What is the better platform of choice for 2020? Is it eBay or Amazon? Before we decide, we need to check out the features of each company. We need to know how much fees they charge, and what their strengths are. Along with this, we also need to know the weak points of each company so we know which one to choose.
In a nutshell, the way you should decide is based on the kind of business you want to operate. While both platforms are great, some sellers are happy with Amazon even if they cannot customize their own store, and some are happy with eBay because it has an auction system.
Here are the things we will discuss:
- Cost of Seller Fees
- Size of Customer Base
- Expectation on Product Quality
- Speed of Shipping
- Ability to Sell Globally
Let us take a look at each platform’s strength, fees, and polices. By the end of this article, we should be ready to make an objective decision which one to choose.
Cost of Seller Fees
As a seller, this is probably the most important thing that can affect your decision. Before you sell online on another company’s platform, it makes perfect sense to know how much you will be charged. Is there a monthly fee, or do you only pay once an item is sold? And how much?
Both Amazon and eBay have a lot of fees. However, there are only two to three most commonly paid fees by all sellers.
On eBay, you will be charged two main types of fees after you have sold your item. These are:
- Final Value Fee or FVF – 10% of the product’s selling value
- PayPal Fee – the fee for receiving payment is 2.9% + $0.30
On the other hand, Amazon charges three types of fees:
- Referral Fees – 6% to 45% of the product cost
- Listing Fee – $0.99 per item sold
- Closing Fee – 1.80%
Looking at these numbers, we can easily say that you are likely to have a higher profit margin if you sell on eBay. The thing is, both companies charge a fee differently depending on the product that you are selling.
For example, eBay charges 10% for common items. That 10% will not exceed $750. For books and DVDs, the FVF is 12%, but will not exceed $750. But if you are selling heavy equipment, like tractors, the FVF is only 2%, and it will not exceed $300.
On the other hand, Amazon charges between 6% and 45% of the cost of the item you just sold. Like eBay, the percentage of the referral fee depends on the product category. For books, Amazon charges 15%, but only 6% for personal computers.
The thing is, Amazon charges a fixed fee of $0.99 per item you sold, and this is on top of the referral fee. And if you are selling a media item like DVDs or books, you have to pay an extra closing fee of $1.80, whereas you do not have to pay this on eBay.
If you don’t want to pay the $0.99 fee, you must register on Amazon as a Professional Seller. That fee will be waived, but you have to pay a subscription fee of $39.99 per month. On eBay, you must also take into account some fees like insertion fees, which they charge of you exceed the 50 item limit per month.
Size of Customer Base
How big is the reach of these companies? Surely, we all agree that the more people there are on the website, the more likely you are going to make a sale.
According to Statista, eBay has reached 183 million active buyers as of the last quarter of 2019, coming from only 89 million in 2010. eBay is a safe site, and it has been since its launch.
On the other hand, Amazon now has more than 197 million active users per month!
Here is eBay's growth:
At that rate, Amazon’s market share is at 49%, while eBay only has 6.6%. This tells us that Amazon is clearly the giant between the two, and that there are more people browsing the Amazon website than eBay.
Obviously, we prefer selling on Amazon than on eBay. In fact, Amazon shipped more than 5 billion products globally in 2017. That is how big Amazon has become.
Amazon did not get there for nothing. It dominates the market because it innovates technology. Unlike eBay, Amazon has a service called Fulfillment by Amazon. On this service, the seller ships all his items to the Amazon warehouse, and it is Amazon who would take care of the packaging and handling.
In line with this, Amazon offered same-day delivery. This is what made it the leader in terms of market reach. Now, Amazon is testing drones to deliver parcels, which can make the shipments more effective as the drones would travel by air locally.
eBay does not do this. The only shipping support that eBay provides is if you sell your items internationally. In the eBay Global Shipping Program, you have to send your items to eBay’s facility in Kentucky, and they will be the ones to ship it out.
Amazon also created Alexa, and this Echo device revolutionized how people manage their smart devices. Because of this novelty, people have become more attached to Amazon than eBay.
Expectation on Product Quality
Many people say that eBay is a place for pre-loved items. Or is it?
Well, eBay started out that way, but a lot of sellers now are posting brand new items on the site. eBay said that more than 81% of the products listed on the site are brand new, and that more than 3 million new products are listed on the site on a daily basis.
The problem with this is that eBay has an auction system. And whenever something is auctioned off, it means that it is not new. This is why artifacts and old paintings are always auctioned—the value depends on the buyer.
On Amazon, however, almost everything is brand new. While there are pre-loved items on Amazon, they are very rare.
Product quality is not really an issue with eBay because it has strict rules against international selling. You cannot even do dropshipping on eBay, but you can do it on Amazon. On eBay, if the seller said it is brand new, then you have an assurance that it is brand new.
On Amazon, the product may be listed as brand new, but the quality of how it was manufactured is poor. This is because a lot of items that are being sold on Amazon now are from China.
This is not to say that Chinese products are bad. But China is also a source of rip-offs and poor-quality items. If you go to Amazon now, it is not unusual to find items that ship from international locations.
As far as quality is concerned, people trust eBay more, but they flock to Amazon because they can buy brand new items at a really low price. Whereas on eBay, the brand new items are of high-quality and therefore sell for a higher price.
Speed of Shipping
We have touched on this earlier. The problem with eBay is that it has no fulfillment services except for the Global Shipping Program.
On Amazon, the shipping is executed at blazing speeds. Even international shipments can take only 15 days, as opposed to the 60 days that you have to wait if your item was shipped by regular couriers.
The shipping is where eBay failed. It did not create any program to support its sellers. As a result, the sellers, a majority of whom are just people doing businesses at home, shipped the items late. Worse, their packaging is not as attractive and professional as Amazon’s.
Because of this, customers were not happy. And if customers are not happy, they leave and never order again.
Amazon FBA changed how online selling works. Sellers have to ship their barcoded items to Amazon’s warehouse, and then Amazon will take care of the inventory management plus the shipping. And as we all know, Amazon did really great in this area.
The other thing about shipping that makes Amazon the go-to platform is that all packages look alike. Do you know what this does?
As customers, we all expect consistency. We want our hamburger today from McDonald’s to be the same with what we got yesterday. It is all about consistency on experience.
eBay failed to do this, but Amazon succeeded. Amazon packages are all branded, and they are packed within certain standards.
Because of that, customers know that the packages they would receive from Amazon have bubble wraps and that they were handled well. On eBay, you will never know what you’re going to get.
However, this comes at a price. While more customers trust Amazon more than eBay, it also means you have to pay more. You have to pay the shipping cost, the referral fee, the closing fee, and a lot more fees.
Your decision must be based on the profit you earn and the kind of items that you sell. If your product is rare and has a high profit margin, then by all means do Amazon FBA. But it you have a low profit margin, you have to sell on the eBay platform and ship the items yourself.
Ability to Sell Globally
You can sell globally on both platforms. However, eBay has a bigger coverage. eBay is accessible by more than 100 countries, and it has 23 international sites. What does this mean?
eBay has different websites that have different contents. They are also offered in different languages, and it makes it easier for customers to understand what are being sold on the platform. As a seller, you can post your items on eBay in your own country, the US, or other countries.
Amazon, on the other hand, is available in more than 180 countries. However, Amazon only has 13 separate websites with different languages.
If you look at the numbers, Amazon only sells 33% of its goods internationally while 62% of eBay sales are from international markets. What this clearly shows is that eBay is outperforming Amazon in terms of global presence.
Because Amazon has a fulfillment service, it makes it a lot more difficult to sell to international buyers. The cost of the shipping for international purchases are often more expensive than the item.
On eBay, the shipping is affordable because the items listed in the different websites are from local sellers. They use local shipping providers.
eBay or Amazon: What should you choose?
The way to go is surely Amazon. It is the biggest online selling platform in the United States, and second only to Alibaba on an international scale.
But do not be misled. The only reason Alibaba performs better is because China has more than a billion in population. Also, a lot of products that are sold on Amazon are sourced on Alibaba.
You need to sell on Amazon if you want people to see your products. It has a wide customer base and it is the dominant online selling platform. The price you have to pay is a lower profit margin, but a profit is a profit.
The key to succeeding in Amazon is to sell high volume. There are companies here that have more than 100,000 items in their inventory, so it means that selling a lot of goods is possible.
Summary
Amazon is the premier choice when it comes to online selling, but only if your target market is the United States. If you want to sell locally, then eBay is a better option for you.
The Amazon FBA is best used by medium-sized and large enterprises who can afford the rent or the storage fee. These are also companies that have money to burn while sales are not doing good. They can wait it out until their sales pick up over time.
If you are just starting out on your online e-commerce business, eBay is the better option for you because you are in control. Also, you do not have to pay a lot of fees.
But if you want a dropshipping store, you can build it on Amazon. You cannot do dropshipping on eBay. You will be reported and you will be banned.