Is it better to sell on eBay or Amazon or should I have my own website?
This is a question we are often asked.
For a small business which is new to online retail, exposure to new customers can be hard to achieve. E-commerce is more mature than it was ten years ago, and it’s now harder to compete on the search engines than it used to be.
For this reason, selling on established marketplaces like Amazon or eBay (or both) can be a great way to generate sales while still working on your own website and building marketing. eBay does attract a great deal of web traffic which will bring a lot of visitors to your shop. The numbers are huge. Amazon had a massive 404million visits to the website in January 2020 while eBay’s users number more than 183 million last year.
Each of the options, having a presence with eBay, Amazon or having your own website, have advantages and disadvantages. Many of our customers have all three and some sell at different prices on each.
eBay & Amazon are established marketplaces with access to millions of potential customers. They are both big brands which are well-known websites and established brands for shopping on. They have put money into marketing over the years and are two of the most popular online shopping sites. People who go to these sites tend to be ready to purchase and searching for something specific. Therefore it is unsurprising that there are 183 million potential customers ready for you to access by selling on these marketplaces.
You therefore need to remember that you can’t compare sales between your own website and selling on marketplaces. Unless you too have spent years and thousands on marketing your website and building up 183 million visitors to your website there is no fair comparison. Each sales channel should be run as complimentary to one another.
Selling on eBay: pros and cons
Pros
1. Access to over 180m potential customers
The potential to reach a huge audience with an eBay store is the main attraction to setting up a merchant account. With the right product, it can provide an excellent income stream to complement other channels.
2. Branding
eBay offers multiple opportunities to create a branded presence. From creating an eBay store and adding your company logo, to printed materials like thank you cards and packaging, you can start to build your brand on eBay. This allows you to promote your own web presence as well as use eBay to build your own customer base.
3. Seller and buyer protections
Protections are provided for buyers and sellers, which can ease any concerns buyers may have about purchases and therefore improve conversion rates. eBay also has fraud monitoring systems and processes to protect sellers from fraudulent buyers or ‘bad buyer behaviour’.
4. Feedback features
The feedback system on eBay allows the best sellers to build a strong reputation through the service they offer, and further improve trust with potential shoppers. Unlike Amazon, all reviews on eBay are from verified buyers and cover everything from product quality to service and delivery speed. In this respect, they are more reliable than those on Amazon and elsewhere.
5. New customer acquisition
Customers acquired via eBay can be converted into regular customers through your preferred channels. Great customer service and fulfilment can help here, as well as smart branding.
6. Ease of use
Product listing can be relatively simple, especially if you can use EAN numbers. There are also plenty of seller tools available to make listing multiple products easier.
7. Global reach
You can sell anywhere in the world once you set up a store. There is also a Global Shipping Programme which allows sellers to send items worldwide via a UK shipping centre.
8. User experience and design is taken care of
For a new business, website design and user experience can be key to building customer trust and making it easy for people to buy from you. On eBay, this work is already done for you. People are familiar with eBay, and the way product search and the payment process works leading to a smoother transaction for shoppers.
Cons
1. Seller fees can eat into margins
In highly commoditised, low-margin categories, the numbers may just not add up. It’s therefore important to consider your margins and whether you can make a profit through eBay.
2. Low prices
This isn’t necessarily the case, but if multiple sellers are stocking the same product, this can drive prices down. eBay is often a destination for bargain hunters, and they may easily find the same product at a lower price elsewhere on the site. Some businesses feel that they cannot survive competing solely on price because it doesn’t give them a chance to utilise any of their strengths in marketing, merchandising, or customer service.
3. Time
While selling on eBay is relatively simple, it will still take up a portion of time which you could be spending building your own website and other online channels. Listing items, packing and sending orders out, or answering questions from buyers all take time so it’s wise to consider whether the effort generates a worthwhile return on investment.
4. Lack of customer loyalty
Many customers are driven by searches for products rather than any brand loyalty, and many may not take much notice of your brand. For this reason, it can be harder to retain customers on eBay than through your own platforms.
5. Reliance on PayPal
Most purchases on eBay go through PayPal, which means you are reliant on it for much of your revenue from the site. This means paying between 2.5% and 3% per transaction, as well as complying with PayPal’s conditions.
6. Competition
You also need to remember that eBay and Amazon are working as hard for your competitors as they are for your company. See point 2 above.
7. Suspension
You also need to be aware that eBay or Amazon can suspend your shop any time they choose. This may be because you haven’t paid their fees, however what is worrying is that they have been known to suspend shops after receiving complaints from your customers, however unfounded these may have been. This could leave you in a really difficult situation where you have to convince eBay or Amazon to reinstate your shop. If eBay or Amazon chooses not to reinstate your shop there is absolutely nothing you can do about it. Once you have been blacklisted by eBay or Amazon, it is virtually impossible to start another shop with them.
Selling on Amazon: pros and cons
Pros
1. Exposure to the customer base of the world’s biggest e-commerce site
It’s a huge marketplace, and it’s where many consumers start out when they want to buy online. Sure, there’s a lot of competition, but it’s a huge potential customer base for your products.
2. Visibility on many product pages
Amazon will show alternative sellers on its product pages, even when it stocks the item itself. This provides an opportunity to compete on the most popular products.
3. Ease of listing
Amazon has its own catalogue of products, so listing items is easy. The product page template is already there, so it’s a relatively simple process.
4. Guarantees
Amazon guarantees transactions through its marketplace so shoppers can buy with confidence. In addition, Amazon offers protection for sellers against fraudulent transactions.
5. Credibility and trust
Amazon is perhaps the biggest name in online retail, and customers are happy to purchase on the site without any concerns over fraud. Credibility and trust can take time to build for new and unfamiliar e-commerce brands, so the marketplace essentially allows sellers to ‘borrow’ this credibility from Amazon.
6. Excellent user experience
Amazon has worked hard on the user experience, conducting millions of tests and experiments over the years to optimise its conversions. Sellers can take advantage of this experience and design without the work involved. In addition, customers are familiar with the site – they know how to search and browse and they know how the checkout works.
7. Customer habits
Amazon is the first destination for many shoppers looking for products. Indeed, 55% of product searches take place on Amazon, more than Google. In addition, people often have saved Amazon accounts, via apps and the website, so making purchases often takes very little effort on the part of the customer.
8. Delivery by Amazon
Sellers can choose to have Amazon deliver their goods, saving a lot of time and effort and providing customers with the retailer’s excellent delivery services.
Cons
1. Fees
It costs money to use Amazon’s marketplace, from roughly 75p per sale up to 25% depending on the level of marketplace access. Sellers need to weigh up the benefits of access to the market against the reduced profit margins.
2. Lack of control over branding
There aren’t many branding options on Amazon, as the only aspect sellers have control of is product images and descriptions. This means it’s very hard to strengthen your brand using the site or to move customers away from Amazon.
3. Lots of competition
It’s a massive market, but you’re competing with thousands of other sellers. On a busy product page, you can be reduced to competing purely on price and delivery charge.
4. Can’t capture email addresses
While on your own site you can create an email newsletter or email customers post-purchase (with the right permissions), Amazon doesn’t allow you to capture buyer email addresses. This limits your ability to build relationships with customers and to market to previous buyers, missing out on an excellent chance to drive repeat purchases.
5. Lack of customer loyalty
Customers are loyal to Amazon, not your brand. You may deliver efficiently and provide excellent service, but this can count for very little. Mostly the Amazon buyer is only interested in the right product at the right price for them.
Amazon vs eBay: key differences to consider
So, selling on Amazon vs eBay – while there are many similarities, the two sites have some crucial differences which should be considered:
Business model
Amazon is a direct retailer of goods which allows third parties to sell via its marketplace, whereas eBay has always acted as a wholesaler, facilitating sales for its sellers. As such, it could be argued that eBay’s business model is more seller-centric while the reverse is more true for Amazon.
Control
The Amazon model provides less control for users than eBay’s. Amazon offers only a fixed price format and creates the product descriptions, whereas eBay allows you flexibility over price and details like product images and descriptions.
If the eventual aim for a small business is to gradually sell more directly to customers, then both marketplaces will provide some useful experience. However, many sellers will learn a lot more by selling on eBay due to the ability to experiment with pricing and product pages.
Costs
It’s generally considered to be more expensive to sell on Amazon than eBay. Amazon charges a fixed monthly fee plus costs per listing, while eBay charges only when customers reach a certain amount of listings (depending on product category) and takes a cut of each sale.
Customer base
Amazon and eBay serve different customers. Amazon is more of a mass-market retailer, while eBay serves a large number of smaller and more specialised markets – hobbyists, dealers, antiques and so on.
In general, people buying and selling on eBay are more likely to be entrepreneurs, other dealers and bargain hunters. The eBay auction model supports this type of customer far more than Amazon’s. Of course, people can arrive on eBay via standard product searches, and not all sales are auctions now anyway, but this is a key difference between the two sites.
Which product categories work best on each site?
It’s hard to be precise about this, and it may be necessary to experiment to find the best marketplace for your products.
