For small e-commerce businesses, building an online presence through your own website has to be the primary goal as it offers you more control over your branding and income. It can take time to do this though, and established marketplaces like Amazon and eBay are worth considering, as they offer fast access to millions of potential customers and a useful extra revenue stream.
For a small business which is new to online retail, exposure to new customers can be hard to achieve. E-commerce is more mature than it was ten years ago, and it’s now harder to compete on the search engines than it used to be.
For this reason, selling on established marketplaces like Amazon or eBay (or both) can be a great way to generate sales while still working on your own website.
However, it’s important to consider whether these marketplaces are the right fit for your products and brand, as well as the pros and cons of selling on each. In this article, I’ll look at exactly that to help you get to grips with selling on Amazon vs eBay (or vice versa!).
Selling on eBay: pros and cons
1. Access to over 180m potential customers
The potential to reach a huge audience with an eBay store is the main attraction to setting up a merchant account. With the right product, it can provide an excellent income stream to complement other channels.
eBay offers multiple opportunities to create a branded presence. From creating an eBay store and adding your company logo, to printed materials like thank you cards and packaging, you can start to build your brand on eBay. This allows you to promote your own web presence as well as use eBay to build your own customer base.
3. Seller and buyer protections
Protections are provided for buyers and sellers, which can ease any concerns buyers may have about purchases and therefore improve conversion rates. eBay also has fraud monitoring systems and processes to protect sellers from fraudulent buyers or ‘bad buyer behaviour’.
4. Feedback features
The feedback system on eBay allows the best sellers to build a strong reputation through the service they offer, and further improve trust with potential shoppers. Unlike Amazon, all reviews on eBay are from verified buyers and cover everything from product quality to service and delivery speed. In this respect, they are more reliable than those on Amazon and elsewhere.
5. New customer acquisition
Customers acquired via eBay can be converted into regular customers through your preferred channels. Great customer service and fulfilment can help here, as well as smart branding.
6. Ease of use
Product listing can be relatively simple, especially if you can use EAN numbers. There are also plenty of seller tools available to make listing multiple products easier.
7. Global reach
You can sell anywhere in the world once you set up a store. There is also a Global Shipping Programme which allows sellers to send items worldwide via a UK shipping centre.
8. User experience and design is taken care of
For a new business, website design and user experience can be key to building customer trust and making it easy for people to buy from you. On eBay, this work is already done for you. People are familiar with eBay, and the way product search and the payment process works leading to a smoother transaction for shoppers.
1. Seller fees can eat into margins
In highly commoditised, low-margin categories, the numbers may just not add up. It’s therefore important to consider your margins and whether you can make a profit through eBay.
2. Low prices
This isn’t necessarily the case, but if multiple sellers are stocking the same product, this can drive prices down. eBay is often a destination for bargain hunters, and they may easily find the same product at a lower price elsewhere on the site.
While selling on eBay is relatively simple, it will still take up a portion of time which you could be spending building your own website and other online channels. Listing items, packing and sending orders out, or answering questions from buyers all take time so it’s wise to consider whether the effort generates a worthwhile return on investment.
4. Lack of customer loyalty
Many customers are driven by searches for products rather than any brand loyalty, and many may not take much notice of your brand. For this reason, it can be harder to retain customers on eBay than through your own platforms.
5. Reliance on PayPal
Most purchases on eBay go through PayPal, which means you are reliant on it for much of your revenue from the site. This means paying between 2.5% and 3% per transaction, as well as complying with PayPal’s conditions.
Selling on Amazon: pros and cons
1. Exposure to the customer base of the world’s biggest e-commerce site
It’s a huge marketplace, and it’s where many consumers start out when they want to buy online. Sure, there’s a lot of competition, but it’s a huge potential customer base for your products.
2. Visibility on many product pages
Amazon will show alternative sellers on its product pages, even when it stocks the item itself. This provides an opportunity to compete on the most popular products.
3. Ease of listing
Amazon has its own catalogue of products, so listing items is easy. The product page template is already there, so it’s a relatively simple process.
Amazon guarantees transactions through its marketplace so shoppers can buy with confidence. In addition, Amazon offers protection for sellers against fraudulent transactions.
5. Credibility and trust
Amazon is perhaps the biggest name in online retail, and customers are happy to purchase on the site without any concerns over fraud. Credibility and trust can take time to build for new and unfamiliar e-commerce brands, so the marketplace essentially allows sellers to ‘borrow’ this credibility from Amazon.
6. Excellent user experience
Amazon has worked hard on the user experience, conducting millions of tests and experiments over the years to optimise its conversions. Sellers can take advantage of this experience and design without the work involved. In addition, customers are familiar with the site – they know how to search and browse and they know how the checkout works.
7. Customer habits
Amazon is the first destination for many shoppers looking for products. Indeed, 55% of product searches take place on Amazon, more than Google. In addition, people often have saved Amazon accounts, via apps and the website, so making purchases often takes very little effort on the part of the customer.
8. Delivery by Amazon
Sellers can choose to have Amazon deliver their goods, saving a lot of time and effort and providing customers with the retailer’s excellent delivery services.
It costs money to use Amazon’s marketplace, from roughly 75p per sale up to 25% depending on the level of marketplace access. Sellers need to weigh up the benefits of access to the market against the reduced profit margins.
2. Lack of control over branding
There aren’t many branding options on Amazon, as the only aspect sellers have control of is product images and descriptions. This means it’s very hard to strengthen your brand using the site or to move customers away from Amazon.
3. Lots of competition
It’s a massive market, but you’re competing with thousands of other sellers. On a busy product page, you can be reduced to competing purely on price and delivery charge.
4. Can’t capture email addresses
While on your own site you can create an email newsletter or email customers post-purchase (with the right permissions), Amazon doesn’t allow you to capture buyer email addresses. This limits your ability to build relationships with customers and to market to previous buyers, missing out on an excellent chance to drive repeat purchases.
5. Lack of customer loyalty
Customers are loyal to Amazon, not your brand. You may deliver efficiently and provide excellent service, but this can count for very little. Mostly the Amazon buyer is only interested in the right product at the right price for them.
Amazon vs eBay: key differences to consider
So, selling on Amazon vs eBay – while there are many similarities, the two sites have some crucial differences which should be considered:
Amazon is a direct retailer of goods which allows third parties to sell via its marketplace, whereas eBay has always acted as a wholesaler, facilitating sales for its sellers. As such, it could be argued that eBay’s business model is more seller-centric while the reverse is more true for Amazon.
The Amazon model provides less control for users than eBay’s. Amazon offers only a fixed price format and creates the product descriptions, whereas eBay allows you flexibility over price and details like product images and descriptions.
If the eventual aim for a small business is to gradually sell more directly to customers, then both marketplaces will provide some useful experience. However, many sellers will learn a lot more by selling on eBay due to the ability to experiment with pricing and product pages.
It’s generally considered to be more expensive to sell on Amazon than eBay. Amazon charges a fixed monthly fee plus costs per listing, while eBay charges only when customers reach a certain amount of listings (depending on product category) and takes a cut of each sale.
Amazon and eBay serve different customers. Amazon is more of a mass market retailer, while eBay serves a large number of smaller and more specialised markets – hobbyists, dealers, antiques and so on.
In general, people buying and selling on eBay are more likely to be entrepreneurs, other dealers and bargain hunters. The eBay auction model supports this type of customer far more than Amazon’s. Of course, people can arrive on eBay via standard product searches, and not all sales are auctions now anyway, but this is a key difference between the two sites.
Which product categories work best on each site?
It’s hard to be precise about this, and it may be necessary to experiment to find the best marketplace for your products.
If we look at the top-selling product categories on each, it is possible to pick out some key differences.
On Amazon, the following featured within the top 10 product categories in the US last year: electronics, clothing, shoes and jewellery, home and kitchen, beauty, books and phones and accessories. On eBay, mobile phones and accessories, video games, crafts and fashion featured in the top eBay categories. While some categories are common to both, such as electronics, some are unique to eBay, like crafts. For your own niche it definitely pays to do some research to see how your products could perform on each site.
Seller tools and automation
Amazon is more automated so sellers listing items will have less work to do, though as mentioned before, this means listings are less customisable than eBay.
Sellers on both sites will have access to third party software, from inventory tools to tools assisting with product listings, tracking sales, analytics and keyword research and optimisation.
Next steps: creating seller accounts on Amazon and eBay
If you’ve decided to begin selling on Amazon or eBay, or perhaps both, then you’ll need to set up a seller account.
Selling on Amazon: how to create a seller account
- Head to Amazon Services and click on the ‘start selling’ button.
- At this point you’ll need to login to your existing Amazon account or register a new one.
- The next choice is the type of seller account you’ll need. If you sell more than 40 products a month, then you’ll need a business account, at £25 per month.
- Add a business name, as well as address and contact details.
- Enter billing details for payments and charges to Amazon, and bank details to receive revenue from your sales on the site.
- Your account is then ready to begin selling.
Selling on eBay: How to create a seller account
- Head to the registration page on eBay and select the business account option. This option allows you to use your company name and branding across all communications with buyers and can also have advantages in terms of fees and tax on sales.
- If you already have a private eBay account, you can change this to a business account via My eBay. Click on Account / Personal Information to do this.
- You’ll need to add details including business name, VAT number if you have one, and contact details. You’ll also need to provide bank account details to pay seller fees by direct debit and receive sales income.
- There are no fees to create an account but eBay will invoice every month for seller fees.
- From this point, you’re ready to list items and begin selling.
So which marketplace is best to sell on? Amazon or eBay?
For small businesses, the choice of selling on Amazon vs eBay will depend on a range of factors, from time and resources to the kinds of products they wish to sell, and the amount of control they want to have over branding and marketing.
Certain product categories may be better suited to one site or the other. Craft and antiques are very well suited for eBay, while Amazon is more of a destination for buyers of electronics and mobile phones.
Then there are profit margins to consider – Amazon can be more expensive in terms of seller fees, while eBay allows sellers more control over price which can mean higher selling prices if you find the right niche.
Control is another key consideration, especially for users who are developing their own website as well. The greater control over branding, and the ability to customise listings pages can be a better option for people new to e-commerce who are looking to learn as they go.
Then there’s time and resources. Even though there are plenty of tools to make listing faster, Amazon can take less time, important if small businesses need to concentrate on other areas of their business.
Of course, businesses can list on both eBay and Amazon, giving their products the broadest possible appeal. This option also means they can also learn which marketplace works best for them.
Whether businesses choose one or the other or both, these marketplaces can be a useful first step. It allows people to test the market for their products and can be done with very little initial investment.
Amazon and eBay can also provide a useful additional revenue stream while you are building up your own e-commerce site. Building up a customer base, improving search visibility and marketing in general takes time. Marketplaces can be a useful stepping stone in this respect.
It’s important to weigh up the pros and cons when asking yourself which is best to sell on, eBay or Amazon, and to consider whether they constitute a useful extra income stream, or whether the effort required and reduced margins detract from your overall business aims.