If you sell products online, you are probably considering or might already be selling your goods on third-party marketplaces like eBay and Amazon. While creating an eCommerce store on your own website is a great place to start, many eCommerce businesses are drawn to the appeal of these marketplaces — and for good reason. With that in mind, let’s dive into a significant eCommerce debate: selling on eBay vs. Amazon.
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Benefits of selling on marketplaces like eBay and Amazon
There are many benefits to becoming a merchant on marketplace platforms like eBay and Amazon — which combine to total more than 55% of all eCommerce sales.
Gain more exposure
The most obvious benefit to selling your products on Amazon and eBay is the increased exposure it affords your business. Every eCommerce website needs traffic to survive and many businesses invest heavily in digital marketing initiatives designed to increase visitors to their website.
Instead of putting so many resources into bringing customers to your website, you can simply list your products on websites that are already driving millions of daily views.
In January 2019, Amazon received 2.63 billion desktop and mobile visits. Although not as powerful, eBay still boasts 179 million active buyers globally.
Increased brand equity
Many merchants don’t realize it — but there is a ripple effect of branding when you dive into the question of selling on Amazon vs. eBay.
Amazon and eBay are like any business and must invest in advertising and marketing. In 2018, eBay spent $1.4 billion in advertising.
By becoming a merchant on Amazon or eBay you benefit from their brand equity. When eBay spends millions of dollars driving more traffic and active users to its platform, it benefits their merchants — in addition to eBay.
Additionally, many consumers trust these brands more than they do smaller retailers.
A recent study from NPR/Marist discovered that 67%of Amazon customers trust the platform — even though they had little to no trust in other online retailers. Because your products are listed on these marketplaces, you benefit from the consumer trust in the larger brand.
Consumers like marketplaces
Again, online marketplaces like Amazon and eBay dominate the online retail market. One reason they are so successful is that consumers simply prefer shopping on marketplaces.Online retail marketplaces have changed the consumer shopping experience.
Buyers have access to a wealth of information within a single platform to help them make the most educated decision. They have access to product descriptions, photos, reviews and other details about the product. They can easily compare substitutes and competitors based on things like price, ratings, reviews and more.
Consumers love the flexibility and control they have shopping on sites like Amazon and eBay. Additionally, these platforms often have multiple vendors selling the same product, which offers more stable inventory levels for buyers.
Amazon, eBay and other eCommerce marketplaces also invest in the user experience.
They are constantly updating their platform to provide a seamless interface that makes the purchasing experience easy and enjoyable. They have quality assurance controls and customer service software to keep their customers satisfied and coming back. They are always looking for new ways to improve the buying process and are constantly at the forefront of online shopping advancements.
Consumers love shopping on marketplaces for many reasons — and, as an eCommerce business, there is value in selling where buyers are most active.
Disadvantages of selling on marketplace platforms
There is a lot of value to becoming a merchant who sells on a marketplace like eBay or Amazon (or both). However, there are some negatives to consider when deciding whether or not to list your products on marketplace platforms.
Lower profit margins
Profit margins refer to the difference between your cost to produce, market and distribute your products and what the end consumer pays for it. The greater the difference, the more profit you earn per transaction — and the better off you are as a business.
If you operate a business that manufactures, sells and distributes goods through channels that you own, you can have much more control over your profit margins throughout the process. However, when you start using other supply chain vendors, they can eat into your margins.
This is exactly the case with listing on third-party marketplaces like Amazon and eBay.
These platforms have fees for merchants that use their services. While you might be able to sell more products, you will likely see the per-sale-profit decrease because of the added expenses.
These marketplaces have different options for vendors to help mitigate some of the fees — ultimately, however, your business will need to decide if there is enough profit left over after the additional fees to make it worthwhile.
Not “your” customers
Customer retention is a huge part of running a successful business. We’ve all heard the stat that it’s 5 to 25 times more expensive to acquire a new customer as it is to retain an existing one. Well, how about this one?
You’re 60% to 70% more likely to sell a current customer.
Unfortunately, when you sell on a third-party marketplace, the customer is not really your customer — they’re the marketplace’s customer. Most platforms offer limited to no communication between the seller and the buyer to prevent the seller from circumventing the marketplaces for future transactions.
For instance, Amazon doesn’t provide sellers with the email addresses of their buyers — which makes it difficult for businesses to market to past customers.
While these platforms do have some communication features, it’s much more difficult to retain and resell customers on a marketplace platform than it is through your own eCommerce store.
Your lack of control is the biggest disadvantage when you look at selling on eBay and Amazon. Not only do they control your ability to communicate with leads and customers, but they limit other important areas of running a successful online business.
For example, design and user experience are powerful ways for eCommerce companies to grow their brand.
However, when you consider selling on eBay vs. Amazon, you are limited to constraints of their layouts and customization options. You can’t create pop-ups; you can’t redesign your product pages — it makes it difficult to differentiate your brand from competitors. This often leads many consumers to base their decision on price or reviews/ratings.
Most marketplaces also prevent you from adding additional analytics to your pages and don’t allow retargeting code such as Facebook pixels.
If you want to have full control over your eCommerce business, then you should consider launching your own online store.
Selling on eBay vs. Amazon: Choose a marketplace
If you’ve decided to start selling your products on a marketplace, the next consideration is on which marketplace to list your goods. The two most obvious choices for any eCommerce business are eBay and Amazon.
Let’s look at each briefly to see the pros and cons of the marketplace.
When people refer to selling on Amazon, they actually mean Amazon Marketplace. Amazon is a retailer first and foremost, but they also have Amazon Marketplace which is a service for merchants who want to sell their products on Amazon’s eCommerce portal.
For a fee, Amazon allows businesses to join (or apply for specific industries) their marketplace as a third-party merchant. As an active merchant, businesses can list their products, sell to consumers, facilitate the transaction and delivery and handle customer service, all within one interface.
Amazon is the largest eCommerce in the world, and there are roughly 1.7 million current sellers with active products in the marketplace.
Sellers on Amazon Marketplace can do quite well, in fact, a recent survey found that 19% of Amazon sellers earned more than $1 million in sales for 2018.
Related: How to sell stuff on Amazon
Today’s eBay is vastly different than it was when it launched in 1995. The auction platform of old is hardly recognizable with eBay now shifting to compete with other retail marketplaces like Amazon.
Today, eBay is very much a fixed-price listings platform that’s highlighted by their “Buy It Now” button.
Like Amazon, businesses can sign up as a third-party merchant on eBay, list their products and start selling within eBay’s interface. While eBay still supports auctions, it’s mainly reserved for extremely rare items like collectibles or high-priced, used items such as cars.
eBay CEO Devin Wenig has lofty goals to increase eBay’s active users by almost 300%. This ambitiousness presents a unique opportunity for merchants selling in their marketplace.
Selling on eBay vs. Amazon: Amazon pros
When compared to eBay, Amazon has a much larger audience. This larger audience means more potential buyers of your products. Amazon also has a robust logistics and delivery feature in Fulfillment by Amazon (FBA) that offers businesses a streamlined solution for inventory management and shipping.
Amazon (46.7%) has also recently surpassed Google (34.6%) as the first place users go to start their product search.
Selling on eBay vs. Amazon: Amazon cons
There are some cons to choosing to list on Amazon over eBay. For one, Amazon has complete control over the customer and offers the merchant very little options for communicating with buyers.
Amazon is also overpopulated with similar vendors — meaning unless you sell a unique product or have an exclusive partnership with a manufacturer, you’re likely to have many competitors.
This increased competition will often create a price war, driving down your profit margin even further. Sellers on Amazon are also finding it increasingly important to advertise in the marketplace, which can continue to drive up the cost of selling on the platform.
Selling on eBay vs. Amazon: eBay pros
One of the biggest pros of selling on eBay is that they provide you with the buyer’s email information. This gives sellers the ability to grow a marketing email list that can be used to resell, cross-sell or upsell products in the future.
eBay also has fewer sellers than Amazon, which means you have a better chance of converting visitors to your product and a lower need to advertise, which can increase sales and decrease expenses.
eBay vs Amazon: eBay cons
The clear con to choosing eBay over Amazon is the substantially smaller audience. Another disadvantage to eBay is its lack of a fulfillment option for its sellers. It’s reported that eBay is piloting a fulfillment solution. However, it’s planning to leverage third-party fulfillment services instead of building its own, which might give Amazon the edge in quality and price of fulfillment.
Selling on eBay vs. Amazon: Which is better?
Choosing whether to sell on eBay vs. Amazon takes some careful consideration. There are obvious benefits and disadvantages to each marketplace.
Ultimately, if you have decided that you want to list your products on a marketplace, the next thing to do is look at some of the questions below:
Is your product unique, rare, or used? eBay is better suited for custom, rare, or used products, whereas, Amazon is best suited for common, new products for which people actively search.
Do you depend on customer lifetime value? If you depend on repeat purchases or leveraging existing customers, you might enjoy that eBay provides an easier way to communicate with past customers.
Do you want a turnkey solution? Amazon offers the best turnkey solution for sellers. It’s easy to set up and provides fulfillment options for merchants.
Are insight and analytics important? While neither platform provides flexible analytics, Amazon does have the more intuitive and extensive data reporting software.
Do you want the cheapest option? Amazon’s selling fees are slightly more affordable than eBay’s, but you will likely spend more on Amazon’s advertising to compete. There isn’t a clear winner for the cheapest option because it will often depend on the product/industry.
Do you want the most potential? Because Amazon has a larger audience, it provides the biggest potential for sales.
At the end of the day, every seller needs to weigh the pros and cons of selling on Amazon vs. eBay to decide which platform — or both, or neither — is the right fit for their business. Do your due diligence, and you may reap great rewards from the effort!#featured#ecommerce#onlinestore#sales#websites#digitalmarketing
Derek Miller, MBA is a digital marketing expert with a background in content, SEO, PR and email and social media marketing. He specializes in small to medium business growth.