If you sell products online, you’re probably also considering the possibility of selling products on external platforms like eBay or Amazon. It’s clear that creating your own online store is the best place to start, but many companies are also attracted to these types of platforms and there’s a good reason for it. With this in mind, let’s dive into an important debate: sell on Amazon or eBay?
Advantages of selling in a marketplace like eBay or Amazon
There are many benefits to becoming a seller on platforms like eBay or Amazon, which together make up more than 55% of all sales made in ecommerce.
You gain visibility
The most obvious advantage of selling on Amazon or eBay is that your products will be exposed to many more people. In contrast, smaller websites need to have a minimum of traffic to survive and invest a lot of money in digital marketing initiatives such as PPC to increase the number of visits they receive.
Instead of investing too many resources in attracting traffic to your website, you can include your products on platforms that have millions of daily visits.
In January 2019, Amazon received more than 2 billion visits through computers and mobiles. Although not as large, eBay has 179 million active buyers worldwide.
Increase in brand value
Many people don’t realize it, but there is a domino effect on the value of your brand when you consider selling on Amazon or eBay.
As in any business, Amazon and eBay invest heavily in advertising and marketing. In 2018, eBay spent $1.4 billion on advertising.
By becoming a seller on Amazon or eBay you will benefit from the value of their brand. They spend millions of dollars to attract more traffic and users to the platform, so in addition to benefiting themselves, it also has a positive impact on you. In addition, many consumers trust these brands more than smaller distributors.
A recent NPR / Marist study revealed that 67% of Amazon customers trust the platform, while having little or no confidence in other retailers selling online. Therefore, if you are able to place your products in these marketplaces, you can benefit from the trust that users have in these two distribution giants.
Consumers like marketplaces
Again, online platforms like Amazon or eBay dominate the retail market on the internet. One of the reasons they are so successful is that consumers simply prefer to buy through them. Marketplaces have changed the user’s shopping experience.
Buyers have access to a large amount of information to make the most informed decision and all from the same platform. They can see product descriptions, photos, comments and other details about the product they want. They can easily compare with other products or competitors based on price, ratings or comments.
This flexibility and control they have on Amazon or eBay is what users like the most. In addition, these platforms usually offer multiple suppliers that sell the same product, which offers more stable inventory levels for buyers.
Amazon, eBay and other ecommerce platforms also invest in improving the user experience.
They are constantly updating their platform to provide a perfect interface that makes the shopping experience easy and enjoyable. They have quality assurance controls and customer service systems to keep their customers satisfied to get them to repeat. They are always looking for new ways to improve the buying process and are constantly at the forefront of advances in online shopping.
People love to buy on these platforms for many reasons and you, as an ecommerce company, have to take into account the value of being present on them.
Disadvantages of selling in marketplaces
There are many pros to becoming an eBay or Amazon seller, but there are also some negatives that you should consider when deciding whether or not to include your products on these platforms.
Lower profit margins
Profit margins refer to the difference between the cost of production, marketing and distribution and what the consumer pays for it. The greater this difference, the greater the profit obtained per transaction and the better the health of your company.
If you have a company that manufactures, sells and distributes products through the channels it owns, you can have much more control over your profit margins. In contrast, when you use external suppliers in the supply chain, they can reduce these margins.
This is exactly what happens when you join third-party markets like Amazon or eBay.
These platforms have fees for sellers who use their services. While it is true that you can sell more products, you are also likely to see a decrease in profits per unit.
In any case, these platforms have different options to mitigate this fall, you have to assess whether it compensates you or better you continue managing it as you did until now.
They are not your customers
Customer retention is one of the main ingredients for having a successful business. We have all heard the statistic that it is between 5 and 25 times more expensive to get a new customer than to retain an existing one. And what about this one? You have between 60% and 70% more chances of selling a current customer.
Unfortunately, when you sell in a third-party market, the customer is not really your customer. Most platforms offer fairly limited communication between sellers and buyers to prevent the seller from circumventing the platform in their future sales.
For example, Amazon does not provide sellers with their customers’ email accounts, which makes communication between buyer and seller very difficult.
Although there are communication alternatives, it is much more difficult to retain and resell to customers in a marketplace than in your own online store.
Limited control
The lack of control is the biggest disadvantage of selling on eBay or Amazon. Not only do they have control of communications with your customers, but also in other important areas that can affect the success of your business.
For example, design and user experience are very powerful elements for ecommerce companies to grow their brand.
However, when you decide to sell on third-party platforms, you are limited to the restrictions of their designs and customization options. You cannot create pop-ups or redesign your product pages, which makes it very difficult to differentiate yourself from your competition. This often leads many users to make the purchase decision solely based on price or opinions.
Most of these marketplaces also do not allow adding additional analysis on their pages or retargeting codes such as Facebook pixels.
If you want to have total control over your ecommerce business, you should consider launching your own online store.
Better Amazon or eBay?
If you are determined to start selling your products on one of these platforms, the next step is to know which one to do it on. The two most used options are eBay and Amazon.
Now let’s delve a little deeper to see the pros and cons of each of them.
Amazon
When we talk about selling on Amazon, we really mean Amazon Marketplace. Amazon is, first and foremost, a retailer, but it also has the Amazon Marketplace service, a service in which sellers and buyers are connected.
In exchange for a price, Amazon allows companies to enter as a third-party seller. As an active seller, companies can add their products, sell to consumers, facilitate transactions and deliveries as well as customer service within the same interface.
Amazon is the largest ecommerce in the world and currently has 1.7 million sellers with active products.
Sellers on Amazon Marketplace can grow a lot, in fact, a recent survey revealed that 19% of Amazon sellers earned more than $1 million in sales last 2018.
eBay
Today eBay is very different from when it was launched in 1995. It is nothing like that auction platform and is now competing fiercely with retail markets like Amazon.
Today, eBay is a fixed-price platform that stands out for its “Buy it now!” option.
Like Amazon, companies can register as sellers, list their products and start selling within the platform. Of course, on eBay there are still some auctions related to collectibles or high-value items, as well as automobiles.
eBay CEO Devin Wenig has big goals to increase eBay’s active users by almost 300%. This ambition presents a unique opportunity for sellers on this platform.
Selling on eBay vs. Amazon: Pros of Amazon
Compared to eBay, Amazon has a much larger audience. Having a larger audience means more potential buyers for your products. Amazon also has a very robust logistics and delivery function in Fulfillment by Amazon (FBA), which offers companies an optimized solution for inventory management and shipping.
Amazon (46.7%) has recently surpassed Google (34.6%) as the first place where users go to start searching for their products.
Selling on eBay vs. Amazon: Cons of Amazon
Amazon also has disadvantages compared to eBay. On the one hand, Amazon has complete control over the customer and offers sellers very few options to communicate with their buyers.
Amazon is saturated with very similar sellers to each other, that is, unless you sell a unique product or have exclusive rights over it, it is very likely that you will have a lot of competition.
This increase in competition usually creates a price war, further reducing your profit margin. Amazon sellers also find it increasingly important to invest in the platform, which can further increase the costs of selling on the platform.
Selling on eBay vs. Amazon: Pros of eBay
One of the biggest advantages of selling on eBay is that they provide you with the buyer’s email address. This gives sellers the ability to grow their subscriber list that can be used to resell, carry out cross selling strategies or sell products in the future.
eBay also has fewer sellers than Amazon, which means you have more chances of conversion and a lower need for advertising, which can increase sales and decrease expenses.
Selling on eBay vs. Amazon: Cons of eBay
The main disadvantage of choosing eBay over Amazon is that the audience you are targeting is smaller. Another disadvantage of eBay compared to Amazon is that it lacks its own logistics service.
So, better Amazon or eBay?
Choosing whether to sell on eBay or on Amazon is not an easy decision. In any case, if you have already made the decision to place your products in a marketplace, you must take into account some of the following considerations:
- Do you have a unique, exclusive or used product? eBay is the most suitable platform for personalized or used products, while Amazon is more suitable for new and more common products that people actively search for.
- Is the life cycle of your customer important for your product? If it is a product that needs repeated purchases, you can opt for eBay since it provides an easier way to communicate with users who have already been your customers.
- Do you want a very complete platform? Amazon offers a very good service for sellers. It is easy to set up and offers logistics options for sellers.
- Are perception and analysis important? Neither option offers very complete analytics, although Amazon’s software offers more intuitive and extensive data reports.
- Do you want the cheapest option? Amazon’s sales fees are slightly more affordable than eBay’s, but the budget you have to invest in advertising is also likely to be higher. In this sense there is no clear winner, since it will often depend on the product or the sector in which you work.
- Are you looking for the greatest potential? Amazon has a much wider audience, so the potential for growth on this platform is greater.
In short, each seller must weigh the pros and cons of selling on Amazon versus eBay to decide which platform, or both, or none, is the most suitable for their business. Do you already know which one to decide on?
