If you want to make money with your products, then you need to find a way on how you can sell them to a greater audience. The internet has provided sellers like yourself an opportunity to extend your reach and increase your chances of making money. Instead of distributing your products on local shops, you can take their products online and reach out to people whom you never imagined reaching out to before.
When selling online, there are only two sites that matter: eBay and Amazon. Both are two of the biggest and most popular online marketplaces with millions of visitors every day. It would be foolish if you don’t try your luck selling your products in either site.
However, which between the two is better? You can attempt selling your products on both sites and profit just the same. However, wouldn’t it be better if you know which between the two will yield you the highest profit? Whether you’re a seasoned seller or new to the online game, knowing which one is more profitable allows you to double down on that site and make more money in the long run.
Therefore, you will learn the following in this eBay vs Amazon post:
- a brief history of both sites and examples of people who has success selling in either marketplaces
- the pros and cons of selling in eBay and Amazon
- which site is better for arbitrage
eBay vs Amazon: the tale of the tape
As mentioned, we need to determine which between the two of the online marketplace titans is the most profitable platform for sellers. Therefore, we must establish the parameters to help us gauge how much money they bring to the table. Below are the metrics we will use for this exercise:
- Competitiveness – The greater the competition in a platform, the most difficult it is for sellers to penetrate the market and get their slice from the proverbial pie. Fierce competition breeds the challenge of producing greater products at affordable prices. It’s a double-edged sword you need to keep in mind so you can choose the right platform for you.
- Scope – The greater the reach of the platform, preferably on an international scale, the better it is for sellers. They can enjoy getting more eyeballs to their products as you hope to convert them into sales.
- Fees – Whenever you sell your products in either platform, a portion of the sales will go to the site. However, there are other factors to consider regarding fees. Some platforms will leave the shipping, storage, distribution, and package to the seller. Others offer fulfillment services that will take care of everything for you at a cost. You may pay more with a platform offering fulfillment services, but you will find it more convenient since you can focus on selling instead of shipping and minding your inventory.
- Customers – The more visitors and buyers you have on your site, the more chances you’ll make a sale in the platform. Keep in mind, however, that the number of visitors is unrelated to the platform’s scope or reach. You will see later on that even if the platform has a greater scope, it doesn’t always equate to higher traffic.
Now we’ve discussed the parameters we will use to discuss each platform, it’s time to take an in-depth look at each online marketplace.
Amazon: The king of the online marketplace jungle
Amazon is one of the most popular online marketplaces in the world. You can visit the site, place an order for an item after searching, and expect the package in a matter of days. It’s made buying and selling products very convenient as opposed to going to the mall to buy and shop. With just a few clicks of a button, you can get what you want – it’s that simple!
Whenever you search for a product on Amazon, you will see the same layout and appearance on all product pages.
In the screenshot above, one the most important elements you need to show on your product page is the Buy Box. It features your name as the seller of the product and whether Amazon fulfills the order (more on this later). Sometimes, Amazon lists itself as the seller instead of the actual seller. However, if the Buy Box shows the seller’s name instead of “Amazon.com,” the conversion rate is much higher. Also, buyers associate your seller name for the product they purchased. It’s possible they will search your name again on Amazon if they want to buy something similar from what they already bought.
You don’t have full control on what shows on your Buy Box. The only factors you can edit in this section are the price, feedback rating, and fulfillment method.
Another section on the product page you need to worry about is the “Other Sellers on Amazon.” It shows a list of sellers offering the same product on Amazon. If the price of the product is expensive, buyers can compare it to the other sellers. The most reasonable price wins, among other factors, so you need to find the best price point for your products. It also helps if you can develop a high feedback score you can use as social proof to encourage more buyers.
Fierce competition in Amazon
As you have read above, Amazon sometimes put itself over as the seller of the product even though they aren’t. Not only is Amazon presenting itself as a platform where people can sell their products online, but Amazon also is a seller! In the case of the Buy Box, they can manipulate what appears in this section for their own good. In fact, Amazon is unabashedly upfront about their role as a seller and how they have no problem undercutting sellers if the need arises.
If you’re a small retailer, you’d think you’re already working at a disadvantage when selling on Amazon. While it’s true, people still get to make lots of money selling on Amazon. Instead of selling for branded products, they sold private label products on Amazon. These are generic products purchased from manufacturers at a small cost. They can include their logo on the products and market them as their own. Manny Coats of AM/PM Podcast earned more than $75,000 from the private label products he is selling on Amazon.
Find the right product to sell and labeling it as your own requires hours of research and lots of elbow grease. Here’s a resource guide at Niche Pursuits to help you get started on choosing the right private label products.
Amazon has lesser reach but more (US) visitors
Amazon.com has 12 website domains across different countries. The number is nothing to scoff at, but it is fewer than what eBay has as you will see later.
However, and as mentioned earlier, scope doesn’t dictate the number of visitors. While their reach makes the online marketplace accessible for visitors, it doesn’t mean that visitors will visit the site for real. With Amazon, it has customers in over 180 countries. Also, 33% of its sales come from the United States.
Therefore, if you are targeting American buyers for your products for reasons, then Amazon is the best platform for you.
Higher fees on Amazon, but…
Amazon gets 15% fees on average for every successful transaction you make with a buyer on the marketplace. For example, for every $100 you make on the platform, Amazon takes a $15 cut from the profit, leaving you with $85. While the fee is not as bad as it seems, it’s more expensive it we compare to eBay later on.
However, the distinct advantage that Amazon has over others is its Fulfillment by Amazon services. Amazon takes care of shipping and delivering your purchased products to their respective buyers. The fulfillment and storage fees are low even if the products are bulky and heavy. Compared to shipping and packaging the items yourself, Amazon FBA is a logical choice to your fulfillment needs. You can focus on selling your products and let Amazon take care of the rest.
While Fulfillment by Amazon is still additional costs (regardless of how cheap it is), you cannot put a price tag on convenience. You may pay cheaper for an online marketplace that doesn’t offer fulfillment services but think of the time spent on managing the orders, keeping an eye on your inventory, and packaging each one for shipping. It will be much more expensive and time-consuming if you think about it. Therefore, while the fees are higher with Amazon, it offers seamless fulfillment services to help you focus on making money.
Vibrant customer base
Amazon not only has lots of visitors but most of these visitors also make purchases on the site. This infographic breaks down the different statistics about Amazon customers you need to know. Below are important figures in the infographic that will help you in your journey in selling on Amazon:
- Amazon has 310 million active customers, 90 million of those are Amazon Prime subscribers
- Amazon Prime members spend $1,300 per year, $600 more than non-Amazon Prime members
- In 2016, Amazon FBA users rose to 70% in 2016. In the same year, Amazon doubled the items delivered for other sellers
- 56% of users believe Amazon understand their needs more than any other marketplace
From the figures above, you could see that Amazon FBA and Amazon Prime have been boons to the company. Regarding the former, it makes selling much easier since Amazon takes care of your inventory, packaging, and shipping needs.
Amazon Prime is like the Amazon FBA for buyers. It is a premium subscription to the site that offers perks and benefits to members. If you are a buyer and love Amazon, then there are lots of reasons you must pay for a monthly subscription.
These premium memberships help Amazon rise above the rest of the online marketplaces in the world. They provide all the tools for buyers to get what they want in as fast as possible and for sellers to deliver their products immediately. These are reasons Amazon is not only the most popular online marketplaces but also one the best sites in the world!
eBay: The premier Amazon alternative
If you feel that Amazon is not for you after trying to sell there for days and months, then you need to come up with an alternative online marketplace where you can sell much better. As far as alternatives as concerned, eBay is ahead of the pack. In fact, the platform holds distinct advantages over Amazon that buyers will appreciate.
There’s a running stigma that eBay sells used products more than branded ones. While the site doesn’t carry a premier brand as one of its sellers, this belief is far from the truth. Over 81% of products sold on eBay are brand new!
In fact, due to the popularity of Amazon all over the world, truths about eBay are obfuscated. Related to the myth above, “bargain hunters” don’t populate eBay. Also, unlike popular belief, eBay doesn’t give buyers too much power. Yes, eBay places the onus on buyers and their slogan “people are good” reinforces that. There are other myths about eBay that people need to know because eBay is more than a capable alternative to Amazon. We’ll see the reasons below.
Less cutthroat competition
Amazon is a difficult market to penetrate unless you’re willing to fight tooth and nail to get your products sold. Not everyone will make money selling on Amazon to its competitive nature.
Unlike Amazon, eBay does not undercut sellers by being sellers in their platform. The latter provides all the tools necessary for small businesses to develop their brand on eBay and make money for their efforts. The online marketplace does not carry big brands which gives sellers more leeway to succeed.
Another factor that contributes to the fierce competition in Amazon is the review section. This is where customers can voice out their opinions about the purchased product and give their star rating. However, there are users who manipulate the star rating by asking people to fill out the section with positive reviews even without them using the product. Amazon cracked down on this issue by providing more stringent regulations for publishing reviews on product pages. Despite this, the reviews have done enough damage it’ll take time for sellers to recover from their dishonest reviews.
You won’t have this issue with eBay. Only people who have purchased the product can leave a review on the product pages. This rule keeps away spammers and false reviews from misleading other buyers.
eBay has an international reach
Amazon is popular in the US – bulk of its customers come from the US. Instead of imitating Amazon, eBay takes a different route by catering to the international audience. It has 25 website domains all over the world. It has more websites than Amazon which explains why roughly 57% of its audience are from non-US countries.
Based on this figure, eBay isn’t a direct alternative to Amazon because both sites cater to different audiences. If you’re having luck on Amazon, it shouldn’t stop you from setting up shop on eBay if you want to extend your reach to non-US buyers. However, given some of its unique features and benefits, I can see why some people would find more success on eBay than Amazon.
eBay has a smaller and frugal customer base
eBay attracts approximately 175 million visitors a month and is more than half the total visitors Amazon accrues (300 millions a month). You’d think Amazon is a much better platform due to the volume of visitors but that’s not always the case. What’s more important than volume is the quality of buyers of the site. eBay buyers are discerning – they are most likely to buy from sellers with a 100% seller rating. Therefore, it is important to get reviews from buyers to help you boost your social proof and increase your sales.
As a result, people are not as willing to buy from eBay easily compared to Amazon. Buyers place the premium on customer support than the brand name which is a good thing to hear for small business. However, expect to sell your products lower than expected. Since eBay uses the bidding system, buyers will place the lowest prices for your product. Unfair or not, it is what it is.
eBay charges a 10% fee for every successful transaction which is 5% lower than what Amazon takes. The only other fee that sellers have to shoulder are the PayPal fees (2.9% of the sale price plus $0.3 flat rate). Other than that, you get to take home more money if you sell on eBay compared to Amazon.
Unless you’re an experienced seller and know how to manage your inventory and deliver the orders to your customers, then eBay may not be for you. Unlike Amazon, you are on your own in delivering the products to buyers. The site doesn’t offer fulfillment services where you can just send them your inventory and the site will take care of everything. eBay only helps you track your delivery. Other than that, you’re on your own.
Therefore, before becoming an eBay seller, you need to learn the ins and outs of inventory management, packaging, and delivery services so you can set up shop on eBay. This post at Bitbond will help guide you through the entire process.
Selling on eBay vs Amazon: Pros and cons
We’ve discussed above the differences between eBay and Amazon as a platform where you can sell your products online. Below is a quick overview of their pros and cons.
Pros of Amazon
- Massive reach – With lots of people flocking Amazon to purchase the best products online, you can jump in get a lion’s share from the market if you sell your product correctly. Amazon buyers don’t mind paying a premium for your products as long as you know how you position yourself as a seller. Also, the conversion rate is 13% for non-Prime buyers and a whopping 74% for Prime members.
- Fulfillment services – This makes Amazon better than other online marketplaces. As a seller, the last thing you want to deal with is the inventory management and the delivery of the orders. Fulfillment by Amazon make it convenient for sellers to make money by selling their products because the site will take care of bringing the order in front of their doorstep. You must pay extra for this service but it is worth every cent.
- Beneficial to US sellers – Bulk of Amazon buyers are in the US. IF you also live in the US, then it should much easier for you to sell here than on eBay or any other platform.
Cons of Amazon
- Ultra-competitive nature – Sellers will take any advantage they can get to make money on Amazon. Some would resort to underhanded tactics by getting misleading reviews just to hike up their star rating. Worse, Amazon is also a seller and competes with sellers with less resources and experience. If they don’t know what they’re doing, they won’t stand a chance against Amazon and other sellers.
- Limited brand awareness – As an Amazon seller, people will remember Amazon more than the seller. The site sometimes changes the name of the seller to Amazon.com and disregard the seller’s name. Ultimately, it’s all about making money and Amazon provides an avenue for sellers to make money with their products. However, if you prioritize building a brand as a seller for your business, then try your luck on other platforms other than Amazon.
Pros of eBay
- Less strenuous competition – Unlike Amazon, eBay provides a more level playing field for sellers to make money. It doesn’t breed ultra-competition among sellers. The site makes sure that sellers are honest with their products and their business which is music to the ears of buyers.
- Easier to build a brand – The absence of prominent brands make it easier for small businesses to create brand equity in this platform. It gives sellers the reins on how they want to appear to their target audience. They can edit the HTML of the page to help create a more personal experience with your brand.
- Lower fees – If you have issues with websites taking a cut from our hard-earned money, then you’ll appreciate eBay. It only takes a small amount from your sales and you get to keep most.
Cons of eBay
- No fulfillment services – This could be a deal-breaker for most sellers. Some don’t have the patience to manage their inventory and deliver the orders to buyers. All they want it focus on selling and making more money. People who want to learn the entire business of online selling will appreciate how you should manage your inventory. However, those with no aspirations of implementing fulfillment won’t find eBay appealing.
- Price sensitivity – People want to bag products at bargain prices. There’s nothing wrong with that. However, it makes life more difficult for sellers who need to sell their products without going below their suggested prices. The profit will be smaller as a result due to buyers looking for lower prices.
Based on the eBay vs Amazon post above, you can make a case for both marketplaces. eBay and Amazon have distinct features that set them apart from each other despite their similarities.
If you want the lowest fees for sales, a more conducive environment for sellers, and the ability to build a strong brand with your marketplace, then eBay is your choice. You need to learn inventory management and deliver the orders yourself with eBay. However, if you’re up to the challenge, then you’ll find a lot to enjoy with this site.
For people who don’t mind the competitive nature of selling online, want to automate the fulfillment services so they can focus on selling more, and are planning to target a US audience, then Amazon is for you.
Do you agree with these sentiments? Comment below with your thoughts and let’s discuss further!