Marketing Tips 2021 – eBay vs Amazon: Which to Choose for Your Online Business

As an entrepreneur or business owner, one of the most important questions to ask when starting an e-commerce business is where to set it up. With over a hundred online marketplaces to choose from, you have to apply good deductions to determine the best possible platform for your business.

Two of the largest and most powerful e-commerce marketplaces you may consider establishing your business are Amazon and eBay.

While both can be competitive marketplaces, whichever you choose will directly impact the performance and growth of your startup business.

Moreover, both eBay and Amazon are powerhouse marketplaces in their own right.

Still, their independent advantages and differences could make one more valuable than the other for your business. In chosen essential criteria, below are the comparisons that will help you arrive at a decision.

Amazon vs. eBay

Amazon ranks as the biggest and most visited online retail platform, with 1.9 million active sellers and 5.2 billion web visits per month. Founded in 1994, it has now grown to be a part of the Big Five companies in the U.S, along with Facebook, Google, Apple, and Microsoft.

As a multinational online marketplace, it connects big brands like Lacoste and MAC, as well as small-time sellers, to millions of buyers from around the globe.

It allows sellers in retail, private label, dropshipping, Print-on-Demand (POD), and other business models to sell on its platform. 

On the other hand, eBay is another international e-commerce marketplace that enables businesses and customers-turned-sellers to sell to millions of buyers worldwide.

As of 2021, eBay boasts 180 million active buyers globally.

Initially, eBay was established by founder Pierre Omidyar as an auction site where sellers can list rare collectibles and unused items.

But in the past decade, eBay extended its services to include a Buy It Now button so retailers and other third-party sellers can sell new and refurbished items. 

Amazon Benefits, Advantages, and Drawbacks

• Amazon Business Model and Product Pricing 

Amazon functions in a business-to-consumer (B2C) and consumer-to-consumer (C2C) business model.

Its sales driver is divided into its own inventory of a wide selection of products and third-party sellers. According to Statista, third-party sellers contribute 55% of Amazon sales in the first quarter of 2021. 

Yet, b2c and c2c are only an umbrella for the many other business models that operate on the Amazon platform.

Depending on the types of products, budget, fulfillment methods, and other business elements, sellers may function under retail arbitrage, wholesale, dropshipping, POD, and a few others. 

Moreover, products are listed at a fixed price on Amazon.

You will find slight variations in the product prices of competing sellers and brands, but you can’t place bids to get the items of your choosing. Instead, you can instantly buy the item if the seller has an available stock.

• Security and Fraud Detection Services

As online selling literally involves the exchange of funds and personal data online, security and fraud detection must be one of your primary concerns as a seller.

Amazon’s Data Privacy Policy explains everything you need to know about keeping confidential data and sharing needed information with third-party sellers and acquired businesses.

Additionally, it provides resources from updating your account passwords and verification to spotting phishing and fraudulent notifications. 

Amazon does not provide a seller protection policy, but it offers additional services you can sign up for in order to protect your e-commerce store or account from scammers.

It does not provide a seller protection policy. But you can subscribe to the additional services it offers, like Brand Protection Program and Amazon Fraud Detector.

These paid services will help protect your e-commerce store or account from fraud, scammers, and counterfeiters.

• Order Fulfillment and Management Features

Amazon offers Amazon FBA and Amazon FBA Onsite to make the process of fulfilling orders easier on the seller’s end.

From the name itself, Amazon FBA means your customer’s order fulfillment, which involves shipping and tracking, is done by Amazon.

This shipping program allows you to store your products on Amazon fulfillment centers for a fee. Then, Amazon will be the one to arrange the packing, delivery, and distribution of items to your customers. 

Conversely, sellers can choose Seller Fulfilled Prime (SFP) if they want to manage the shipping of orders directly from their warehouse.

To avoid heavy storage and fulfillment charges from Amazon FBA and easily acquire Amazon Prime Badge, merchants are allowed to deliver to Prime customers straight from their inventory.

On the other hand, FBA onsite is a hybrid between Amazon FBA and Seller Fulfilled Prime.

Here, sellers can ship from their warehouses. But they need to use a cloud-based software called Warehouse Management Software (WMS), so Amazon can still indirectly take part in the fulfillment method.

• Seller Accounts and Fees

There are two types of seller accounts on Amazon- individual and professional. You can create both accounts for free.

The individual seller account is good for small-time sellers who don’t have inventory or don’t sell many items. On the contrary, the professional seller account is good for big, established brands and businesses.

Although you can sign up for both accounts for free, you need to pay $0.99 every time you sell an item on your listing in an individual account.

The professional account requires you to pay a subscription fee instead, which costs $39.99. By paying this fee, Amazon won’t require you to pay a fee every time you sell an item.

A professional account is an obvious and more practical choice if you plan to be a long-term seller and scale your e-commerce business one day, a professional account is an obvious and more practical choice.

In addition, Amazon also charges a product fee that ranges from 6% to 20% of the total price of every item sold. It includes the shipping cost, any special packaging or gift wrapping, and the item cost.

• Promotions, Subscriptions, and Advertising

Amazon programs and subscriptions for sellers are mostly for the fulfillment, like Amazon Seller Prime and Amazon FBA. But you can subscribe to Stores to make custom shopping destinations for your customers. 

In terms of marketing and advertising, you can promote your products through sponsored ads, sponsored brands, and featured products. You can get your products featured in Lightning Deals and Best Deals, but of course, you need to meet requirements like certain product discounts. 

Amazon also holds events like Amazon Prime Day, which you can use to promote your products. Advertising and promotions fees only apply when a visitor or buyer clicks an ad.

It follows the pay-per-click (PPC) model, where you need to pay an amount per customer’s click on your ad. The ad cost will depend on the budget you set for your ad campaign on Amazon. 

eBay Benefits, Advantages, and Drawbacks

• eBay Business Model and Product Pricing

Just like Amazon, eBay works under the b2b and c2c business models where businesses sell to customers, but customers can also buy from vendors to sell to other customers.

The stark difference between eBay and Amazon is that eBay also operates under the auction business model. In this model, sellers list an item with a starting price. Customers can only have the item when they submit price offers and win against other bidders.

The item is then granted to the customer who wins the bid when the listing ends in 3-10 days.

Customers are allowed to use tactics like using sniping software to manage their bids.

They can enter their maximum bid and then use the sniping software to control and supervise simultaneous bids on different items. It doesn’t always guarantee a win, though.

But listing your items in auction speeds up the completion of the purchase process and encourages customer engagement through competition.

Yet, in its recent expansion of service, eBay made changes in its pricing strategy by giving sellers the option of adding a Buy It Now button. With this, customers can bid for the item or secure the item in real time at a fixed price.

• Security and Fraud Detection Services

Unlike Amazon, eBay offers a free and clear seller protection policy against scammers and abusive buyers. It provides automatic defect removal to correct transaction records of sellers.

You can download your Transaction Defect Report to keep track of defect details and use it as a reference for your transactions in case buyers request claims or whatnot. It also clears negative buyer feedback from abusive buyers and blocks buyers who abuse or scam sellers.

However, most sellers think the eBay protection policy leans more towards the customers.

It’s because scammers and abusive buyers use the existing buyer protection policies to take advantage of the seller. They would also usually get refunded as it is standard for any marketplace to have a return policy.

• Order Fulfillment and Management Features

Compared to Amazon, eBay doesn’t have its own fulfillment program and instead partners with third-party fulfillment centers to carry out the seller’s order fulfillment.

One of its partners is eFulfillment service which serves eBay merchants and sellers from other online marketplaces. Sellers are left to choose from eBay partner fulfillment centers or Amazon FBA.

And yes, eBay sellers can use Amazon FBA to fulfill orders, and that is called multi-channel fulfillment. Of course, the charges are high.

In 2019, eBay announced that it would launch Managed Delivery, its own fulfillment program that becomes inaccessible to new sellers, in December 2020.

Whether it was ended or just stopped accepting new members is unclear. What’s clear is that you can choose from many third-party fulfillment centers to fulfill your customers’ orders.

• Seller Accounts and Fees

There are two types of seller accounts on eBay- personal and business.

Like Amazon’s individual seller account, eBay’s personal account is recommended for sellers who only plan to sell a small number of items or those who have a small inventory.

Contrarily, eBay’s business account is for vendors who have a large inventory and big businesses.

There’s also no upfront fee for signing up to any eBay seller account. However, eBay takes an insertion fee for every listed item.

The insertion fee for a full-priced listing is 50 cents per item. But for auction-listed items, you pay a fee of 4%- 9% per item. For items with a reserved price of $0.01- $0.99, the listing fee is free.

However, fees are different for eBay store subscribers. 

Aside from the insertion fee, eBay asks for a final value fee or selling fee, which is taken after an item is sold.

This fee is charged for every item you sell. It is usually 10% of the total sale amount of the item. But some categories can reach up to 12.55% or lower than 10% with an additional transaction fee of $0.30.

Furthermore, if you choose to subscribe to an eBay store to easily manage your listings and get exclusive perks, you have to pay an annual subscription fee.

The annual fee starts from $4.95 up to $59.95, depending on the plan you choose from the three plans available. You can also pay this through staggered monthly payments, with the fee ranging from $7.95 to $74.95.

• Promotions, Subscriptions, and Advertising

Seller programs offered by eBay include eBay Stores, Top Rated Seller Program, and Top Rated Plus.

Since you already know the plans and costs for eBay stores, you might be wondering about marketing steps you can take on eBay. 

Qualifying for the Top Rated Seller Program enhances your listings’ visibility and conversion rate. It also gives you additional seller protection against scheming buyers.

Top Rated Plus, on the other hand, is an advanced version of the Top-Rated Seller Program. It also has its own set of criteria for you to qualify.

Its benefits include a Top Rated Plus Seal, which will increase your credibility with buyers, and a 10% discount on final value fees.

Sellers can create Classified Ads, which are products or services you want to promote. These products are given exposure on eBay’s homepage. You can also generate a campaign that will make Promoted Listings to improve the visibility of your products. 

When you create a campaign for Promoted Listing, you can select an ad rate between 1% -100%. You will be charged for the ad depending on the ad rate you selected. You can check your ad performance on your advertising dashboard and check the Payments tab to see your fees. 

Moreover, eBay advertising works under the Cost-Per-Sale (CPS) model. It means that clicks on the ads don’t add to an advertising fee.

Instead, when a customer clicks your Promoted listing and proceeds to buy the item, that’s when you will have to pay for the ad.

Frequently Asked Questions

Conclusion

Amazon and eBay both offer a large and competitive platform for your startup e-commerce business.

If you plan to transition from a brick-and-mortar store to an e-commerce store, it also allows you to scale and follow an omnichannel approach. Both have their advantages, and both also have drawbacks.

What you need to do is analyze your target audience, see whether they prefer eBay, Amazon, or some other marketplace, and start from there.

After all, no matter how much you economize and save from your budget, it will not be worth it if the customer base you plan to sell to is not usually seen in the marketplace of your choosing.

To know more about Amazon and Ebay, read more blogs at Sellers Planet.