20x bigger market than eBay.
- Amazon FBA is something that is so unique and wonderful, it saves you so much headache and hassle for a small percentage, which means you can focus on another important side of your business.
- Amazon attracts all ages, groups, from a different economic background, simply put wider caliber of customers
Cons of selling on amazon
- The biggest disadvantage is that amazon completely owns the customer.
- Also, they are ruthless when it comes to enforcing their terms and conditions and new policies every time one comes up.
Pros of selling on eBay
- The main advantage is that you can design your store, and your product listings, making them look different than the other guys out there.
- Also, you have customer information which if you use well, can be very beneficial.
- It is also easier to enter into the eBay marketplace for they don’t require you a ridiculous amount of documentation and making listings as hard as possible like the amazon.
Cons of selling on eBay
- The main disadvantage has to be that it is way smaller in a marketplace.
- Also, eBay does not have FBA, or any other service of that sort, which means you will have to own a warehouse and ship products yourself.
- Also, customers on there is almost always there, because they are looking for a good deal. So it is a very price sensitive clientele with eBay.
Now to make it even easier to understand, we decided to make a table and compare it through three categories of Entry, Risk, Profitability.
Below this table will tackle the entry issues and opportunities.
|More documentation required||Fewer documentations required, only Paypal is enough|
|Money out every two weeks||After Paypal Jail gets money every day, the same day.|
|Need much higher startup capital, credit.||Need less capital, if at all|
This table will look at the risk and possible restrictions.
|They are strict with rules and policies||Overall loosely managed,|
|Complaints are taken more seriously, but no way to talk to someone and explain||can talk to a representative, and at least explain|
|Possible seller sabotage.||Almost no seller sabotage|
|Cash tied up, if banned, not returned at all||Take money out every day on Paypal|
Now let us look at the most important part of the comparisons: profitability
|Fewer items to sell||More items to sell|
|Need competitive pricing||Can pick your own price|
|More buyers||More sellers|
|Bigger traffic and growing||Less traffic and stagnant|
Now that you know the types of business there are to do on Amazon or eBay and who many people visit and how many buys, how many sells, what are going to be your costs, it is going to be far easier to make a decision
We will not say do one over the other even though you are here to get an answer to those exact questions. and the reason we will not persuade you to one over the other is that you will need to experience it yourself and see which platform is going to work for you.
Even though Amazon might seem like the gigantic marketplace and if you think no matter what you put out there, it gets sold due to the sheer volume of people then you will be wrong the same as thinking eBay has too many sellers, and I won’t be able to make lots.
That is first to find out what you want to sell, and which model you are going to be using for your eCommerce/retail business and according to all these and, other factors make your decision.
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