Amazon vs. eBay vs. Your Own Website: Pros and Cons of Different Marketplaces
For those getting involved in online selling, there are three main options to make money: Amazon, eBay, and your own website. Each has its own pros and cons, so it’s a good idea to look at all the possibilities for your business. Let’s take a brief look at some of the selling options when considering eBay vs. Amazon and selling on your own website. Which is safer and which platform will give you the best chance at success?
Amazon started as an online book retailer but has grown to become far and away the biggest online retailer (within the USA). In addition to books they now sell electronics, clothes, toys, and pretty much anything else you can think of. According to MSNBC, it is expected that Amazon will top $250 billion in sales this year, or roughly 49.1% of all online sales.
In short, Amazon sales will be roughly equivalent to all other online retail combined. That’s a big plus when looking at the differences between Amazon and eBay. Clearly it is the most important of these marketplaces, as it’s the most popular place for people to go to buy the stuff they want.
Pros of selling on Amazon vs eBay
Easy access to a wide swath of spenders . Forbes states that more than 50% of American households have access to an Amazon Prime membership. This is just subscribers, and there are many more that do not have a Prime membership but still shop on Amazon.
Simple to get started. Amazon offers fulfilment by Amazon, or “FBA,” for a small fee. This means you can have items that you sell sent to Amazon, and when customers buy it, Amazon will package and send the item to the consumer, while also providing tracking numbers and other end-to-end customer services. This makes it easy to start your online store before you have a warehouse and fully fleshed out shipping and packaging operations. It is also relatively inexpensive and often much cheaper than it would cost for an individual to send packages out on their own. The program makes the management of your business much easier.
Advertising is run through the same portal . When advertising on Amazon, one uses what is now called, “Amazon Advertising.” You can use this to setup broad automatic campaigns, or more targeted, specific campaigns. This allows you to have great control over your advertising budget, and you know that you are advertising to customers that are already fairly interested in buying a product.
There are lots of support communities and research tool. AMZScout is widely considered the best extension for evaluating potential products. There are also other tools that help with streamlining advertising, and Reddit and the Sellers’ Forums provide places to ask questions and learn quickly about the Amazon sales opportunity.
Cons of selling on Amazon
It is a wildly competitive marketplace . There are more than two million sellers on Amazon, which means in many categories the competition is incredibly high. Without careful product selection, you can find yourself toiling away on the eighth or ninth page of a search, never to be seen by customers. Alternatively, you may find that the product prices get lower and lower, cutting into your margins and turning a good idea into a waste of money. Tools like this simplify the process so you can find successful Amazon FBA products quickly and easily.
The return policy is extremely beneficial for the customer . Amazon panders to their customers in a way almost no other retailer has done. The return policy is simple and easy. For most items, customers are refunded before ever returning the items they purchased. To stay on top of getting reimbursed, there are programs available to help track these returns and make sure the product is actually being returned to inventory.
Fees are high when you compare them to other options . Amazon charges a 15% referral fee on almost all purchases. You need to think about this when considering your accounting, as it can quickly cut into your bottom line. If you are looking for hot selling products on Amazon, be sure to consider this fee. Luckily, Amazon offers an FBA Fee calculator to help estimate your potential profits.
Amazon can be strict with their rules, and can suspend quickly . There are countless horror stories of successful sellers losing their entire Amazon business because they violated one of Amazon’s lines. It could be as simple as logging into the wrong Wifi, and can sometimes be out of your control, such as a competitor making false accusations to hurt your product.
eBay is the second largest online retailer, but only has about 6% of the overall online market. To put this in perspective, it is roughly ⅛ of Amazon’s market. While this can still be a substantial amount, it is noticeably less than the sales found on Amazon. This is a big negative when performing a comparison between eBay and Amazon.
Pros of selling on eBay versus Amazon
eBay has lower fees . eBay’s fees are changing at the end of September, and while they’re increasing they will still be lower than Amazon’s fees. eBay fees now range from 3.15 % to 9.15%, depending on the item you’re selling. This is virtually half of Amazon’s fees, which can make a huge difference in your bottom line and the profitability of your products.
eBay has fewer sellers . While once known for the abundance of different sellers peddling their wares, there are actually more independent sellers that make their primary income from Amazon than from eBay. It is estimated that only 1.3 million sellers rely on eBay for their main income. There are certainly far more ‘amateur sellers’ on eBay, but overall, the competition for fixed price products can be quite low.
eBay is more lenient when it comes to rules . eBay can be looser with the rules, which can allow a qualified seller to really stand out. When there are many poorly made or unprofessional looking listings it can be easy to excel. Use this to your advantage as a seller!
Cons of selling on eBay
There are fewer consumers on eBay . As noted above, it can be a less competitive environment largely because there are fewer buyers than on Amazon. A best selling product on eBay will typically gross far less than a best seller on Amazon.
Customers have less confidence in eBay . eBay has an association with scams and a lack of professionalism among many consumers. This can look bad for your brand when you are trying to make a name for yourself.
It can be harder to fulfil orders on eBay . Unless you fulfil orders using FBA (which is more expensive to use for a third-party site like eBay), you will need your own packaging and shipping operation to sell on eBay. This can be a burden on your company, and will immediately begin saddling you with overhead.
Your Own Website
As you begin to build your brand, establishing your own website can be an attractive option. It gives a certain weight to your products and brand, and can instill consumers with a higher degree of confidence.
Pros of selling through you own website
Establish credibility for your brand . A website can give your products and brand a natural gravitas.
Lowest fees possible . The fees when selling on your own site will be minimal, typically a credit card processing fee and the cost of using a platform like Shopify, or something of the like.
Upsell other products . Once the customer is on your site, they may end up buying several different products. The ability to sell similar or connected products magnifies the need to establish a niche so you can sell multiple items in one fell swoop.
Cons of selling through you own website
You must bring customers to your site . When you start your own website, you don’t have the benefit of millions of customers already looking on your platform to make purchases. You must invest time, money, and energy to build up your search ranking on Google and other search engines.
Advertising can be expensive . Running ads for a broader subset of the population on a search engine like Yahoo or Google can be much more expensive. Additionally, the conversion rate is oftentimes much lower.
Customer service can be difficult . When running sales through your own site you will need to be constantly cognizant of customer service issues, technical issues, and anything else that may pop up. Performing customer service while at the same time running all other areas of your business can be very difficult.
As a seller, the question is always, “So what? How does one apply this knowledge in a concrete way to help with their business model?” Here are your main takeaways:
Pick an initial platform for getting started.
Amazon and eBay are great places to start since they come with a vetted customer base. This saves you time and money drawing traffic in the early stages.
Find products with a lot of demand.
Whether you decide to sell on Amazon, eBay, or your own website, we recommend using the AMZScout Web App and Pro Extension. This software is used by many expert sellers to increase their sales. With the Web App, you can search for products using a wide array of filters in order to help you find products that meet all of your criteria.
Next, use the AMZScout Pro Extension to measure demand and learn how profitable the product niche is, as this will help you generate the most revenue. For a quick summary of the profitability of a niche click on the Niche Score. This score measures both demand and competition to generate a score out of 10. A score of 7 or higher means the niche is worth pursuing.
Look to expand your business both vertically and horizontally. This means expanding by both adding products, and by adding marketplaces. This type of growth will help lead to long term success. If you start with a strategy like retail arbitrage consider eventually moving on to something with more growth potential, like private label products. Sites like Alibaba and Aliexpress are great places to look to find new products to sell. Consistently looking for new things that can grow your business will help you increase your net worth.
Be cognizant of which products can succeed on which marketplaces. For instance, some technical goods and replacement parts actually sell better on eBay than Amazon.
Leverage your success into a private website. Once you see the potential of some products within the same niche, create an appropriate website to help legitimize your brand and begin to make sales with a lower referral fee.