E-commerce has become a multi-billion-dollar industry, and because of it, the lost vision of the American Dream is being revived again.
People are leaving their 9-5 jobs and starting their e-commerce journey.
However, starting an e-commerce business is not as easy as it sounds. There are multiple success variables, and the most important one is choosing the right starter marketplace.
Currently, the top two marketplaces in the e-commerce industry are Amazon and eBay.
This article will help in understanding if it is better to sell on eBay or Amazon. And which marketplace is perfect for you.
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Which Market Potential Is Bigger?
More traffic, higher sales = bigger market potential.
Before selecting a potential product, you need to define which market has a higher chance of selling your products.
As discussed above, the selling of a product depends entirely on the number of eyes on your product. More eyes, more sales.
1.1. Amazon Marketplace Potential
Amazon is the oldest and most frequently used e-commerce website in the United States. According to Statista, Amazon has almost 50% of the share in the overall retail market. The rest is split among other marketplaces and independent websites.
That’s not all. Amazon has a powerful brand value as well, and so its retention rate is super strong. This is the main reason that more than 73% of consumers are returning buyers, and they wholly trust Amazon.
1.2. eBay Marketplace Potential
eBay and Walmart are head-to-head rivals in the US market, and they’re constantly fighting for the second biggest share in the US e-commerce market.
Compared to Amazon, eBay has a relatively small share of the marketplace, at around 5-7%, with around 176 million monthly users.
In the US market, consumers do not blindly trust eBay, as the majority of sellers are either small or low-volume sellers. So, consumers only buy from those sellers who are highly reputed.
1.3. The Conclusion: Market Potential
According to authenticated sources, Amazon has higher monthly traffic compared to eBay, which automatically makes it a marketplace with a higher potential.
Moreover, it has a strong brand value and a higher retention rate, making it a better platform for sellers to start a private-label brand.
However, none of this means that eBay isn’t a good option. Because of high market potential, sellers on the Amazon market have bigger returns in mind. If you plan to start a small business with a relatively low budget, eBay is the perfect option.
Which Has Less Seller Competition: Amazon or eBay?
Less seller competition means a larger gap in the market to fill, and where there’s a gap, there’s money. Not to mention, fewer sellers means more chances of finding a winning product.
Where there is a gap, there is an opportunity.
2.1. Amazon Seller Competition
Even with ridiculously high monthly traffic, Amazon only has 1.9 million sellers; among these 1.9 million sellers, less than 10% are generating over $100,000 in annual sales, and 1% of them have hit the one-million-dollar-plus mark.
Amazon has an annual revenue of 386 billion dollars, and the main reason it holds 50% of the market share is because of its private-label model. With this model, the seller can sell their items with their branding.
Apart from this, due to higher annual revenue and a lower number of sellers, there is still a lot of space left for new sellers.
2.2. eBay Seller Competition
Surprisingly, eBay has over 25 million sellers on its platform. Sounds weird, right? That’s way higher than Amazon, even though eBay has a far lower market share.
And that’s not the end of it. eBay has over 1.7 billion active listings, making it hard for new sellers to differentiate themselves. However, among those 1.7 billion active listings, rarely a handful of people generate significant profits.
Let’s do some quick math. The annual revenue of eBay is around 10 billion dollars, and if we divide that between 25 million sellers, the average seller barely makes $430/yr.
2.3. The Conclusion: Seller Competition
Based on the above statistics, it’s evident that Amazon has less seller competition. Even though most eBay listings are still not that competitive, the annual revenue is also extremely low.
So, to be rewarded for your effort, it is better to opt for Amazon as your final choice.
Amazon vs. eBay Selling Fees: Which Is Lower?
Being a business owner, you have to figure out which platform will generate more revenue after all the marketplace fees.
Let’s discuss which marketplace is giving sellers the best deal.
3.1. Amazon’s Seller Fees – Are they lower?
Amazon seller fees depend on the type of model the user has selected; both FBA and FBM models have a difference in fees.
Before selecting a model, every seller must confirm the Amazon seller subscription based on their goals.
If you are doing FBM (Fulfillment by Merchant), it will charge you two types of fees: Referral fees and Closing fees (charged for categories like Books, DVDs, Music, Software, and similar). Both of these fee types vary according to category and sub-category.
Apart from this, the FBA fees are entirely dependent on the weight and dimension of the selected product.
If you want to get an idea of the final calculation, then Semrush has a tool called Product Research for Amazon that offers a free inbuilt price calculator.
3.1.1. Amazon Prime Subscription:
Amazon has a great level of customer satisfaction and retention rate, one of the main explanations being its Amazon Prime subscription.
They launched this monthly subscription plan to improve the buyer experience by providing super-fast delivery. Thanks to this strategy, customers tend to buy more from Amazon rather than letting the offer go to waste.
So far, Amazon has 200 million customers with Amazon subscriptions, and the numbers are increasing rapidly.
3.2 eBay’s Seller Fees – Are they lower?
If you want to sell on eBay, then you need to know about the four fees that eBay charges its sellers:
This fee is charged to sellers after they create their listings on eBay. There is no fixed number for every category. After continuous use and an increase in listings, the charges will increase.
Final Value Fees:
This fee is similar to Amazon’s referral fee. When you sell a product on eBay, eBay will take a specific percentage from the product’s final price. This final price includes fulfillment and shipping as well.
Payment Processing Fees:
People who used to buy on eBay using Paypal were charged 2.9% + 30 cents on each transaction to the seller. But eBay has now rolled out its managed payments system, which saves the sellers from this extra financial hit as they can now solely depend on eBay.
Optional Listing Upgrade Fees:
eBay allows its sellers to specialize their listing and make it stand out for an additional cost. This optional service includes: Adding a subtitle, converting normal fonts to bold, and adding a reserve price for your product.
As there are too many unstable variables on eBay, it’s hard to evaluate here the total fee that eBay will charge for your product. You can use eBay’s fee calculator to determine the exact fees.
3.3 Conclusion: Marketplace Fees
Multiple variables in both marketplaces decide the final fees. Some of the variables in each market are either dependent on product weight or dimension or the target market.
So, giving the lowest fees title to one of these marketplaces would be quite unfair. However, if an eBay seller takes the optional listing upgrades, then Amazon will definitely have lower marketplace fees.
Which Platform Is Easier to Manage?
Starting a business is one thing, managing/scaling is another thing entirely. When it comes to choosing an e-commerce marketplace, multiple technicalities can appear anytime.
You have to pick the marketplace that is easier to manage and consumes less time.
Let’s see whether Amazon or eBay will fulfill your dream of achieving a passive income.
4.2. Is Amazon Easy to Manage?
Amazon has an upgraded and user-centric interface that is easier to use for both buyers and sellers. Once you have selected your product, there is not much work required on your end.
The Amazon FBA program handles all your hectic business tasks such as order fulfillment, shipping, returns, refunds, and customer service experience.
You just need to handle future inventory and ongoing advertising.
4.3. Is eBay Easy to Manage?
eBay has a decentralized product management system, and sometimes it gets extremely hard for a beginner to operate. As sellers on eBay list items in bulk quantity, it becomes a complete mess.
For eBay, you have to deal with all the customer support manually, and usually, even after a one-hour long discussion, the customer will still ghost you.
Apart from this, you have to store all the inventory either at your place or a 3PL (3rd Party Logistics), and you have to ship all the products as well. This whole process takes a lot of time and effort.
4.4. Conclusion: Easy to Manage?
Amazon has a more advanced, easy-to-use, and centralized system, and that keeps things aligned for sellers. Also, its FBA model saves sellers from a lot of work and frustrating hours.
On the other hand, eBay is hard to operate, and the seller has to manage everything independently. The time required to do all this work is not worth it for the majority.
The Most Trustworthy Marketplace: Amazon or eBay?
E-commerce fraud is quite common in today’s online world, and potential customers tend to buy only from those online stores or marketplaces they trust.
So, one question comes to mind: Which platform is more trustworthy, Amazon or eBay? Because a higher level of trust means higher conversions and long-term marketplace loyalty.
5.1. Is Amazon More Trustworthy?
Amazon has shown itself to be a quality marketplace with a premium brand image from the start. And to further put trust in consumers’ minds, they launched a system called A to Z guarantee.
This system gives leverage to the buyer. If they are not satisfied with the received product or the delivery process, they can return the item any time.
Moreover, Amazon takes the consumer experience seriously, which is why, if a seller receives multiple A to Z claims, the marketplace can suspend the owner’s listing. Apart from this, continuous good ratings and positive customer experiences increase the consistency of Buy Box eligibility.
5.2. Is eBay More Trustworthy?
eBay started its career as a platform for people who wanted to sell their garage clutter or who were ready to flip some products and make an extra buck.
Sadly, that garage sale label is still hanging over eBay, and the majority of people don’t consider eBay to be a status symbol. This is the same as Apple vs. Oppo brand authority.
Besides, eBay is a difficult platform to claim refunds on or accept returns. The majority of actions are in the hands of sellers. The worst thing is, a seller can also add a no-return option to their listing, and the customer can’t do anything about it.
An unsatisfied customer can leave a bad rating on the seller listing, but the sellers do not care much about it as the majority of them are selling a handful of each product.
5.2. Conclusion: Is Amazon or eBay More Trustworthy?
Amazon has robust brand authority plus policy structuring when compared to eBay. This makes the consumer feel more comfortable buying from them.
eBay has more of an equal edge between buyers and sellers, which both ends sometimes exploit. However, Amazon is centered around the buyer, and the majority of the time, they take the buyer’s word over the seller.
Can You Make More Money Selling on Both Platforms?
Many new sellers wonder whether they can sell on both platforms.
Of course, the answer is yes, but there are multiple complexities that come with this decision.
Ask yourself the following questions:
- Budget – Do you have enough capital to invest on both platforms simultaneously? If you are planning to do a private label launch on Amazon, that alone will consume most of the budget.
- Time – Two marketplaces mean 2x time consumption. So, do you have that much time? Because you might end up turning a part-time business into a full-time one.
- Expertise – Do you have experience with e-commerce selling? If the answer is no, then putting everything you have into both businesses at the same time is not a good move.
- Goal – Always have a clear goal before starting a business; assume your goal for this e-commerce business is $3000 monthly profit. So, if you can achieve that goal by just working on one platform, do you need to work on both?
Estimate your costs and profits on Amazon with the free Product Research tool.
7. Final Conclusion: Amazon or eBay
Have you heard this phrase before: “It was a one-sided battle.”?
The same goes for comparing these two platforms. Amazon is a giant that is in front of eBay, not just in terms of numbers but also in terms of brand identity, brand loyalty, sales, revenue, and overall profitability.
Amazon has a higher revenue potential alongside the risk of losing your investment because big opportunities come with more significant risks.
If you are looking for a way to cover your small bills, eBay is worth a shot. However, if you want to make a living out of e-commerce, Amazon is the better and more feasible marketplace.
Make your final decision based on goals, capital investment, time availability, and expertise in the field.
Take in all the facts and figures stated above, as they are the core difference between eBay and Amazon.
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Are you about to establish your business on Amazon and are struggling to understand how to start? Learn how to start selling on Amazon in this article, where we talk about how the marketplace works, the required tools to get started, and finding suitable suppliers.