11 Apr 2019
How do you know you’re signing up with the right marketplace? Read on as we breakdown which marketplace is right for your online business, and how it will benefit you.
Amazon was founded back in the summer 1994 selling books online. It wasn’t until 1998, when Amazon expanded products to music and videos, that it started sharing it’s platform to other book sellers.
Amazon is a brand within itself and therefore they own the customer database. The marketplace simply shares their home, so they are going to be very strict when you sign up to sell with them.
If you have an original product to sell on Amazon, you are selling under their brand. Sure, you will have a company listing, however, all the shipping and customer service is done through them. You are simply visiting their home.
As an Amazon seller, there will be limitations, such as customer information and storefront design. When it comes to customer emails, for instance, they have that information on lockdown. Since you’re working under their brand, you are limited to expanding yours.
Founded only a year later in 1995, eBay gives you a little more to work with. Since you are responsible for shipping and customer service, eBay doesn’t hide the customers’ information. You are to be able to reach customers and they can certainly reach you. There’s a lot more opportunity to establish a brand by creating newsletters and inventory updates.
With eBay, you are able to design your storefront a bit more. If you want to make a serious business out of eBay, you can customize your seller name and logo. The freedom of shipping everything yourself allows you to customize the packaging to a fun and brand-fitting design.
To start a reputable business that people remember, you need the chance to stand out, and Amazon does not allow much for creativity nor branding support. With eBay’s auction-based model, it allows you the freedom to sell anything, from your old Barbie to your new desk.
Not to mention the success stories of business that bloomed from the site, including the origin of NastyGal. I have yet to see a business that started at amazon and became a brand of its own.
As a consumer, you can virtually buy anything on Amazon - even your next car! In total, Amazon has 37 product categories, but depending on the type of seller you are, you may only qualify for 20 categories. The remaining 17 products are available for those who have the Professional Selling Plan.
Toys & Games:
Camera & Photo
That said, certain brands like Disney, for instance, will not be available for re-selling due to their trademark. Unless authorized by Disney - with invoices to prove it - do not make the mistake of buying these items and selling them off of Amazon. Doing so will put you at risk of getting banned.
Then we have eBay, who is notorious for selling used goods. With 75 product categories in the United States, there are countless opportunities for sellers.
Home & Garden
On eBay, You aren’t limited to the brands you can re-sell, and can really play around with the products that best suit your niche. This allows you to sell from anywhere, including your own garage or apartment.
The flexibility that eBay allows you is amazing when you’re a small business. However, the more you grow, the more complicated it is to categorize all your items.
Both marketplaces are very similar in that they both have a great array of products, but Amazon lacks game in categories such as Collectibles and Industrial Equipment.
When compared to Amazon’s strict rules, eBay comes out on top. Their policies are more flexible when it comes to listing your products and how you can sell them.
Amazon is a Business to Consumer (B2C) and Business to Business (B2B) e-commerce site. The nature of both of these business models is that shoppers are drawn to low prices, which means your products need to be priced competitively. This could hurt your profit margin if you’re not careful.
As of their latest update, Amazon has 300 million users, and 30 million of those are mobile users. As of 2017, 90 million of U.S. users have Prime Subscriptions, and 100 million globally. This means that one-third of Amazon Shoppers are paying an annual fee to get their purchases more quickly and easily.
Amazon currently ships to over 100 countries, which include:
If these numbers overwhelm you, pause for a moment and know that Amazon provides sellers with a standard international shipping policy, making it easy for sellers to dispense their products to supported countries only. Out of the 105 countries, 55 are supported, and Amazon will take care of the orders with the FBA Export Program.
Ebay, on the other hand, is a Consumer to Consumer (C2C) and Consumer to Business (C2B) platform. Their original business model was product auctions, making it easy to barter and trade. The old-school model is what makes it so attractive to shoppers.
Currently, eBay reaches over 100 countries globally. The platform offers a Global Shipping Program where they take care of the logistics for you once you qualify for the plan, similar to FBA.
The platform you choose to sell on will determine the audience you sell to. A bigger market will always generate bigger sales. So if we’re talking about availability and exposure, Amazon has more shoppers in less locations, while eBay has less shoppers in more locations. How do you choose?
Since we are basing it solely on audience numbers for this round, Amazon takes it. Though eBay is not far behind with shipping being supported in all of their available countries, unlike Amazon.
With over 400,000 sellers joining Amazon this year, you have to sometimes fight to be seen by the consumers. Even if that means fighting with Amazon themselves. When it boils down to it, there are two competitions going on: the Buy Box and the Amazon Brand.
The Amazon Buy Box is the boxed area that holds both the “Add to Cart” and “Buy Now” to the right of product listings. Unless you’re using their mobile application, at which point, their buy box is under the products.
Because Amazon sellers are likely to sell the same merchandise, Amazon rotates their Buy Box merchant. The idea is to give every seller a chance to generate sales.Here are some popular pro-tips on how to win the Buy Box:
Provide high quality customer service and earn top notch reviews on your product listings.
Subscribing to a Professional Selling Plan.
Registering as a Seller Fulfilled Prime (SFP) to reach those millions of Prime members.
Keeping your prices low enough to get your consumer a deal, but still make a profit.
Sending only new products to FBA, as it is unlikely that people buy “Used Items” at Amazon.
Customer service is what Amazon will prioritize 99% of the time. Ultimately, you’re playing by Amazon’s rules in order to generate more traffic.
As previously mentioned, Amazon is a house brand. They sell their own products, and try to dominate that category, in spite of inviting millions of others to do the same. Rumor has it that Amazon uses small companies as testers to see how well their product sell. If successful, Amazon will begin selling said products at a lower price, undercutting the original seller.
Because they have the tools necessary to see what products are doing well for everyone, Amazon has an unfair advantage. They can compare their sales to their guests, and figure out where they themselves need to improve.
Ebay stirred competition within fellow shoppers given their auction model. It’s a friendly competition that keeps you on your toes and gives your used product a chance to be worth anything. Of course, you set the initial price, but $10 can go as high $1,000 sometimes.
This benefits sellers a lot, especially with items such as collectibles. Currently, eBay has been following Amazon’s footsteps and introduced a Buy Box as well in 2017. They slowly integrated it without telling sellers, but many think it was just tests, given that it had different format designs.
This starts making sense when you think about the 25 million sellers at eBay. Some are bound to sell the same products, and when they do, eBay brings in the Buy Box to organize the listings, and give people the best deals.
When compared, eBay doesn’t have nearly as much competition as Amazon. They may be instigating more competition with the Buy Box integration, but it’s a healthy competition that helps the customers find you. Nor do you have to watch your back with eBay on the off-chance that they undercut your product.
With Amazon, you have too much opportunity to not be seen, and even when you are, Amazon can come in and steal your sales.
Amazon has FBA, which means Fulfillment by Amazon. This is included once you subscribe to your Professional Selling Plan. FBA is an all inclusive service where amazon does everything for you. All you have to do is collect your inventory, ship it to their fulfillment center, and they handle the logistics once your product sells. They also take over your customer service!
This is a great tool if you want to be more hands-off in your business. When it comes to their return policy, Amazon is very forgiving with their consumers. They really do go by to the phrase, “The Customer is always right.” Should the customer need to return anything for any reason, Amazon will allow it. Many times at the sellers expense.
This can leave you open to scammers, but Amazon is fully dedicated to keeping the consumer happy and coming back. In a way, this is the reason Amazon has the audience that it does. By this point, they’ve earned everyone’s trust.
On eBay, it’s all you! You control where you store your inventory, when you ship it, how you package it, and what courier you use. Many have found FedEx and USPS to be the best services to use, but it will definitely depend on your product size and weight. Each carrier has different prices that vary accordingly. If you’re thinking that you don’t have the time, let me introduce you to dropshipping.
Dropshipping is a business model where you you can sell inventory without ever having it on hand. You can list a product at the price you set. Once it sells, you purchase said product from a third-party retailer, provide your customer’s address, and the retailer sends it to them for you.
Dropshipping can keep your overhead low, but it is important to find the right retailer for your product listings. You want to look for a creditable wholesaler who has experience dropshipping and can deliver your items efficiently.
Dropshipping does have its cons, and one of them is that you now are giving up on your brand. The products you are selling, and the packaging they are delivered in, aren’t yours.
On eBay, sellers have the opportunity to create a return policy tailored to their products, or business model. But eBay also has a Money Back Guarantee that protects the customer in the first 30 days of purchase.
The best way to handle returns on eBay is to try to avoid them completely, and keep track of items being returned. If you are a dropshipper and those items keep coming back, maybe it’s time to look into a different supplier.
Another pro-tip is to not fight customers over returns. It’s always best to accept returns, and try to make your money back, than to waste time and haggle over the details.
Successful eBay Seller, DIYMike says “Don’t fight for every dollar. Move on to the next investment or the next item… Look past that one customer and see the 100 past them, or 1,000 past them, or like me, the 100,000 customers past them. I’m doing it for the long haul.”
When it comes to shipping, Amazon seems to have a more advantageous playing field, so we’re giving them this point. They’ve made it foolproof for you to send over your inventory and they handle everything else. It’s a give and take, of course. You are open to the chance of multiple returns, but Amazon has a large clientele because they are so accommodating.
The site Where To Sell Online did a great job putting together a breakdown for Comparing Fees and Pricing between Amazon and eBay.
Amazon is fee-happy because it provides you with all-inclusive features like FBA and SFP. Luckily, they provide a Fee Revenue Calculator to help you understand the profits you’ll make.
Fees vary for eBay depending on the items you sell and your subscription.
While it looks like eBay has more fee variation, it doesn’t necessarily mean that Amazon is more cost effective. When you compare the two side by side, you see which platform makes you more money:
Ebay has lower fees in comparison to Amazon. It gives you a bigger profit margin, even if its a range of 3-10% higher. You still end up getting more for your buck and that is the point when creating your company. Every e-commerce platform you choose is going to have a fee, but it’s important to choose the lesser of two evils.
Once you start selling, and the fees are paid, when do you receive your earnings?
Amazon has a two week payout. Up to three weeks when you send them new inventory. Once FBA receives your products, it takes up to 10 days for Amazon to receive and process them.
eBay, on the other hand, has an instant payout with PayPal. All payments on eBay are done through PayPal, and they have even introduced a CashCard that could be used as your Business Card.
As an alternative, you can always transfer the money to your bank, but that takes up to 3 business days. If you need cash flow immediately to restock, the CashCard may be your best bet.
No argument that an instant payout for your business is the most beneficial. Not only are you reaping the profits, but you can also put that money back into your business a lot faster.
The reason you are starting a business is to leave behind the days where you live paycheck to paycheck on a bi-weekly payroll. No thank you, Amazon!
As you can see, both eBay and Amazon have pros and cons. Both rank really high as e-commerce platforms, but ultimately, you really have to look at the business you want to produce. Find your niche and dominate it!
You should sell on eBay if you:
Want to create a brand that people remember and come back for.
Have fun and unique products to sell or flip. All brands apply!
Are not afraid to handle customer service and logistics.
Want a higher profit margin.
Like having an instant payout as your products sell.
Or consider selling on Amazon if you:
Aren’t worried about your own brand and just want sales.
Know the exact product you’re selling is doing well in the marketplace.
Don’t mind cutting into your margins to have an all-inclusive program and keep prices low.
Are okay with waiting to get paid for your product sales.