eBay vs. Amazon at a glance: How do these platforms compare?
| Amazon | eBay |
| Platform | Focus on product sales with emphasis on other services. | Focused on product sales, with a strong emphasis on auctions and used items. |
| Customer base | Attracts a wide range of customers, with a strong focus on convenience and fast shipping. | Appeals to a diverse customer base, including bargain hunters, collectors, and those seeking unique items. |
| Insurance | Required for Pro Merchant accounts | Not required |
| Fulfillment method | Amazon FBA (optional or seller-fulfilled | Seller-fulfilled |
| Return policy | Policy varies depending on if you’re a Fulfillment by Amazon (FBA) seller. | Flexible. Seller can set their own return policies. |
| Seller fees | Fees for listing items, referrals and fulfillment (FBA). | Fees for listing items, final sales and store subscriptions. |
| Brand and marketing support | Provides tools and resources for sellers to build their brand, but the platform itself is often the dominant brand. | Offers less support for brands, with sellers typically relying on their own marketing. |
How to start selling on Amazon
Amazon also has extensive resources, including different fee schedules to make ecommerce affordable for small businesses. They also have Seller University to help first-time sellers and brick and mortar owners unfamiliar with running an ecommerce business.
Amazon caters to a broad demographic. Through Amazon Prime membership, Amazon has cultivated a loyal customer base seeking expedited delivery and access to exclusive content.
Amazon’s scale and resources enable sellers to build their own brands. Tools like Amazon Brand Registry offer intellectual property protection and advertising opportunities. However, Amazon’s brand often overshadows individual sellers.
Amazon has specific return policies that sellers must adhere to, and they vary depending on if they are handling fulfillment or if the seller handles it. Either way, understanding these policies is crucial to avoid negative feedback and returns. It’s essential to have your own clear return procedures in place to manage customer returns efficiently.
Fees for Amazon sellers
Selling on Amazon involves various fees, including:
- Individual vs. professional selling plan: Choose the plan that aligns with your sales volume and needs. Professional plans offer additional features and lower fees for higher sales.
- Referral fees: A percentage of the sale price (typically ranging from 8% to 15%) charged for each item sold.
- Fulfillment fees: Applicable for FBA sellers and include storage, picking, packing and shipping costs.
- Additional fees: Other fees may apply, such as closing fees, inventory storage fees, and removal fees.
The individual plan costs $0.99 per item sold, while the professional plan costs a flat $39.99 per month no matter how many things you sell. Simple math shows that the individual plan is more cost-effective if you sell less than 40 products per month.
Since Amazon fees can have a significant impact on your bottom line, research how big of a cut you’ll be giving them before getting started.
Insurance requirements for selling on Amazon
Amazon may require you to carry liability insurance. For example, you’ll need Amazon sellers insurance if you have a Pro Merchant account and gross sales of $10,000 a month or more for three months in a row. NEXT’s general liability coverage meets Amazon’s insurance requirements.
However, you may want to get coverage even if you’re not a Pro Merchant. Amazon seller insurance can protect your business if something goes wrong.
The two types of Amazon fulfillment
1. Fulfillment by Amazon (FBA)
FBA is a popular choice for many sellers due to its convenience. The fulfillment service lets you ship products to an FBA Amazon warehouse, where they’ll be stored. Then, Amazon will pack and ship it to your customer for you. This frees up your time to focus on new product development and marketing. Additionally, FBA-eligible items qualify for Prime shipping, which can significantly boost sales.
However, the program comes with FBA shipping charges, including storage fees, fulfillment fees and potential long-term storage charges. It’s essential to carefully analyze these costs to determine if FBA is financially viable for your business.
2. Fulfillment by Merchant (FBM)
For sellers who prefer more control over their operations, Fulfillment by Merchant (FBM) is an option. You handle all aspects of order fulfillment, from storing inventory to shipping your own products to customers. While FBM can be more cost-effective initially, it requires additional resources and time management.
This option is cheaper because you aren’t paying Amazon to store and ship products, but it takes time away from selling and focusing on more important parts of running your business.
The pros and cons of selling on Amazon
By carefully considering these factors, small business owners can make informed decisions about whether Amazon is the right ecommerce platform for their products and business goals.
The five best things about selling on Amazon
- Vast customer base. Tap into a massive customer pool with high purchasing power.
- Fulfillment options. Utilize FBA for hands-off order fulfillment or maintain control with FBM.
- Brand building potential. Use Amazon’s platform to increase brand visibility and awareness.
- Marketing and promotion tools. Access a range of tools to advertise and promote products.
- Convenience. Benefit from a user-friendly platform and established logistics infrastructure.
4 cons to selling on Amazon
- High competition. Face stiff competition from other sellers, both large and small.
- Fees: Manage various fees, including referral fees, fulfillment fees (for FBA) and advertising costs.
- Limited pricing control: Amazon’s marketplace structure restricts pricing flexibility.
- Dependency on Amazon: Rely on Amazon’s platform for sales, which can be risky.
How to start selling on eBay
eBay operates on an auction-based business model. It offers sellers a global platform to reach online shoppers worldwide. With its established reputation and user base, an eBay store can be a valuable channel for businesses looking to expand.
eBay’s customer base is diverse. Bargain hunters, collectors, and individuals seeking unique or hard-to-find items are drawn to the platform. eBay’s auction format appeals to those who enjoy the thrill of bidding, while its fixed-price listings cater to consumers looking for immediate purchases.
eBay primarily relies on a seller-fulfilled model, meaning sellers are responsible for handling order fulfillment, packaging and shipping. While this gives sellers full control over the process, it also requires efficient order management and shipping logistics.
This platform offers sellers flexibility in their return policies. Sellers must indicate whether they accept returns — and if so, under what circumstances. They can set up rules that automate the return process.
eBay offers less structured support for brand building as compared to Amazon. However, eBay Stores provide a customizable storefront for sellers to showcase their products and brand identity. Additionally, eBay offers advertising options, including promoted listings and sponsored items, to increase visibility.
Fees for eBay sellers
eBay’s fee structure consists of:
- Insertion fees: Charge for listing items.
- Final value fees: A percentage of the final selling price.
- eBay store subscriptions: Optional subscriptions that offer additional features and benefits.
The insertion fee is $0.35 per listing and only applies if you list over 250 products per month.
If your item sells, eBay keeps a portion of the sales price — this is the final value fee (selling fee). It’s 13.25% for most categories plus an order fee. For orders $10.00 or less the per order fee is $0.30, for orders over $10.00 the per order fee is $0.40
eBay also has the option to pay subscription fees to set up a storefront. Prices range from $4.95 per month to $2,999.95 per month, depending on the number of product listings and whether you opt for eBay to provide dedicated customer support for your e-commerce store.
Insurance requirements for selling on eBay
eBay does not require sellers to have any type of liability insurance. However, getting coverage makes sense for business owners whether they’re selling in-store or online. Specifically, as an eBay seller, you have several unique risks such as:
- A fire or flood could damage your inventory
- A product you sell could damage or injure someone and they file a lawsuit against you
Insurance for e-commerce sellers can help pay to replace your inventory and cover costs associated with a lawsuit up to coverage limits. Even though the selling platform doesn’t require it, insurance can protect you from financial loss.
The pros and cons of selling on eBay
Review these pros and cons to figure out if eBay is right for you.
The five best things about opening up an eBay shop
- Global reach. Access a worldwide customer base, expanding potential sales.
- Auction format. Utilize the auction model to generate excitement and potentially higher prices.
- Pricing flexibility. Enjoy greater control over product pricing and profit margins.
- Lower barriers to entry. Generally lower startup costs compared to Amazon.
- Diverse product categories. Sell a wide range of items, including new and used goods.
4 cons to selling on eBay
- Higher competition. Face intense competition from other sellers, especially in popular categories.
- Manual order fulfillment. Handle all aspects of order processing and shipping.
- Potential for lower profit margins. Competition and fees can impact profitability.
- Less brand and marketing support. Building a strong brand on eBay can be more challenging compared to Amazon.
