In a time when e-commerce is booming, we can no longer ignore online retail’s potential. Take a look at the last performance of the Ebay or Amazon stock. It doesn’t require much intelligence to see where the trend is going. The question is, are you going to miss it or take it?
Like other millions of people, you might have thought of starting an e-com business. But that’s expensive: think of the inventory, storage fees, fulfillment, advertising, and last-minute changes. Add to that the competition/saturation factor, and it won’t surprise you why over 90% of stores fail.
Luckily, times have changed, and it now takes far less effort to do the same work. We’re talking of the e-com platforms, which allow sellers to leverage their structure and outsource most of these tedious tasks. The difference is astronomical: if you needed over $20K to start a business back then, you might only need $2K today.
But of course, it’s not as easy as listing on these platforms and getting a millionaire lifestyle. Likewise, every platform is different when it comes to functions.
- Do you want to sell on a personal website and brand?
- What size do you want for your customer base?
- Do you want to manage everything behind the scenes or have more interaction with your clients?
- Have you thought of setting a price or letting others choose how much it’s worth?
Depending on what you answer, you might want to choose Amazon, eBay, Etsy, or Shopify. Since we want to be where our customers are, we will decide between eBay and Amazon first.
Of course, you want to be available on as many platforms as possible. But expanding too early can weaken your overall growth. The question then becomes, which one will come first?
Ebay And Amazon: Key Differences
- “Ebay isn’t as big as Amazon.”
- “Amazon is too expensive for customers.”
- “Ebay has less trust, and there are more scammers around.”
- “Amazon is saturated and dead.”
- “Ebay offers lower fees.”
- “Amazon FBA does everything for you.”
These are some of the notions you may already know about both platforms. But are they valid or just a vague description?
Size? Sometimes, it’s easier to succeed as a “big fish in a small pond” than a tiny one in an ocean.
Expensive? You’re not your client. Every person has it’s standards, and value gauges on perception and originality.
Trust? No platform is 100% safe. If the perfect platform existed, it would surely attract many scammers. It’s a personal responsibility.
Saturation? You’ve seen the charts. These platforms are statistically receiving more clients and products to sell than sellers.
Fees? Yes, no platform will offer the best deal without taking a part of the cake. But in the beginning, they don’t matter that much. Once you grow, you create a branded website and get the full ROI.
Everything? For a cost. If your no.1 worry is competition, having to do everything yourself means a higher entry barrier and thus less saturation. If everybody can do it, it’s not as valuable.
Now that we’ve debunked these generalizations, we can get into detail.
- The future of your business
What do you want to do with the store once it grows enough? How much do you want to scale? You could take it easy and keep getting passive income from eBay or Amazon, but it wouldn’t be as profitable long-term.
To get to that point first, you should indeed start with Amazon FBA because of how simple business becomes. If you want to increase your profit margins, however, eBay wins.
Mind that both platforms are companies with interests at the end of the day. They are lending you their services, visibility, and customers. On eBay, however, sellers have more freedom to create their brand. The right choice depends on the stage you find yourself.
- Customer Loyalty and Communities
Isn’t it amazing that these platforms have millions of daily visitors with the only goal of buying something? Imagine if you ranked your listing on these. The more customers they have, the more likely there is to be a profitable micro-niche with no saturation.
More customers also mean more demand for product variety, which creates opportunities for sellers. Many get into Amazon because of its customer obsession ideology.
But often, what happens in Amazon stays in Amazon. Although you get sales from customers, you can’t create a community with someone else’s clients. On eBay, luckily, it’s easier to create that connection.
In short, people buy on Amazon because they trust this brand and not necessarily the seller. On the other hand, people trust sellers more on eBay, not the platform itself.
- Selling difficulty
The paradox of opportunities is that the better they are, the more people you’re competing for them. If your game involves no creativity nor strategy, everyone ends up doing the same thing, and success reduces to luck or whoever arrived first.
Back in the day, you owned a serious business if you had a store, a website, and an ad campaign. But today, any kid can copy your business by signing into a Shopify or ClickFunnels free trial. Technology can help but not replace the whole process. It still requires working hard, if not harder, to get an edge over everyone else.
What we like about eBay are the many tools they offer sellers for their stores. As you become more skilled, you can apply strategies other competitors won’t see and get ahead in the market.
In Amazon, you can pay for the fulfillment, advertising, or even ranking. But understand that without an entry barrier, these are no longer market advantages but bare minimums to stay at everyone else’s level.
Let’s put money matters aside for a moment and think of an even scarcer resource: time. That’s perhaps the reason you thought of e-com businesses. A store that makes money while you sleep gives you the freedom to spend time with things you enjoy.
It may sound like a meaningless question, knowing we live in the age of information: How much time does it take to learn to sell on these platforms?
It depends on how much time you have and what control you want. Amazon offers tools to outsource/automate almost everything, but you still need to learn how to use them. Once you do, you no longer need to spend time on them, except for perhaps a weekly hour for maintenance.
Ebay can take longer because it resembles more a real e-com brand. You take care of the logistics (extra work). But since you get better rates and more freedom, it may be worth the time.
Because Amazon is the most popular brand here, people have spent far more time creating educational content rather than about eBay. What you know about Amazon may be common knowledge.
- Rates and price point
Let’s address the sole reason this business model works. You buy large quantities somewhere else and ship it to your warehouse. You price it higher and pocket the difference. More profit margins also mean more stability during a downturn that forces you to sell for cheaper. If every store in the world had the same price, many e-com sellers wouldn’t exist.
When it comes to fees, there’s not that much of a difference. We like eBay because of the way it sells its services in the form of upgrades. The basic plan is free (except for non-refundable sales commissions), and you only pay when you earn. Thus, beginners won’t be spending hundreds a month for extra features they may not need.
Amazon is free in theory, but unless you buy the Professional Plan, making profits remains unviable. If you have the structure or want to sell a small inventory, you could sell as Fulfilled By Merchant(FBM) and save in fees there. You pay for every sale you make, including “referral fees,” plus others that apply for coupons, for example.
But not even that cost is enough to get a chance to sell. If you want to launch a product with Pay Per Click, expect to spend another $500. You should get those back once you’re making profits, but what if you don’t?
Because of it, sellers price higher on Amazon than eBay.
We leave you an interesting question. How would eBay compete with Amazon if there was a program like “Fulfilled By eBay?”
Competitive Advantages Only Amazon (or Ebay) Have
If we kept the argument plain and simple, we’d go with Amazon. But before you make the decision, understand that each platform is powerful in its way. Each of them has, at least, three propositions that you won’t find anywhere else.
- Fulfillment By Amazon
What if we told you decades ago that you could have a six or seven-figure e-com business working from your bedroom anywhere in the world? A pipe dream? Not anymore.
You pay for the subscription, inventory, and product launch. Amazon FBA takes care of the rest. You just give them an FBA commission for every sale you make without ever having to receive or package products yourself.
If you have a proven product idea, an Internet connection, and a couple thousand, you have a potential business.
- Ebay Offers Lower Advertising Costs And Needs
Opportunity attracts competition, and ranking on Amazon has nothing to do with listing on eBay. On the latter, a good listing will sell without putting much effort into the launch.
On Amazon, you need weeks to launch. They don’t care if you offer the best product or it’s free. You need to spend two-three weeks to gather about ten positive reviews, then spend another two to test your ad campaigns, another one to rank, and another to get sales traction.
On eBay, it’s opening a listing in as fast as two minutes and expecting sales on the next day. You can obviously pay for ads and upgrades to accelerate the process, but the need and costs are much lower.
Ebay could be the only website we know where buyers won’t mind browsing past page one.
- Amazon Prime’s potential
Here’s another reason FBA is a no-brainer for its cost. Amazon offers fast, free shipping for less than $30 a month: 30-day trial included. Without Prime, you can still get it for free if you reach the minimum order cost.
Thus, customers become more likely to order from FBA sellers, whether it’s more volume or purchase frequency. For these merchants, faster delivery also means faster sales.
Expect in 2020 to exist over 310 million accounts, at least, 150 million of which are Prime subscribed. It means that at least half of Amazon’s shoppers buy like crazy.
- Ebay buyer-seller communication
Amazon only works well if you’re okay with selling with such a polarized company. If you don’t value customers properly, it won’t take long before they suspend your account.
On eBay, people decide what they expect to be a good deal. Buyers trust sellers more because they can freely communicate with sellers. Not only you check their reviews and past performance, but you ask them about the order details too. Before you purchase, you already have a clear picture of what to expect.
On Amazon, however, you have no choice but to trust the listing and reviews, most of which are likely biased (common among new sellers). They do offer “some” communication in the form of Client Q&As, but it’s not the same as direct chat.
- Amazon’s emerging marketplaces
Amazon is so big that every marketplace works as a completely different store. A product you find on the United Stated site may not be profitable or not exist in Canada, for example.
Sometimes, selling on a second marketplace could mean doubling your revenue without much effort. It helps advanced sellers because listings often stagnate on a certain income level after a year. By listing on another marketplace, you increase sales with the same product.
If you act quickly, you may arrive first to emerging marketplaces before they explode. Although AMZ US is hot right now, Australia and Amazon UK have massive potential projections.
There’s this common belief that you only find cheap customers on eBay looking for the next “steal.” Who doesn’t like to get a nice deal?
It happens everywhere, not only on eBay. You can find high-rate customers there just like anywhere else, especially with eBay’s social community features.
For example, you can see how much others bid on a product, understand the perceived value, and participate in the auction. The seller sets the auction deadline and what minimum price is acceptable. Thus, merchants always break even, and anything extra clients pay is a big win.
To add more pressure to the sale, eBay shows how many items remain in stock and how many people are watching the listing. Who will be the one to get the product?
The Million Dollar Question
Amazon or eBay? You should already know your winner based on what you plan to do in e-commerce. No matter what you choose, remember that it matters to appear on both platforms. And none of them will benefit you as much as an actual retail business where you own the site, the logistics, and the customer base.
- Absolute Beginner’s Choice
Amazon is an “easier” but more expensive investment. What if you don’t have thousands of dollars for inventory and advertising? Going with the lowest order quantities will get you the worst rates, unfortunately. We’d suggest you wait until you can rack up $2000 at least, and that’s how eBay could help you out.
Here, you don’t need to verify your goods as long as the client receives whatever you advertised. That’s an opportunity for beginners to start with dropshipping and retail arbitrage. Since eBay doesn’t deliver packages (you do), you don’t require any verification for it.
- Find a deal/ discount/ giveaway and reserve it.
- List it on eBay for a price you think people will buy quickly, preferably below average.
- When a client pays you, buy the reserved item, and ship it to them.
- The Not-So-Beginner Choice
You have saved a few thousand dollars and know a thing or two about e-commerce. You may now start with your first FBA product, but not without a few warnings:
- Bad product research will ruin you, no matter how well you do the other 99% of steps.
- Do not expect the product to be profitable until the second or third order.
You got just enough capital, but your margin of error is slim to none. Take generous time to research products (about a month), and be more preventive with your first selection.
It’s also a smart idea to use eBay first. You could try the arbitrage method we just mentioned with the product you want to sell on Amazon. Sell it on eBay for a while, and if it does well, it should do the same on the other platform. It allows you to test before having to buy hundreds of units.
- The Advanced Sellers Choice
As an established seller, you do want to appear on Amazon, eBay, Shopify, Etsy, OverStock, or any store available. You would treat all of these as secondary gateways for your main website, which offers the highest profit margins.
Some of your ideal customers may never find your store unless they see it on some of the mainstream platforms. That’s why you should do it because of exposure, not profits necessarily. You can insert cards in your products to promote your landing page as well.
Don’t know where to start selling, choose Amazon.
The Bottom Line
Whether you choose one or the other, it will depend on your growth strategy. If you were looking for a simplistic answer, then yes, Amazon wins.
As a new seller, your best chance to make it on e-commerce is to join some of these platforms. As an advanced owner, you should have some online presence in all of them. Later when you make big money, the goal becomes to exit the same platforms that made it possible, so your e-com brand becomes your main source of income.
With e-com platforms these days, it’s easy to get started but very difficult to master them. Whatever business you start, have the entry barrier in mind: the more work you put in your products, the better you will sell.