Many people make a living selling products on Amazon or eBay. As such, it stands to reason that you could make a lot of money by selling on both marketplaces. But is that the case? The answer lies in the details — you have to know the gives and takes of each marketplace. This article will compare and contrast the two so you can determine which, or if both, is a better fit for your online business.
What Is The Benefit Of Selling On eBay And Amazon?
There’s one major benefit to selling on Amazon and eBay — the number of visitors. Each site has millions of visitors each day. In 2011, Amazon remained the largest online retailer globally with more than 280 million unique visitors in one month and 20% market share of online retail. In second place, eBay has 16% market share of online retail.
Amazon’s success has been attributed to its huge inventory of just about every product on earth, and that growing inventory comes from outside retailers (aka third party sellers) who market their products on Amazon’s website. eBay, with a slightly smaller inventory, is known for being a hassle-free, turnkey selling environment, even for the smallest and inexperienced of sellers.
eBay Seller Fees
eBay’s seller fees are based on how the seller chooses to list their items. eBay has two general listing methods…
1. Auction-Style Listings
Sellers who sell their products using Auction-Style listings allow buyers to bid on their item, with the highest bidder winning the auction. Costs to use Auction-Style listings are based on an insertion fee and final value fee after the sale. Additionally, eBay has other fees if sellers want to upgrade their listing, such as “Reserve Price,” “Buy it Now” and other upgrades. As a promotional tool, eBay sellers receive 50 free auction listings each month, which may include the “Buy It Now” feature.
2. Fixed Price Listings
Sellers who sell their products using Fixed Price listings allow buyers to purchase an item at a set price. Costs to use Fixed Price listings are based on an insertion fee and final value fee after the sale. Similar to auction-style listings, eBay offers listing upgrades that come with a fee.
Insertion Fees
Insertion fees are different for both Auction-style and Fixed Price listings. For Auction-Style listings, insertion fees range from $0.10–$2.00 to list your item (cost depends on value of item). For Fixed Price listings, the insertion fee is $0.50 to list your item.
Final Value Fees
Final value fees for Auction-Style listings are set at 9% of the total cost to the buyer. The total cost includes the product cost and the cost of shipping the item to the buyer. The final value fees for Fixed Price listings range from 7%–13%, depending on the value of the product and the category.
PayPal Fees
Along with eBay’s insertion fees and final value fees, most buyers purchase items on eBay using a PayPal account. Sellers who use PayPal are charged $0.30 plus 3% of the purchase price (including shipping) per transaction. The benefit of online payment services is sellers receive payments immediately.
Amazon Seller Fees
Amazon’s seller fees are based on two programs…
#1 Individual Seller Program
The Individual Seller Program fees are set at $0.99 per item sold plus a referral fee that ranges between 6%–25% of the purchase price depending on product category (most categories are 15%). Additionally, sellers will need to pay the “variable closing fee,” which ranges from $0.80–$1.35 and covers the cost of processing a transaction through Amazon.com. This charge covers the credit card merchant fees and technology that powers Amazon. If you sell less than 40 items per month, the Individual Seller Program is your best option.
#2 Professional Seller Program
The Professional Seller Program fees are set at $39.99 per month plus a referral fee that ranges between 6%–25% of the purchase price depending on product category. Members of the Professional Seller Program also get access to special selling tools to help grow their business. If you sell over 40 items per month, the Professional Seller Program is your best option.
For both programs, Amazon collects payments and then deposits them directly into the seller’s bank account. This benefits Amazon sellers because they’re not required to use PayPal or another payment site that takes a cut of their profits.
eBay vs. Amazon: Pricing
On eBay, many items are sold using an auction format. Sellers set the price at a low amount they’re comfortable with, and then buyers bid against each other to purchase the item. The highest bid wins and all bids must be given before the auction deadline is reached. The seller’s goal is to obtain the highest possible profit by the end of the auction. In addition to auctions, eBay sellers have “Buy It Now’” and “Best Offer” promotions. For “Buy It Now” promotions, sellers list a price and give buyers the option of purchasing without an auction. For “Best Offer” promotions, buyers make individual offers and sellers accept or decline them
On Amazon, sellers control the pricing of their items. The seller’s goal is to price items lower than the competition to attract buyers. Given the tremendous amount of competition on Amazon, this is no easy task. That’s why you’ll typically find that profit margins are small on Amazon. However, small margins are counteracted by the millions of consumers who make daily purchases on the site.
eBay vs. Amazon: Shipping Deadlines
eBay doesn’t give an exact time frame in which items must be shipped after a sale is made. Law states that a seller has 30 days, and sellers using PayPal must ship items within 7 days to qualify for PayPal Seller Protection. Experienced sellers ship out items as quickly as possible. Why? eBay sellers with a track record of slow shipping are at risk of having low Detailed Seller Ratings (DSR) — a 5-star seller performance rating determined by buyers. If a seller has low DSR, eBay will hold the purchase funds until the buyer verifies delivery of goods.
If you sell on Amazon, prompt shipping is a must. Amazon sellers are required to ship items within two business days. No questions asked.
eBay vs. Amazon: Shipping Costs
On eBay, sellers control shipping costs by determining the fees. However, eBay penalizes sellers who overcharge for shipping by lowering the visibility of their listings in searches. Additionally, a seller who overcharges will likely earn low DSR, which can result in account suspension or cancellation.
Amazon controls shipping costs and has preset fees. In addition, Amazon gives sellers a “shipping credit” towards the cost of shipping, which may or may not cover sellers’ shipping expenses. The shipping credit is fixed, meaning Amazon sellers cannot request to change the amount. How do sellers avoid losses if their Amazon shipping credit doesn’t cover shipping costs? There is a solution. Experienced Amazon sellers avoid losses by increasing the total cost of their goods so they don’t pay out of pocket for shipping.
