Even nowadays, e-commerce sellers have many choices regarding where to sell their products online. Amazon and eBay are both well-established and have been around since the mid-1990s. In July 1994, they launched Amazon under the name Cadabra, which changed in 1995, and shortly after that, in September 1995, eBay followed suit.
But to know which platform is right for you is the question to answer when you start this journey as an e-commerce seller. There are good arguments for both, so here we will review the difference between the two marketplaces to determine which store is the best option for your type of business.
Table of content:
- Understanding the Basic of Selling on Amazon and eBay
- Consider the target audience and product range
- Fees and Costs Involved
- Seller Support and Customer Service
- Market Reach
Understanding the Basic of Selling on Amazon and eBay
Selling on Amazon and eBay is quite simple in many ways; the setup and the way to start selling are very similar and have very few but big differences to consider when deciding which option is best for you.
Here are some key differences between selling on Amazon and eBay:
- Market: Amazon is more significant than eBay, with more potential customers. However, eBay is known for its more competitive market.
- Commissions: Amazon charges a commission for each sale, while eBay charges a commission for the sale and a transaction fee.
- Inventory management: Amazon manages inventory for you, while you must manage inventory yourself on eBay.
- Customer service: Amazon offers 24/7 customer service, while eBay offers limited customer service.
Ultimately, the best platform for you will depend on your specific needs and goals.
- Amazon is a good option if you are looking for a large market with potential customers.
- eBay is a good option if you are looking for a more competitive market with lower commissions.
- Do not want to manage inventory yourself, then Amazon is a good option.
- Amazon is a good option if you want to offer 24/7 customer service.
Whatever your decision, the two platforms offer a simple, friendly, and reliable way to sell your products online. The decision to sell on each of them depends on the characteristics of your business and, above all, on your idea of growth and development.
Amazon’s sellers have an attractive way of selling their products, FBA (Fulfillment by Amazon), which means Amazon will store their products in their inventory, fulfill their orders, and offer customer service. Selling with Amazon is easy; the steps are simple, and most people meet the first requirement: an active account. With this same account, you can sign up for the FBA program by following the instructions on the page that are pretty simple, and you are ready to go.
Selling on eBay is also quite simple. You need to make sure to follow some essential steps. Here are what they are:
- Create an eBay account; it can be personal or business.
- Create a product listing:
- Identify your product.
- Select between auction-style and fixed-priced selling.
- Set your listing duration.
- Price your item.
- Set up shipping options.
- Manage your eBay listing:
- Build a positive seller reputation.
- Complete a transaction.
- Promote your listing.
Some extra tips I can give you are:
- Create a business plan.
- Find your niche.
- Do a market search.
- Identify our suppliers.
- Place orders.
- Create product listings.
- Manage your inventory.
- Follow up for customer reviews.
- Optimize product listing.
BONUS TIP: OPTIMIZATION should be a continuous process for Amazon sellers.
Consider the target audience and product range
Knowing your target audience will always make a difference when selling your products. Knowing who is interested in them allows you to choose the right words for the product description and the promotion you offer. On Amazon and eBay, you can identify the target audience in different ways:
At Amazon, you must first find a profitable niche as it matters to your success. To have a thriving business, you must do market research and find relevant, trendy, and competitive products that align with your passion and interests. Learn the product trend and study its emotional impact, practical value, visibility, and recognition.
Amazon’s demographic segmentation is vast and global, target customer segment is located worldwide, with an average age of 37, split equally between male and female. It has a convenient shipping service, and nearly 80% of Amazon users say that fast and free shipping is their main reason for purchasing there, so let’s use this as an advantage.
The size of Amazon’s audience is in the hundreds of millions of customers, making its demographic analysis very complex and multi-layered. To better understand our future customers, we must deeply dive into Amazon’s customer segmentation from various perspectives: demographic, geographic, behavioral, and psychographic.
Once we successfully conduct this market study and understand our target audience, we will be in a better position to make informed decisions regarding the products we want to sell. These, in turn, will have a more significant impact on our store’s sales.
Understanding your target audience at eBay makes the difference between a great store and an average one. When you know who is interested in your products, you can choose the right words for product descriptions and the promotions you can offer. First, I would like to outline the difference between “target audience” and “target buyer.”
The target audience is a demographic group who might be interested in your items. When you define your target audience, you need to specify their age, education, income, family status, interests, lifestyle, and geographical location.
To be more specific, we must clearly understand our target buyer; this means creating an image of the ideal customer most interested in our eBay inventory and likelier to purchase. When envisioning the target buyer, we start not with conventional attributes like income, gender, age, or social status but with goals, problems, and motivations that genuinely matter when purchasing.
We need to ask, “Why would our ideal customer buy our item?” We will be ready to create a more appealing and effective marketing message when we find the answer to this question.
I’ll answer the following question: where is it easier to target your audience? Two factors can help you make this decision. If your customers are price-sensitive, eBay could be your best choice. However, if your customers are looking for fast and reliable shipping, Amazon will be your better option.
Fees and Costs Involved
Amazon’s commissions depend on the product you are selling and its fulfillment method, whether FBA or FBM.
There is a handy tool that can help us understand the fees we will be paying once we manage to sell our products. The best sellers use Amazon’s FBA calculator, an excellent tool for understanding the profit margin of your products.
Now, let’s discuss the fees you need to pay:
Selling FBM, the only fees you would incur product-wise are the selling on Amazon fees, which include:
- Amazon Referral Fee: For every product sold, Amazon takes a referral fee percentage calculated on the total sales price. This fee depends on the product category sold, though on average, you can expect to pay a 15% referral fee per sale.
- Fixed Closing Fee: This fee only applies if you have an individual selling plan versus a professional one. You will pay an extra $0.99 per item sold if you are an individual seller.
In addition to the Amazon selling fees, FBA sellers must also pay:
- FBA Fulfillment Fees: The FBA fees are what Amazon charges to fulfill the order of your product based on the product’s weight and size.
- Monthly Storage Fees: Amazon charges monthly inventory storage fees for the space your inventory occupies in fulfillment centers, calculated by your daily average volume in cubic feet.
So, if you offer a product on Amazon for $30.99 and are an FBA seller, you must pay a minimum of $13.40 in fees. And if you provide the same product at the same price as an FBM seller, you will have to pay a minimum of $5.64 in fees before shipping costs.
But those aren’t the only fees you’ll have to pay as an Amazon seller. Regardless of your fulfillment method, all Amazon sellers have to pay the following fees:
- Individual per-item fees or subscription fees: When you sell on Amazon, you can choose between two different seller accounts: individual or professional. You must pay a $0.99 fee per unit if you sell individually. Experienced sellers, on the other hand, pay a monthly subscription fee of $39.99.
- Refund administration fees: While these fees only come into play if a customer asks for a refund, it’s still important to know that Amazon does charge you for processing that reimbursement. This fee will be $5.00 or 20% of the refunded charge, whichever is less.
When discussing eBay, these are the fees you need to pay:
- Insertion Fees: This fee is charged when you list your item on the platform. Sellers receive 250 zero-fee insertion listings per month.
- Final Value Fees: eBay takes a percentage based on the final selling price once you sell your products; this includes shipping but excludes sales taxes. It’s important to note that these fees vary depending on the type of product you’re selling.
- Payment Processing Fees: eBay now mandates sellers use its payment processing system; they add this fee into the “final value” fee.
- Optional Listing Upgrades Fees: Sellers only pay this fee to create a specialized, standout listing. Optional upgrades include adding bold font, adding a subtitle, and setting a minimum/reserve price for your product.
It’s important to consider that the fees can increase if you use any listing upgrades. However, you can use eBay’s fee calculator to determine how much you need to pay before listing your product.
For Example, for a fixed-price product selling at $22.95 in the baby category, eBay’s fees are $3.26. If you plan to offer free shipping, you must absorb that cost.
However, eBay’s fees are less than Amazon’s overall.
Understanding the fees associated with your chosen platform is vital for maintaining a healthy profit margin. Amazon and eBay offer opportunities for entrepreneurs to reach a vast audience, but they come with fee structures.
Amazon presents a nuanced fee system, where commissions vary based on product categories and fulfillment methods. FBA sellers incur fulfillment and storage fees. With these considerations, it’s essential to calculate your fees accurately using Amazon’s FBA calculator to gauge your potential profit margins effectively.
On the other hand, eBay employs a more straightforward fee structure comprising insertion fees, final value fees, payment processing fees, and optional listing upgrade fees. These fees can be more detailed; eBay even provides a fee calculator to help sellers plan their expenses.
While the fees for both platforms can add up quickly, it’s worth noting that eBay generally has lower overall fees than Amazon. However, individual circumstances and business models vary, so it’s essential to analyze.
Seller Support and Customer Service
When choosing the platform to sell on, it’s crucial to consider the level of support for sellers and customer service. As a seller, you always want to work with a platform that values your business and makes sales management easier.
Amazon’s interface can be more complex when listing and managing products than eBay’s. However, Amazon offers robust inventory and fulfillment management tools, simplifying e-commerce business operations for sellers.
Regarding performance metrics, Amazon enforces strict rules that must be adhered to. These restrictions are in place to ensure it will provide the best shopping experience for customers. Amazon monitors the service performance metrics of all sellers through an Account Health Board. This determines how well a seller performs in terms of customer satisfaction. Factors such as order defect rates, cancellations, late deliveries, valid tracking rates, and they evaluate customer service dissatisfaction against the seller. Failure to take guidelines seriously can put your account at risk of suspension.
In contrast, eBay also has seller performance standards, which tend to be less stringent. eBay focuses on the percentage of cases closed without seller resolution and late shipments. While eBay is more lenient in some areas, it’s still crucial for sellers to maintain good performance to build trust with buyers.
Ultimately, the choice between Amazon and eBay goes beyond fees and features; it also involves understanding the platform’s support for sellers and its expectations for seller’s performance. Both platforms offer opportunities for success, but sellers must align their strategies with each marketplace’s specific requirements and advantages.
Another analysis I would like to include in this article is Amazon’s and eBay’s market reach size.
Based on Statista, the number of people shopping on Amazon is staggering. In 2022, it had a 13.7% share of the global e-commerce market, corresponding to a 41% market share in the US. In terms of raw traffic, Amazon received 2.7 billion worldwide visits. It’s worth mentioning that 44% of these visitors also subscribe to Amazon Prime. This demonstrates that in the US, customers are willing to pay more for faster shipping and lower individual item costs.
On the other hand, eBay’s market share is approximately 4.3% in the US e-commerce market. These raise the question of whether it is still good and popular. However, the reality is that around 1.7 billion people use it every month. These individuals are discerning and prefer to buy from sellers with better feedback ratings. As a result, maintaining your reputation is crucial for your business. While eBay started as an auction platform, its buying culture has shifted to focus more on price. Customers now prioritize cost and security over the niceties with premium subscriptions.
When comparing the market size between Amazon and eBay, Amazon stands out. However, eBay still has opportunities as there are still many significant players in the world of e-commerce, with billions of buyers outside the US accounting for more than half of their annual revenue.
In the dynamic world of e-commerce, flexibility and adaptability are also essential. Remember that your choice between Amazon and eBay doesn’t have to be permanent. As your business evolves and your goals change, you can explore other platforms or consider a multi-channel approach. Success in e-commerce often comes from pivoting when necessary, seizing new opportunities, and fine-tuning your strategy based on real-world feedback. So, while your initial choice is crucial, it’s just one step in the exciting journey of growing your online business.
Understanding what you, as a seller, are genuinely looking for is paramount. Take the time to conduct a thorough analysis of your own business objectives, strengths, and limitations. Consider your long-term aspirations and immediate needs. Are you seeking rapid growth, or is stability your primary concern? Are you prepared to handle inventory management or prefer a more hands-off approach? Do you have the resources to provide exceptional customer service, or are you looking for a platform to support you?
By aligning your decision with your specific goals and expectations, you can make a more informed choice between Amazon and eBay. Remember, there’s no one-size-fits-all answer. What works best for one seller may be better for another. Tailor your decision to suit your unique circumstances, and be ready to adapt as your business evolves. In this ever-changing landscape, your ability to align your strategy with your seller profile can be the key to your long-term success.