Small business owners have numerous opportunities to grow their business and increase profits with online sales. When it comes to selling products online, how do you choose between selling on Amazon vs. eBay?
In this post, we’ll look at differences in fulfillment, fees and insurance requirements. Let’s take a look at some of the pros and cons of eBay vs. Amazon to decide which is right for you.
Selling on Amazon
If you’re looking for the largest digital marketplace to sell your products, Amazon has you covered. You get your own virtual storefront to start selling your products right away.
Amazon also has extensive resources, including different fee schedules to make e-commerce affordable for small businesses. They also have Seller University to help first-time sellers or business owners unfamiliar with e-commerce.
Amazon fulfillment
You have two options to fulfill orders when selling on Amazon:
- Fulfillment by Amazon (FBA)
- Fulfillment by Merchant (FBM)
The FBA program lets you ship products to an Amazon warehouse, where they’ll be stored until sold. Then, Amazon will pack and ship it to your customer for you.
With FBM, you store your own inventory and fulfill orders yourself. 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.
Fees
An Amazon seller account is free to set up, but the platform charges a fee to merchants who sell products. Amazon has two different tiers to choose from:
- Individual plan
- Professional plan
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.
You’ll also pay referral fees (typically ranging from 8% to 15%), fulfillment fees, and other costs, like long-term storage, advertising, or premium account services.
Since fees can have a significant impact on your bottom line, research how big of a cut you’ll be giving to Amazon before getting started. Use Amazon’s Calculator to determine what your total sales margin will be.
Insurance
You may not realize that Amazon can require you to have 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. Plus, we make it easy to get a quote, purchase coverage and access your certificate through a simple online process.
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.
Key takeaways about selling on Amazon
Overall, Amazon is a robust platform for small business owners. It’s a good place to sell if you’re a large-volume seller or plan to scale quickly. Here’s a quick review of Amazon’s pros and cons.
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Selling on eBay
eBay is one of the most popular online marketplaces. The site has 187 million users worldwide, and small business owners can tap into the customer base when starting an eBay store.
Fulfillment
eBay mainly relies on an auction process rather than selling items at a fixed price. However, when you list a product, you can list it for a set fee or let people bid on it.
But you’re on your own when it comes to fulfilling orders — eBay does not have a system in place to help you. You’ll need to store, package and ship each product that you sell.
Fees
eBay Seller Center lists two different eBay fees that you could end up paying: An insertion fee and a final value fee.
The insertion fee is $0.35 per listing and only applies if you list over 250 products per month. eBay keeps a portion of the sales price if your item sells — this is the final value fee. It’s 12.55% for most categories plus a $0.30 per order fee.
eBay also has the option to pay for an annual subscription to set up a storefront. Prices range from $4.95 per month to $2,999.95 per month, depending on the number of listings and whether you opt for eBay to provide dedicated customer support for your e-commerce store.
Insurance
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 seller could 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.
Key takeaways about selling on eBay
eBay is a good platform for small businesses or amateur sellers. They have features that make it a great choice as you scale your business and sell larger quantities. Check out the pros and cons of selling on eBay.
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What NEXT can do to help e-commerce sellers
If you’re thinking about selling on Amazon vs. eBay, both are popular places to start. What’s even better is that both of these marketplaces offer tools to make listing your products and making a sale a simple process.
Regardless of the platform you choose, keep in mind that internet business insurance is a smart move. NEXT Insurance helps entrepreneurs get the coverage they need to protect their e-commerce business.
Got 10 minutes? That’s all it takes to start a quote and purchase customized coverage. You’ll get access to your certificate of insurance immediately. If you have questions along the way, our licensed U.S.-based insurance professionals are available to help.
