eBay vs. Amazon: An Overview
Whether you list things while at home in your pajamas, have money sent directly to you, or drop packages off in the mail, using eBay or Amazon is easier than the yard sales of yesteryear. But which major e-commerce site is best? It might help to understand how each of these companies makes money.
- eBay has made selling on its site easier over the years by implementing a simpler structure for calculating the fee for products sold.
- Amazon’s fee structure is a bit more complicated, having variable referral and closing fees, with the latter being based on the product's weight.
- Listing on Amazon allows buyers to purchase right from the Amazon website and sellers can even have Amazon fulfill the order if they choose to have it stored at one of the Amazon warehouses.
- eBay offers more customized listings, as well as the ability to have eBay employees put together listings for sellers.
- Getting paid from Amazon as a seller involves having money deposited directly into your bank account, while eBay still uses PayPal for the most part. In addition, customers pay you directly.
eBay has snapped up quite a few companies since it first launched in 1995, including PayPal, Kijiji, and StubHub, and had 159 million active buyers as of the second quarter of 2021.
So how does eBay make money? First, and most importantly, is PayPal. PayPal was spun off from eBay in 2017. The money transfer/payment website is enormously profitable for eBay and makes up almost half of the company's revenue. PayPal fees can easily cut into a seller's margins with a 2.9% + $0.30 fee for each sale. But let's focus on the part of eBay that's comparable to Amazon—the Marketplace. Back in its heyday, the eBay Marketplace would charge users an insertion fee based on the item's starting bid and a final value fee when the item is sold. Today, every seller on eBay gets several free listings.
For example, If you have an eBay store, according to the website, you'll receive more zero insertion fee listings per month, unlike those sellers who do not have an eBay store subscription. However, eBay still charges a final value fee. However, the last value fee calculations have been simplified, and these days, eBay is charging a flat final value fee of 10% of the sale price (for most items).
For power sellers, eBay offers subscription packages that give sellers several free listings for a monthly fee, a lower insertion fee for sellers who go over their allotment, and a less-simplified but lower range of final value fees. With the Marketplace, sellers can upgrade their listings (better placement in the search results, more pictures, etc.) or list their items at a fixed price. Fixed price listings are subject to the same fees as auction listings.
Amazon has an even more complex fee structure than eBay. The company offers two options for sellers: they can either list as Individuals or as Professionals. For Individuals, Amazon charges $0.99 per item to list along with a referral fee that ranges from 8%–45% depending on the item’s listing category.
On top of that, there is a variable closing fee which, for BMDV (books, media, DVD, and video) items, is not variable at all, at a fixed $1.80 per item. Other products are charged a variable closing fee that is calculated by the item’s weight.
Sellers can list their items in 20-30 different categories (depending on whether they are selling as Individuals or as Professionals), and for BMDV sellers, have set shipping rates set and collected by Amazon. These fixed shipping rates are great for buyers who know that, when purchasing BMDV items on Amazon, the total price can be easily calculated without searching for individual sellers’ shipping rates.
Amazon allows those selling products already listed on the site to list their product simply by entering the item’s UPC or SKU number. This process cuts down on the time a seller needs to prepare a listing because the relevant information has already been input by Amazon employees. Payment is completed by periodic bank transfers to the seller’s account, and sellers are protected by Amazon’s Fraud Protection service.
Both companies offer seller protection services as well as the ability to directly contact a buyer if an issue arises. Both companies also offer tutorials and customer support for sellers who are just starting out.
eBay, the original auction site, used to have complicated and expensive selling fees. Since streamlining their fees, the structure looks simple and easy to understand. Amazon, by comparison, can be confusing and frustrating to navigate. Sample calculations would be helpful to compare the two sites. Still, with multi-tiered pricing structures and closing fees, which vary by item category, item weight, and buyer payment option, any examples could be construed as cherry-picking or biased towards one company or the other.
Amazon has a few advantages over eBay. For starters, the site does an excellent job of making a buyer feel that they are buying directly from Amazon. Seller’s items are listed alongside Amazon’s. Purchases can be made using “1-click buying,” Unlike eBay and PayPal, buyers can complete their payment without leaving the Amazon site. With Fulfillment by Amazon, sellers can even have their items stored and shipped directly from Amazon’s warehouses.
On the other hand, a seller might prefer to use eBay to customize and personalize their listings. With the ability to post catchy full-color ads within a listing, it might be more appealing and more likely to result in a sale than Amazon’s neutral listings.
How to Get Paid
Amazon has a multi-step procedure to set up a seller’s account. Users are automatically signed up for a Professional account and Fulfillment by Amazon. Account information is input based on a user’s existing account (if any). Finally, there’s a section for Tax Identity Information.
For eBay sellers, the process is simple—open an eBay account (or use an existing one) and start selling. Getting money into a bank account is a bit more complicated. Amazon users get paid via a direct deposit to their bank account, whereas eBay users (usually) get paid through PayPal.
Advantages and Disadvantages of Selling on eBay
Selling on eBay can be an easy way to earn money off of things you no longer use (gently loved toys or in-the-box collectible items, for example) or a way to sell what you make (Halloween costumes and Christmas decorations). Most shoppers and sellers are familiar with eBay, and its search engine makes it simple to find what you need on its platform.
There are, however, disadvantages to using eBay versus other online selling platforms. First, you will have to pay eBay fees for using its platform, you have limited control over how items are sold, and you may end up with payment issues if customers don't pay you.
eBay has a global reach.
Setting up an eBay account is pretty straight forward.
Selling on eBay is one way to make money on the side.
You have to pay fees, and those fee structures may change over time.
You have to compete with similar sellers.
You may run the risk of not ending up paid for your items, if a customer doesn't pay.
Advantages and Disadvantages of Selling on Amazon
Amazon is a behemoth, and it reaches millions of potential customers, which provides online sellers with the potential of high traffic. Amazon is a well-known online shopping platform, and once you learn to tag your products, they may show up in recommended lists.
Amazon will also store your products in their massive warehouses if running a small business via Amazon. This can be a significant advantage over using your garage or paying for storage for your products. Amazon Prime shoppers are more likely to do the bulk of their shopping on Amazon, and if you can reach that audience, you will likely pull in more sales.
Like eBay, the fees are a downside, you don't get any interaction with your customers (unlike eBay), and your products and your business are enveloped within Amazon, so you don't get the opportunity to grow a brand.
Amazon reaches millions of potential customers.
Amazon is beloved and trusted by online shoppers.
Your products (when tagged) can show up under Amazon's recommended products.
Amazon doesn't allow you to grow your own brand.
Your products may not have strong visibility in a digital ocean of products.
Amazon has high fees.
Which is Safer, Amazon or eBay?
E-commerce can be a risky business, but overall, Amazon may have more safeguards in place because you don't have to interact with your customers. Amazon handles the payments to the seller. However, both Amazon and eBay have many safeguards in place to protect their sellers and customers.
Is eBay or Amazon Bigger?
Amazon has more potential customers than eBay, and it offers more products than eBay.
How Many Sellers Are on eBay vs. Amazon?
There are approximately 7 million U.S. sellers on eBay. Amazon has approximately 6 million global sellers.
How Many People Shop on eBay vs. Amazon?
There are around 182 million global eBay customers. Amazon has over 300 million active users around the world.
The Bottom Line
Whether selling through eBay or Amazon, the key is research. Given the different pricing schemes associated with each company, an item that might be cheaply sold on Amazon could demand high fees from eBay. But the higher price could be justified for the customer service received and a specific audience reached. Both sites offer pros and cons for sellers, but if you want to create a brand, eBay may be a better option. If you want built-in storage for your products, Amazon may be the right fit.