As a business owner that sells physical or digital products, it makes sense to list your goods on popular marketplace sites. But is it better to sell on Amazon or eBay? This post explains the differences between the eCommerce marketplaces.
In this article, we'll discuss the differences in revenue, demographics, order fulfillment options, competitive landscape, and more on Amazon vs. eBay.
Comparing eCommerce Performance Between Amazon vs eBay
Although both eBay and Amazon are popular marketplaces, Amazon is more extensive. Let's compare revenue between Amazon vs eBay to get a sense of the difference in monthly sales volume.
Amazon vs eBay Sales Volume
According to Statista, Amazon generated 386 billion dollars of sales in 2020. On the other hand, eBay earned 10.27 million dollars in sales during the same year. Overall, Amazon has a market share of nearly 40% of online eCommerce retail companies.
Therefore, eBay and the Walmart Marketplace share a similar market share, with Amazon making most of their sales online. Additionally, Amazon's worldwide brand value, according to Statista, is about 200 billion US dollars, making it the second leading brand (after Apple.)
Amazon vs eBay Shopper Popularity
Although Amazon generates notably more revenue, both marketplaces are popular with buyers worldwide. Amazon has about 200 million Prime Members, who subscribe to an "Amazon Prime Membership" and benefit from 2-day shipping.
eBay's total active buyers were around 182 million users worldwide, making eBay the second-highest eCommerce site by traffic.
What are the Most Popular Product Categories on Amazon vs eBay?
Although you can find almost everything on Amazon and eBay, each site has distinctly popular product categories. Electronics are the most popular product category on Amazon, while eBay merchants sell more mobile devices and cell phone accessories.
Thus, if you sell in either of these product categories, the choice is simple! Go where the most competition is and watch your sales skyrocket. But what if you don't sell electronics or cell phones? Well, in this case, it makes sense to learn more about demographics on both sites.
Demographics on Amazon vs eBay
The younger your ideal customer, the more likely they'll use Amazon over eBay. If you're targeting a younger demographic, it might make more sense to skip eBay and sell directly on Amazon.
However, if you create products for a 30+ years old demographic, eBay might be the best marketplace to use. In fact, eBay is the only platform that is popular with all age groups.
Demographics are an essential distinction to understand if you're trying to appeal to a specific buyer base. Since many companies recommend Amazon for young entrepreneurs, it's likely best suited for products and services created for Millennials and Generation Z (Born in 1995 or later.)
How Much Does Your Average Shopper Spend on Amazon vs eBay?
Another primary consideration is how much customers on both platforms spend annually. There has been a decline in how much customers spend on eBay throughout the years.
The latest average annual spending information from eBay states that most customers spend around $500 a year on their platform. Compare this to Amazon's statistics stating that shoppers spend about $1,400 a year, and you start to understand just how much more people buy on Amazon than eBay.
Why Do Shoppers Choose Amazon and eBay?
There are different reasons that shoppers search for products on Amazon and eBay. Amazon motivates buyers with free, two-day shipping on millions of products. The Amazon Marketplace also does a great job keeping customers on the site by recommending related items and product bundles.
On the other hand, eBay attracts buyers searching for unique products at a discount. eBay is an excellent way for shoppers to find deals on name-brand items, which is why many consumers looking to save money recommend it.
Both Amazon and eBay are popular with buyers, but the latter is more suitable for finding deals, while the former is best if you're looking to sell through an established marketplace that will drive sales.
When it comes to overall popularity, it is no surprise that Amazon wins. However, just because people spend more on Amazon than eBay doesn't mean that you can't make money from either platform. Depending on your niche, you might earn more on eBay since there will be less competition.
Now that we've answered the question "is Amazon doing better than eBay" based on customer metrics, let's explore the benefits of both platforms for eCommerce sellers.
Order Fulfillment Options Between Amazon vs eBay
On Amazon, there are two ways to fulfill customer orders. You can either use the Seller-Fulfilled (FBM) program or the Fulfillment by Amazon (FBA) program. Let's discuss these two programs and how Amazon FBA improves fulfillment for eCommerce sellers.
Fulfillment by Merchant (Amazon FBM)
Amazon FBM is the default fulfillment method for Amazon sellers. As an FBM seller, you need to pack and ship customer orders from your warehouse using your own packaging materials.
For example, if a buyer purchases three shirts from your online store, you need to pick up those three shirts from your inventory location. You would then package them individually using a protective material (bubble-wrap is best), mark them with tracking information, and then ship each shirt separately.
Amazon collects a small shipping and handling fee whenever a customer purchases something on the marketplace. You'll pay UPS per package, plus whatever additional labor is required made it quite labor intensive on top of all that time spent coordinating, picking, packing & shipping across multiple orders.
Fulfillment by Amazon (Amazon FBA)
The alternative is Amazon FBA. If you use Amazon FBA, Amazon will pack and ship all customer orders from its warehouses to both protect your products as well as simplify the fulfillment process for you.
Additionally, Amazon is known for having some of the cheapest shipping rates around (if not the most reasonable). They can achieve such low shipping costs by reducing overhead and using economies of scale. When you use Amazon FBA, Amazon reduces their operational costs and pass those savings on to eCommerce sellers like yourself. They even provide Amazon FBA reimbursement for lost or damaged items.
There is a one-time fee associated with Amazon FBA, which is based on how many units sell (a sliding scale) plus additional storage fees depending on how much space one is using in their fulfillment center per cubic foot. You pay this fee upfront, and it is non-negotiable.
Should You Use Amazon FBA or FBM?
So is Amazon FBA worth the extra cost? If you're willing to pay more upfront for convenience and significant economies of scale.
As an Amazon FBA seller, Amazon handles all customer service inquiries, so you don't have to. Also, since Amazon is not buying your products directly from you, there are no payments to make per unit sold - they pay after they receive payment from the customer.
That is why most eCommerce sellers prefer selling on Amazon vs eBay or Walmart because it is more convenient than having private label inventory lying around somewhere in storage. Plus, those in the Amazon FBA program can have Amazon package and ship orders, even if the orders are on other marketplaces like Walmart.
However, if you're looking for a cheaper way to sell online with lower fees, selling on eBay is definitely a better option than selling on Amazon. Let's discuss fulfillment options as an eBay seller.
Order Fulfillment as an eBay Merchant
Unlike on Amazon, there's only one way to fulfill orders as an eBay seller. If you sell to eBay customers, you'll need to complete the order yourself. Thus, selling on eBay is similar to being an Amazon FBM seller that packages, prints labels, and ships products themselves.
A nice thing about the Amazon FBA program is that you don't need your own warehouse space to store inventory and prepare to ship. Unfortunately, as a top-level eBay seller, you'll need storage space to manage your inventory. If you're a new seller, you might not want that level of involvement while fulfilling orders.
With that said, eBay might roll out Managed Delivery, a program similar to Amazon FBA. They had a short pilot program in 2020, and rumors are that they'll launch the program in 2022. Whether Managed Delivery is worldwide or only for sellers in the US and EU is currently unknown.
When asked, "is it better to sell on Amazon or eBay" it's evident that fulfillment is a significant part of the decision. Until eBay launches its Managed Delivery program, Amazon is the sure winner since they make fulfillment simple using the FBA program.
What's competition Like on Amazon vs eBay?
Sellers want to offer unique products and services, and Amazon has a lot of competition. Amazon is so giant that there are millions of active sellers on the platform and over twelve million products.
However, it's best to think about Amazon as an opportunity rather than a threat. Many Amazon sellers have built successful businesses from their online stores. There are ways to differentiate your product offerings to succeed on Amazon.
eBay is known for being a second-hand marketplace with high competition between arbitrage-driven sellers. If you're looking at eBay as a platform to launch new products or offer services, you might be disappointed in the amount of competition waiting for you.
Though it is an auction site, the competition is much less fierce in comparison. While it can take longer to rank products in search results on Amazon, eBay product searches are seemingly fairer. As time runs down on a product listing, every product on eBay will be displayed on the first search result page eventually.
The same cannot be said of Amazon, where the most important competitive factors are whether your product listings appear on the first page of search results. In addition, you must also command the Buy Box on Amazon, which is how Amazon determines which seller makes a sale when a customer clicks the "buy now" button.
With that in mind, let's discuss why competition is so crucial on both sites.
Amazon Search Result Placement Competitiveness
Before launching an Amazon eCommerce store, be aware of how Amazon favors sellers with long-term customer relationships. Those who have the most products on Amazon and generate the most sales will reap the benefits with higher search result placements. Therefore, it is essential to remember that the number one ranking is only temporary for any specific product search.
With that said, Amazon is still considered by most to be the most competitive marketplace on the web. It is challenging to offer a unique product or service because many big brands sell directly on Amazon through their storefronts and sometimes undercut smaller sellers with lower prices.
eBay Search Result Placement Competitiveness
When holding out for your products to appear in the first few pages of eBay search results, you'll have a better chance of being prominently displayed compared to Amazon since eBay has so much lesser competition.
For example, searching for "lemon squeezer" on Amazon, the first result is a random assortment of products, each with significantly different titles and descriptions (including one advertorial-like listing).
On eBay's main page alone, there is only one outright advertisement at the top of the page. All the other listings come from a customer's search results. Thus, the remaining listings are straightforward to browse because they contain only images and product titles that target consumer keywords in some capacity.
Before launching your eCommerce store, it is crucial to understand how both Amazon and eBay rank products since it will directly impact how potential customers will be able to find you online through organic searches conducted via Google or other search engines.
There's a lot less competition on eBay since you create your own product listings for each item you sell. Additionally, when someone clicks the "buy now" button on your eBay listing, you'll always make the sale.
Because of how Amazon sells the same products by multiple sellers, any seller can generate a sale when a customer uses the Buy Box, which makes Amazon much more competitive. Therefore, if you want to create your niche on an eCommerce marketplace, eBay might be the place to begin.
Amazon vs eBay Revenue Seller Fees
Amazon Seller Fees
There are many seller fees on Amazon. The two most vital to know are the referral and fulfillment fees.
Amazon Referral Fees
The referral fee is how much Amazon charges for selling your products. The referral fee is based on the sale price of your item (15%-30%). They also charge a variable closing fee (10% + $0.99). The product category you sell within determines how much you pay in referral fees.
Amazon Fulfillment Fees
There are different fees based on how you decide to fulfill orders. Whether you're an FBA or FBM seller influences price. So does how heavy or large your product is and how you ship.
If you go with FBA, Amazon is your fulfillment partner and handles the storage, packaging, shipping, returns, and customer service for you. This is why they offer so many benefits to FBA sellers, such as discounted shipping rates.
These services are included in the referral fee that Amazon charges you for selling on their platform.
eBay Seller Fees
Selling on eBay is more straightforward than selling on Amazon because it doesn't charge as many fees.
There is a cost to list items or create listings but nothing like what Amazon charges. eBay's monthly Unlimited Listing plan is perfect for small-time eCommerce sellers because there is no pressure to make changes if it doesn't work out.
The two main eBay fees to know are insertion fees and final value fees. Let's cover the difference between these two business expenses.
Insertion Fees on eBay
Insertion is the process of creating a listing with eBay. The cost is meager, but sellers need to know that it is per listing and not per item sold. Therefore, you'll pay around $0.35 per listing that you create after your first 250 listings free per month.
So if you're selling five different products on the same listing, the insertion fee is still applied with every single sale (even though you only pay one time). eBay is able to keep its rates low for small businesses this way.
Final Value Fees on eBay
eBay also charges a percentage of the selling price for your customer's order plus $0.30. The final value fee you pay depends on the category of products you list on the platform.
Most categories have an 11.40% final value fee, but they can go up to 15% for some products. As you can tell, you'll save a lot on fees by selling on eBay instead of Amazon. These savings on fees are a big reason why eBay is one of the top-selling sites in eCommerce.
If you have a simple product with an average sale price, it's no wonder why so many sellers choose Amazon over eBay or vice versa. It comes down to ease of fulfillment, popularity, and the demographics you'll find on both marketplaces.
Amazon vs eBay Customer Support
Both Amazon and eBay offer almost the same customer services. Specifically, they provide order management, fulfillment, RMA services, catalogs of all products that sellers can sell on their site, and other services related to selling online.
The only difference is that Amazon is more flexible with shipping times and customer support than eBay.
Amazon completes customer service requests for many sellers in the FBA program, which is another perk. If you don't want to handle returns, inquiries, and refunds yourself, then you can rely on Amazon to do it on your behalf.
On eBay, sellers can access their Seller Dashboard similar to Amazon's Seller Central. The Seller Dashboard on eBay helps sellers monitor their performance and customer service requests.
Thus, eBay is similar to being a seller-fulfilled merchant on Amazon. You'll handle customer returns, inquiries, and refunds yourself.
However, eBay is very strict with timelines for customer support responses compared to Amazon's flexible approach.
To make matters worse, customers can contact eBay without having to purchase the product from you first. Customers can do this because eBay is a platform where customers can buy and sell items independently; it is not an online retailer like Amazon.
Running Product Promotions on Amazon vs eBay
At some point, you'll want to offer promotional items and prices to your customers. But which platform makes it easier to run product promotions? Let's discuss how you can run promotions on Amazon and eBay.
Amazon's Lightning Deals
The Amazon Lightning Deals program lets sellers provide product discounts for 6 hours or less. Lightning Deals is Amazon's online deal feature for sellers who list products using the FBA platform.
Lightning Deals is available only if you are an item-based seller and have fulfilled at least 50 orders in the past month. It is also important to note that participation is limited because Amazon reserves this opportunity for specific sellers.
If you can participate, you can schedule your Lightning Deal anytime between 7 AM and midnight during the promotional period.
A great thing about Lightning Deals is how flexible they are with run times. Sellers can select their own price, duration, discount amount, and product quantities just by filling out some basic details on the Amazon Seller Central dashboard.
You should keep in mind that if you don't want to sell out of your stock by the end of a Lightning Deal promotion, then it is best to schedule sales for less than 6 hours. In addition, it is recommended not to do multiple Lightning Deals within 72 hours of each other.
Running Promotions on eBay
Unfortunately, there's no easy way to run a product promotion on eBay. Instead, you'll create a listing and use a low price. Because eBay is an auction site, it might feel like you're running a promotion whenever you make a product listing.
Unlike Amazon, you can't use coupon codes or create lasting deals and discounts. For this reason, if you plan on creating several product promotions, Amazon might be the better option for you.
Website Design Quality and Consumer Trust
It should be no surprise that website design is essential for eCommerce sellers. The higher quality your eCommerce business design, the easier it is to generate sales.
But which platform has a better design and builds more trust with its customers? Let's discuss.
Amazon Marketplace Design Quality
Users love browsing Amazon listings. Amazon is designed to maximize conversions, so its clean design is appealing to customers.
Every seller on Amazon has a rating, which builds trust in merchants. There are also product ratings, which help customers determine if the product is safe to buy.
eBay Marketplace Design Quality
While eBay is also designed to help eCommerce sellers generate sales, it's more focused on usability than conversion optimization.
The high-quality images and multiple pictures per listing make it easy for customers to browse listings.
However, with most listings using an auction format, they don't offer buyers the ability to review seller ratings like you'll find on Amazon.
While eBay is simple enough for users of all skill levels, many consumers use Amazon because of its popularity in mainstream markets.
While we're discussing trust, why not talk about the feedback system? Here's what to know about seller and product feedback on Amazon and eBay.
Amazon vs eBay Feedback Systems
Both Amazon and eBay offer feedback systems crucial to online sales. Feedback is the number one factor when consumers choose which eCommerce platform to use for their purchases.
Both platforms collect reviews, but only Amazon collects ratings. Each rating is an overall score based on consumer reviews, including seller ratings. These ratings are what is needed for trust between merchant and buyer.
eBay rates sellers with a percentage in comparison to others on the site. It also provides product reviews that help customers determine what other people think of the product before buying it themselves.
Because both platforms provide feedback on products and sellers, this is one feature that's not necessarily better or worse on either platform. You'll find both marketplaces suitable for collecting buyer feedback on your company's products.
As you can tell, answering the question "is it better to sell on Amazon or eBay" isn't always straightforward. It depends on which features you're looking for and the product categories you provide.
With that in mind, let's discuss how to determine which platform will work best for you.
Conclusion - What's Better, Amazon or eBay?
Amazon is an excellent platform for selling products, but is it the best choice for you? As we mentioned earlier, Amazon is an extremely popular marketplace with millions of customers.
This popularity is why we recommend that new sellers use this eCommerce platform to begin their journey into online sales. If you're just starting and don't have a large budget, learning the ropes of eBay is more complicated than learning how to sell on Amazon.
eBay is also an excellent option for new eCommerce sellers. It's prevalent in the United States and is a great market when you're looking to expand into foreign markets. Many countries use eBay as their primary source of imports from overseas companies.
Since the marketplace is targeted at casual shoppers, trendy or trending products are perfect for generating more sales. Because this platform is very diverse, performing thorough research before beginning your first sale on this platform is essential.
Based on our experiences with both Amazon and eBay, we consider them equally viable options for eCommerce merchants who are just starting. However, there is no doubt that Amazon is more accessible to break into than eBay. Whether you choose to sell on Amazon or eBay is a matter of preference and is not necessarily better or worse.
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