eBay vs. Amazon: An Overview
Whether you’re listing things at home in your pajamas, receiving cash directly, or dropping off packages in the mail, using eBay or Amazon is easier than the garage sales of yesteryear. But what major e-commerce which site is the best? It might be helpful to understand how each of these companies makes money.
Key points to remember
- eBay has made selling on its site easier over the years by implementing a simpler structure for calculating fees for products sold.
- Amazon’s fee structure is a bit more complicated, with varying referral and closing fees, the latter based on product weight.
- Listing on Amazon allows buyers to buy directly from Amazon’s website, and sellers can even have Amazon fulfill the order if they choose to store it in one of Amazon’s warehouses.
- eBay offers more personalized listings, as well as the ability for eBay employees to create listings for sellers.
- Getting paid by Amazon as a seller involves depositing money directly into your bank account, while eBay still uses PayPal for the most part. Plus, customers pay you directly.
eBay
eBay has acquired quite a few companies since its launch in 1995, including PayPalGumtree and StubHub, and had 138 million active buyers in Q3 2022.
So how does eBay make money? The first and most important is PayPal. PayPal was separated from eBay in 2015. The money transfer/payment website is hugely profitable for eBay and accounts for nearly half of the company’s revenue. revenue. PayPal fees can easily eat into a seller’s margins with a 2.99% + $0.49 fee for each credit/debit card payment received. But let’s focus on the part of eBay that’s comparable to Amazon: the marketplace. In its heyday, eBay Marketplace charged users an insertion fee based on the item’s starting bid and an ending value fee when the item sold. Today, every seller on eBay enjoys several free listings.
For example, if you have a eBay store, according to the website, you’ll receive more listings with no insertion fee per month, unlike sellers who don’t have an eBay store subscription. However, eBay still charges a commission on the final price. The variable commission on the final price depends on the item category and the amount of the sale, plus $0.30 per order.
For strong sellers, eBay offers subscription packages that give sellers multiple free listings for a monthly fee, lower insertion fees for sellers who go over their allotment, and a less streamlined but lower range of final value fees. With the Marketplace, sellers can update their listings (better placement in search results, more photos, etc.) or list their items at a fixed price. Fixed price listings are subject to the same fees as auction Advertisement.
Amazon
Amazon has an even more complex fee structure than eBay. The company offers two options for sellers: they can register as individuals or as professionals. For individuals, Amazon charges $0.99 per item to list, plus a referral commission ranging from 8% to 45% depending on the item’s listing category.
On top of that, there is a variable closing fee, which for BMDV items (books, media, DVD, and video) is not variable at all, at a fixed amount of $1.80 per item. Other products are charged a variable closing fee which is calculated based on the weight of the item.
Sellers can list their items in 20-30 different categories (depending on whether they are selling as individuals or as businesses), and for BMDV sellers, they have set shipping rates set and collected by Amazon. These fixed shipping rates are perfect for buyers who know that when purchasing BMDV items on Amazon, the total price can be easily calculated without researching individual sellers’ shipping rates.
Amazon allows those selling products already listed on the site to list their product simply by entering the UPC of the item or SKU Number. This process reduces the time a seller needs to prepare a listing because the relevant information has already been entered by Amazon employees. Payment is completed by periodic bank transfers to the seller’s account, and sellers are protected by Amazon’s Fraud Protection Service.
Both companies offer seller protection services as well as the ability to contact a buyer directly in the event of a problem. Both companies also offer tutorials and customer support for newbie sellers.
Main differences
eBay, the original auction site, had complicated and expensive seller fees. Since the rationalization of their fees, the structure seems simple and easy to understand. Amazon, by comparison, can be confusing and frustrating to navigate. Examples of calculations would be useful to compare the two sites. Nevertheless, with tiered pricing structures and closing costs, which vary by item category, item weight and buyer’s payment option, any example could be construed as a selection of products or biased in favor of one company or another.
Amazon has some advantages over eBay. For starters, the site does a great job of making the shopper feel like they’re buying directly from Amazon. Seller’s items are listed next to Amazon’s. Purchases can be made using “1-click purchase”. Unlike eBay and PayPal, buyers can make payment without leaving the Amazon site. With Fulfillment by Amazonsellers can even have their items stocked and shipped directly from Amazon’s warehouses.
On the other hand, a seller may prefer to use eBay to personalize their listings. With the ability to post eye-catching color ads in a listing, it could be more appealing and more likely to drive a sale than Amazon’s neutral listings.
How to get paid
Amazon has a multi-step procedure for setting up a seller’s account. Users are automatically registered for a business account and Fulfillment by Amazon. Account information is entered based on a user’s existing account (if applicable). Finally, there is a section for tax identity information.
For eBay sellers, the process is simple: Open an eBay account (or use an existing account) and start selling. Depositing money into a bank account is a bit more complicated. Amazon users are paid through a direct deposit to their bank account, while eBay users are (usually) paid via PayPal.
Advantages and disadvantages of selling on eBay
Selling on eBay can be an easy way to make money off of things you no longer use (dearly loved toys or off-the-shelf collectibles, for example) or a way to sell what you make (Halloween costumes and Christmas decorations). Most buyers and sellers are familiar with eBay and its search engine makes it easy to find what you need on its platform.
There are, however, downsides to using eBay compared to other online selling platforms. First, you’ll have to pay eBay fees for using their platform, you have limited control over how items are sold, and you can end up with payment issues if customers don’t pay you. not.
You must pay fees, and these fee structures may change over time.
You need to compete with similar sellers.
You may run the risk of not getting paid for your items if a customer doesn’t pay.
Advantages and disadvantages of selling on Amazon
Amazon is a giant, and it reaches millions of potential customers, which provides online sellers with high traffic potential. Amazon is a well-known online shopping platform, and once you learn how to label your products, they can appear in recommended listings.
Amazon will also store your products in their huge warehouses if you are running a small business through Amazon. This can be a significant advantage over using your garage or paying for storage of your products. Amazon Prime shoppers are more likely to do the bulk of their shopping on Amazon, and if you can reach that audience, you’ll likely make more sales.
Like eBay, fees are an inconvenience, you don’t get any interaction with your customers (unlike eBay), and your products and business are wrapped up in Amazon, so you don’t have the ability to build a brand.
Amazon reaches millions of potential customers.
Amazon is loved and trusted by online shoppers.
Your products (when tagged) may appear under Amazon Recommended Products.
What is Safer, Amazon or eBay?
E-commerce can be a risky business, but overall Amazon may have more safeguards in place because you don’t have to interact with your customers. Amazon handles payments to the seller. However, Amazon and eBay have many safeguards in place to protect their sellers and customers.
Are eBay or Amazon bigger?
Amazon has more potential customers than eBay and offers more products than eBay.
How many sellers are there on eBay compared to Amazon?
In 2021, there were approximately 7 million US sellers on eBay. Amazon had approximately 6 million sellers worldwide.
How many people buy on eBay compared to Amazon?
In 2021, there were approximately 159 million eBay customers worldwide. Amazon has over 300 million active users worldwide.
The essential
Whether you’re selling through eBay or Amazon, research is key. Given the different pricing systems associated with each business, an item that might sell for a low price on Amazon could command a high fee from eBay. But the higher price might be justified for the Customer service received and a specific audience reached. Both sites offer advantages and disadvantages for sellers, but if you want to build a brand, eBay may be a better option. If you want built-in storage for your products, Amazon might be the right fit.