If you’re planning to start your eCommerce business then most probably you’re wondering which is the best platform to sell online, how to sell on Amazon, how much does it cost to sell on eBay and so on.
In this article, we’re going to answer these questions and cover things such as:
- Which platform generates higher revenue?
- How does customer behavior differ on Amazon vs. eBay?
- What types of products are more suitable for both sites?
- How much does it cost to sell on eBay vs. Amazon?
- What is the difference between both platforms?
Does Amazon or eBay generate higher revenue?
First off, looking at the revenues generated by Amazon vs. eBay for the previous year, Amazon looks like a giant compared to eBay.
Amazon annual revenue for 2019 was $280.522B (with a 20.45% increase from 2018), while eBay generated only $10.8B (a 0.5% increase from 2018).
Data: https://www.macrotrends.net/ last accessed on 24/03/2020
And even though Amazon surpasses eBay in revenue, there are some differences and pros and cons to both platforms that we’re going to have a look at.
How does customer behavior differ on Amazon vs. eBay?
To begin with, it’s important to understand the nature of Amazon vs. eBay and the different customer behavior in the platforms. Most customers, if they are going to search for something second-hand, would prefer eBay, although you can buy used items on both. One reason is the auction model which offers competitive prices.
And while on eBay you’re able to sell almost anything (except for illegal items, of course) from brand new to used, bear in mind that the auction model doesn’t provide you with much control over your profit margin. At the same time, on Amazon, you sell on fixed prices set by you. Certainly, you’re able to run fixed-price listings on eBay, too, but that’s why we stressed to have in mind the customer behavior and shoppers’ expectations.
What kind of items to sell on Amazon or eBay?
Speaking of new and used items, Amazon is more oriented toward selling new goods rather than used ones. However, you can sell certified refurbished devices in some categories.
In order to decide which platform suits you as a seller, you need to be aware of what kind of items you can list for sale on each site. You can see a full list of the categories available on eBay vs. Amazon here.
If you’re interested in selling books check out this page for useful tips.
Selling on eBay vs. Amazon: Taxes
Alright. We discussed customer behavior and types of goods but you’re most probably asking yourselves how much does it cost to sell on Amazon or eBay.
On Amazon, you can choose between two types of plans: Individual and Professional. The Individual Plan charges you a fixed price of $0.99 per item sold and has no monthly fee. This plan is suitable for beginners or if you plan to sell less than 40 items per month. The best option is to switch to a Professional plan which costs $39.99 a month, the moment you start selling more.
Also, bear in mind that you must have a Professional plan if you want to sell some specific items or such that aren’t already listed on Amazon.
Apart from the pricing plan you choose, you’ll have to pay a few additional fees:
- Referral Fees
- Closing Fees
- Refund Administration Fees
For more information, visit this page.
There is also a distinction between selling online directly on Amazon.com and using Amazon FBA. To understand the Amazon FBA Pricing and learn about Fulfillment by Amazon in detail visit this SellerApp blog post.
If you’re now thinking: “Okay, with so many taxes how could I possibly know if I’ll be profitable?” That’s a good question. To calculate your profitability before starting you can use 888 Lots’ Amazon calculator.
How much does it cost to sell on eBay?
If you choose to sell items on eBay you’ll need to pay the following fees:
- An insertion fee – you’ll get 50 free insertions per month and sometimes more if you open a store
- Final value fees – 8% of the final sale price for items of $50 and less, plus an extra 5% for items worth more than that
- PayPal fees – this is a flat rate of $0.45 and an added 2.9% of the transaction
- Optional listing upgrade fees – as their name suggests they are optional but preferable if you want to have an outstanding eBay listing
Note that if you want to offer free shipping to customers, you’ll have to cover those expenses, too. Purchases that are shipped for free account for 71% of all (eBay, 2019) and it wouldn’t be surprising if that’s what buyers prefer and expect.
Overall, the fees are cheaper on eBay and it’s a great platform for beginners where many Amazon sellers started their online selling business before switching to Amazon.
Which is best: to sell on eBay or Amazon?
In order to answer the question of which one is better: to sell on Amazon or eBay, we have to mention product quality once again. If you want to go for second-hand items in most cases it’s better to sell on eBay, but if your dream is to have a private label brand, to sell high-quality goods and generate sustainable profit year after year, then our advice would be to go for Amazon.
If you want to learn more about how to find a product to sell on Amazon check out our article on the topic.
In conclusion, it’s no secret that Amazon is the preferred option by many buyers and sellers. But that doesn’t necessarily mean that Amazon is better than eBay nor does it mean that the competition and higher taxes on Amazon should scare you off.
To put it simply, it’s better to think about what type of product you want to sell, on which platform the customer expectations will be more suitable for that product and would you be willing to spend time packing and shipping products or would you prefer to spare some dollars, use FBA and have more free time.