eBay vs. Amazon Business Model

Is it Cheaper to Sell on Amazon or eBay?

Here is a summary of the key comparisons between eBay and Amazon.

Amazon:

• Uses a complicated fee structure that includes closing fees based on product weight and also variable referrals

• The fee structure proves hard to understand for some sellers.

• Allows buyers to make purchases directly from the website

• Allows sellers to let Amazon complete the order by storing goods at an Amazon warehouse

• Allows sellers to be paid directly to their bank accounts

eBay:

• Uses a simple selling structure that eBay has improved over time, letting sellers figure out the fees they must pay
• Allows sellers to customize listings freely, but also the chance to have eBay workers arrange listings
• Typically pays sellers through PayPal and not through direct deposit

While it appears that eBay and Amazon are fairly similar in terms of what they offer sellers interested in e-commerce, it is clear that the platforms each feature key differences that may appeal to some sellers and not to others. Therefore, let’s look at each platform more in-depth.

Which Company is Bigger, eBay or Amazon?

eBay

When many entrepreneurs and e-commerce enthusiasts consider eBay, they forget that eBay has acquired more than one company since the platform launched back in 1995. Over the last twenty years, eBay bought PayPayl, StubHub, and Gumtree, all-powerful and active companies in their own right.

eBay creates profits from its transaction fees, which impact sellers’ cut of money whenever they make a sale. These transaction fees consist of a 2.99 percent fee plus a 49-cent fee for each credit or debit card used by customers.

eBay’s profits do not stop there. The platform also charges some sellers an “insertion fee” in eBay’s Marketplace. When sellers list their goods for auction in the Marketplace, they pay a fee on the listed starting bid on the item and its listed final value. However, each seller can create multiple free listings before they begin paying fees for them.

Sellers who are committed to working with eBay create eBay stores. Those who run eBay stores can create more free listings per month than sellers who do not subscribe.

However, these eBay members still must pay a final value fee, dependent on the nature of the item and the amount it sells for, plus 30 cents per single order.

Some entrepreneurs are committed to selling on eBay as their main income source. For these high-powered e-commerce workers, the website offers subscription packages. What are the benefits of eBay’s subscription packages?

• Lower final value fees
• Lower insertion charge if sellers exceed allotted sales
• More free listings

However, like most subscription services, eBay charges a monthly fee for these perks, and sellers should be aware of all fees when they make their final decision.

Lastly, eBay’s Marketplace allows sellers to change and upgrade their listings as they see fit, which can lead to advanced search result visibility and more sales.

Overall, eBay has created a useful and unique platform for sellers who see e-commerce as a way to supplement their incomes or focus solely on e-commerce as their main pursuit. However, for sellers who sell their goods online full-time, we recommend eBay’s Marketplace Subscription service if it is affordable.

Amazon

One thing that sellers notice right away about Amazon is its fee structure, which many views as complicated. However, with such a high amount of sellers on the website—over 1.5 million—Amazon must also offer some e-commerce advantages.

Amazon provides a choice for sellers: they can sell their goods as “professionals” or “individuals.” What do these labels mean? Individuals pay $0.99 per item when they list it and a referral fee between 8%-45% based on category.

Individual sellers also must pay a variable closing fee. When they sell books, DVDs, media and videos, the fee stays fixed at $1.80 per item, while the fee for other items goes by weight.

Sellers are also able to:

• List their items using many different categories, from movies to appliances
• Use established shipping rates set by Amazon and paid to Amazon

Amazon sellers who already possess listings on the site can list a new item easily: all they have to do is punch in the item’s SKU or UPC. Amazon deposits payments periodically into the seller’s account. Lastly, Amazon’s highly-rated Fraud Protection Service protects sellers from any problems.

Many sellers wonder if they should become “professional” sellers or stay in the “individual” category. Professional sellers usually estimate they will sell more than 40 units of their goods per month. If this is true, they must also agree to the roughly $40 per month subscription fee. What do Amazon’s professional sellers get for this as opposed to the site’s sellers?

Professional sellers:

• Do not have to pay Amazon a fee of $.99 per item

• Enjoy access to previously restricted categories, from Fine Art to Sports Collectibles.

• More customer feedback courtesy of Amazon’s Feedback Five Program, which helps sellers collect reviews

• Ease in managing inventory and creating more detailed, effective listings

In this case, Amazon sellers and e-commerce enthusiasts must decide if the gains warrant the cost.

Overall, both eBay and Amazon provide the following:

• Protection services for sellers
• The chance to contact buyers of items directly
• Highly-rated customer support, tutorials, and instructions for beginning e-commerce sellers

What Are the Advantages of Selling on eBay?

eBay offers a formula for earning money from items individuals no longer use. From worn clothes to old toys to collectibles still unboxed, eBay offers a way to trade the stuff taking up space in one’s home for cash. Think sneakers, sunglasses, musical equipment, sports gear, and more. Also, for the e-commerce artists, the website provides a chance to sell costumes, decorations, and craftspeople made by hand. Often, handmade goods require very little overhead, so e-commerce artists make solid profits even with the fees.

Moreover, eBay has been a force for years in the e-commerce world, and most sellers and buyers have experience with eBay. The website’s handy search engine also makes for quicker searching for that sought-after item.

Let’s sum up the rest of eBay’s advantages for sellers.

• Buyers and sellers use eBay all over the world
• For sellers, it is easy to set up an account
• Selling items on eBay offers a steady side income

What Are the Disadvantages of Selling on eBay?

All e-commerce platforms have advantages and disadvantages, and the challenge for buyers and sellers is to figure out what website works best for them.

eBay charges sellers fees to use its website.

Plus, sellers do not have much control over how goods are sold, meaning that sellers might struggle to find recourse if, for example, a buyer defaults on payment. When a buyer defaults, the order is canceled, and the buyer gets a mark on their record, but often the seller cannot recover the owed funds.

What are some of the other drawbacks to selling on eBay?

• Sellers compete directly with similar sellers, raising competition and sometimes lowering overall sales
• Sellers must pay fees, and it is daunting when fee structures evolve over time
• Sellers may end up unpaid if a customer refuses to pay

One missing payment may be enough for casual sellers who do not sell goods in bulk to send them over to Amazon instead of eBay. But, of course, this is all up to the seller.

What Are the Advantages of Selling on Amazon?

Globally, Amazon is perhaps the most well-known e-commerce site in the world. Research tells us that Amazon’s “Prime” users number over 200 million compared to eBay’s total global users, which are 180 million. Therefore, Amazon’s revenue dwarfs that of eBay.

However, sizing and economic comparisons can cut both ways for sellers. Some sellers want to tap into Amazon’s size and strength, but others find it overpowering and impersonal.

Since Amazon reaches millions of customers, sellers benefit from higher traffic. However, with so many similar items for sale, it is easy for sellers’ goods to become overlooked by the masses.

On Amazon, sellers can “tag” their items, making them eligible to show up on Amazon’s Recommendations and Recommended Lists. Also, Amazon allows sellers to store products in their warehouses. This fact is a significant plus for bulk sellers with goods in their houses, garages, or storage spaces.

Also, Amazon’s Prime program has been a success, and its shipping rates make many shoppers rely on Amazon for most of their daily and holiday shopping. Therefore, when sellers reach Prime members, their numbers increase.

Amazon offers many advantages to sellers, the most important being:

• Sellers can reach millions of customers
• Amazon’s size and reach make it trusted by customers
• Seller’s products can be tagged and therefore show up on Amazon’s Recommended Lists

What Are the Disadvantages of Selling on Amazon?

Like eBay, Amazon charges sellers fees to vend items on their platform. Additionally, sellers report that they do not get to interact with their customers much.

Amazon’s enormous brand also overshadows any individual brands or products, so for sellers looking to grow their brands, Amazon might prove frustrating.

Amazon’s high fees and enormous size hinder some sellers, especially those who engage in e-commerce as a side gig. However, as we have established, Amazon offers some advantages that sellers cannot ignore.

Which Site is Safer for Sellers, Amazon or eBay?

E-commerce is not without its risks for both sellers and buyers. However, both eBay and Amazon employ specific protections for sellers and buyers.

Amazon is considered safer for sellers overall because e-commerce sellers do not need to interact with their customers to the extent they do on eBay.

Both websites have evolved, however, in terms of providing safe shopping and selling experiences. As a result, when sellers decide between eBay and Amazon, safety is usually not a key issue.

Which Site is Better for Sellers: Amazon or eBay?

Although eBay used to feature a more complex structure for sellers and pricey fees, the original auctioning website has made successful changes that improved structure and cost.

eBay still employs a multifaceted schedule, and the different levels can still be challenging to negotiate for some sellers. For example, two similar listings on eBay might be classified very differently according to the seller’s specific category and status.

However, eBay has supplied a quality e-commerce website for many years, and sellers praise their reliability, customer and seller support, and improving ease of use. Sellers wish it was easier to collect direct payments from eBay, but perhaps that is a policy change that the website will make in the future.

Similarly, Amazon is a reliable e-commerce site that has been in the game for a while, but it is not without its share of seller concerns. For example, Amazon’s fee system still confuses casual and professional sellers. Many find selling on Amazon frustrating because they are not sure where the fees originate or why they are paying them.

How Do the Two Websites Compare?

It can be difficult to accurately compare the selling experience on eBay and Amazon since the websites generally offer a similar experience for sellers. In addition, so many different variables exist based on the items, the listings, the seller’s desire or ability to sign up for a subscription or ‘professional’ account, and more; the results of most comparisons are understandably mixed.

However, Amazon’s business model boasts a few simple advantages compared to eBay’s. What are these clear advantages?

Amazon offers a better buying experience. For example, when a buyer purchases a pair of socks made by Seller X, the buyer believes they are making the purchase directly from Amazon. This brand synchronicity helps sellers achieve a sense of legitimacy among buyers, as does the fact that Amazon sellers’ items are listed next to items from the Amazon brand.

Additionally, on Amazon’s e-commerce site, buyers can use their famous “1-Click Buying” feature. However, unlike eBay, the payment and the purchase are completed without leaving the Amazon website.

Fulfillment by Amazon also offers another advantage since e-commerce sellers can store their goods at Amazon’s large fleet of nationwide warehouses and ship items directly from the company’s warehouses to buyers’ homes.

According to sellers who still frequent eBay, the site’s main advantage is the ability to personalize listings. eBay’s sellers create custom listings that are enjoyable to make and help fuel traffic and sales. Amazon’s listings are decidedly uniform, corporate, and controlled, while on eBay, a seller can design a colorful, eye-catching ad, all within a listing.

How Are E-Commerce Sellers Compensated?

eBay sellers collect payment through a standard, two-step process. Sellers are free to:

• Sign up for an eBay account
• Begin posting, listing, and selling their items
• Accept payment through PayPal or, in some cases, direct deposit to their bank accounts

On Amazon, the process is more complicated. Amazon users must:

• Sign up for a Professional or Individual account
• Enter their tax information
• Accept payment via direct deposit

Should Sellers Choose eBay or Amazon for E-Commerce?

Those interested in e-commerce for the supplemental income it provides and those who want to sell items full-time should be aware that selling goods online is a subjective experience. We hope this article has provided enough details to decide what platform to use easier, but individuals may want to do more research.

Since Amazon and eBay feature different pricing plans and unique fee structures, goods that one could sell cheaply on eBay might solicit higher fees on Amazon and vice-versa.

However, some sellers accept higher fees for increased exposure or the ability to find a specific customer base that grows with time.

In short, both websites are excellent choices for your e-commerce journey. Amazon’s storage capacities may work better for bulk selling, but eBay’s sense of freedom and creativity may suit emerging brands.

Whatever you decide, the keys to e-commerce are hard work, industry knowledge, and perseverance. Good luck.