If you’re looking for the best marketplace to sell your products, you’d be remiss not to consider Amazon and eBay.
But how do you choose between two global e-commerce giants? What can one do that the other can’t?
- The major difference between the two marketplaces is Amazon sellers sell products at fixed prices while eBay sellers can both offer products at fixed prices or set items to auction, where buyers can bid for them and the highest bidder wins.
- Amazon sellers can choose between an Individual plan that charges sellers a small fee for each sale they make and a Professional plan that includes enhanced features such as bulk listing and reporting tools. While eBay sellers, they can choose between Personal accounts that are suited for those who sell personal items infrequently and Business accounts that are geared towards businesses that want to sell on eBay full-time, manage bulk sales, and resell products.
- The right platform for your business depends entirely on your sales model and the products you sell.
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What Are the Key Differences Between Amazon and eBay?
While both Amazon and eBay are marketplaces, there is one major difference between them: Amazon, like most online retailers, sells products at fixed prices. Meanwhile, eBay sellers can both offer products at fixed prices or set items to auction, where buyers can bid for them and the highest bidder wins.
As well as facilitating third-party merchants, Amazon also has its own privately labeled products within its Amazon Essentials, Amazon Fresh, and Amazon Basics ranges. eBay, meanwhile, only facilitates third-party sellers ― both individuals and businesses ― meaning those who sell on eBay will never compete with the platform itself.
Amazon: Key Facts and Figures
How big is Amazon, really? Well, with 310 million active users and more than 40% of total e-commerce sales worldwide, it’s safe to say that Amazon’s impact as an e-commerce marketplace is pretty ubiquitous. On the seller side, Amazon keeps pretty hush about how many active sellers they have, but it’s been estimated to be around 6.4 million sellers — of those, 1.5 million are active.
eBay: Key Facts and Figures
A little on the smaller side, eBay has 187 million users worldwide, and although it only has a 4.3% share of worldwide e-commerce sales, this still makes it the third biggest retail e-commerce company. eBay also keeps the number of their active sellers on the down-low, but the number has been estimated to be around a whopping 25 million.
How Do Businesses Use Amazon?
Amazon sellers can choose an Individual or Professional selling plan. The Individual plan charges sellers a small fee for each sale they make and is aimed at those selling less than 40 products per month.
The Professional plan includes enhanced features such as bulk listing and reporting tools, the ability to customize shipping rates, and eligibility for top placement on product detail pages.
Once you’ve chosen your plan, you can sell on Amazon in six different ways:
- Amazon Brand Registry: This option lets sellers build an online storefront featuring their brand and requires sellers to have a registered and active text or image-based trademark.
- Dropshipping: Dropshipping is a popular way to sell on Amazon. This means that you offer products that someone else manufactures. Once those products sell, the manufacturer ships them to the customer, and you get a portion of the profit.
- Arbitrage: This method involves sourcing and buying products from other retail stores and selling them at an increased price on Amazon.
- Reselling wholesale goods: Buying products in bulk from manufacturers at a cheaper price and selling each unit at an increased rate is another popular method among Amazon sellers.
- Private label selling: This involves putting your own branding on often wholesale products, enabling sellers to build brand recognition.
- Manufacturing and homemade: Amazon offers a “Handmade” platform for sellers that want to sell their own manufactured or handmade goods.
An example of a branded Amazon storefront.
How Do Businesses Use eBay?
eBay sellers can choose between a personal and business account. While personal accounts are suited for those who sell personal items infrequently, business accounts are geared towards businesses that want to sell on eBay full-time, manage bulk sales, and resell products.
Both accounts, however, have the option of an “eBay Store” subscription that enables sellers to build their own branded storefront with free product listings and lower final value fees.
An example of a branded eBay storefront.
There are two ways to sell on eBay:
- Auctions: This involves the seller choosing a starting price for an item and interested buyers placing bids on the item. The idea is that once the auction has ended (they can run for 1, 3, 5, 7, or 10 days), the highest bidder wins the item and pays the price they bid. Sellers can also add a “Buy It Now” price to items, which must be at least 30% higher than the starting price. This type of listing is used more commonly by personal sellers.
- Buy It Now listings: Sellers can also list fixed-price products where buyers purchase the item straight away with no bidding involved. eBay also offers a “Best Offer” feature, which sellers can add to products. This means that buyers can offer sellers the highest price that they’re willing to pay, which sellers can then accept or reject.
Amazon Fulfilment Options
Depending on how you choose to sell on Amazon, you’ll need to select the most sensible fulfillment option. There are three Amazon fulfillment options available for all types of businesses:
- Fulfillment by Amazon (FBA): With this option, Amazon takes care of almost all operational processes. Sellers store their products in Amazon’s fulfillment centers, and they pick, pack, ship, and provide customer service for each product you sell. Choosing this option also gives sellers automatic Prime status.
- Fulfillment by Merchant (FBM): FBM involves sellers using Amazon as a platform to sell their products, but the sellers themselves handle all fulfillment, shipping, and customer communications. They can also outsource these processes to fulfillment partners. Sellers that choose this option aren’t given Prime status.
- Seller Fulfilled Prime (SFP): When sellers choose this option, they handle all fulfillment and shipping processes and customer communications themselves or via an outsourced partner. However, the difference between SFP and FBM is that sellers that choose the SFP option are granted Prime status.
eBay Fulfilment Options
There are only two eBay fulfillment options available: pack and ship orders yourself or hire a third-party logistics provider and outsource the process.
In recent years, eBay has made mention of a new “managed delivery” program, which is essentially an end-to-end fulfillment service for sellers. However, this program hasn’t yet come to fruition.
Factors to Consider When Deciding if eBay or Amazon is Right for You
One factor we’ve yet to address is the fees you can expect to pay for each platform. While each platform has extended fee and pricing structures, let’s break down the basics here.
Amazon sellers are subject to two main fees: referral fees and fulfillment fees.
- Referral fees refer to the cut Amazon takes every time you sell a product, and this amount depends on the product category. Most referral fees are between 8% and 15%.
- Fulfillment fees depend on which fulfillment method you use, and also how heavy and/or large the product is.
Individual plans cost $0.99 per month which allows for up to 40 sales, while a Professional account costs $39.99 per month.
eBay has two main types of sellers fees, namely insertion fees and final value fees.
- Insertion fees are associated with product listing. Sellers are offered 250 free listings per month and are then charged $0.35 per listing.
- A final value fee is a cut eBay takes after you make a sale, which is represented by a percentage of each sale, with an extra $0.30 per order.
There are also additional fees associated with specific higher-value product categories, such as automotive items and jewelry.
Opening an eBay store costs anywhere from $4.95 per month to $2,999.95 per month, depending on your needs.
How to Choose Between eBay and Amazon
The right platform for your business depends entirely on your sales model and the products you sell.
For example, eBay might be your best bet if you specialize in selling antiques or super-niche items since its auction function is a great match for this product category. However, if you sell generic, bulk items via dropshipping, Amazon’s platform is much more suited to your needs.
You’ll also need to seriously consider both fulfillment options. Since eBay doesn’t offer any of their own, you’ll need to weigh up whether you can handle packing and shipping yourself, or whether you’ll turn enough profit to make outsourcing these processes worthwhile.
Amazon vs. eBay: The Decision is Yours
Both platforms have their strengths — after all, there’s a reason that they occupy the top spots in global online retail.
If you’re just starting out, there’s no reason why you can’t use both platforms to test the waters. But you’ll need to weigh up whether you can realistically cover all of the fees associated with each marketplace.
Before you settle, we suggest putting together an e-commerce business plan that will help you create and visualize a solid foundation from which your business can grow.