If you are looking to create a new e-commerce business in 2021, you have many important decisions to make. We’re going to break it down step by step; this time, it’s Amazon vs eBay for e-commerce start-ups – which should you choose?
E-commerce stores can be hosted on many different platforms, but most new e-commerce entrepreneurs choose to host their own store using Shopify or similar or take advantage of the constant traffic on eBay and Amazon.
Amazon vs eBay – audience and sellers
Both Amazon and eBay are monsters of e-commerce. In November 2020, Amazon had 579.5 million visits in the UK alone. In Q4 2020, eBay reached 185 million active buyers worldwide.
While eBay’s number is dwarfed by Amazon’s, remember that the size of the seller pool is also a factor. Every month, Amazon receives an average of 100,000 new sellers, making it significantly harder to stand out.
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Shipping of goods
Many e-commerce entrepreneurs are big fans of Amazon FBA as a way to automate their stores. Items are “Fulfilled by Amazon”, meaning all you need to do is ship your products to an Amazon warehouse. Amazon packs up your product and ships it to your customers, removing concerns about delivery times, damaged goods etc. Although Amazon FBA is an added expense, the time saved along with packaging and materials means it is an extremely cost-effective method of dispatching your goods.
You can also opt for Amazon FBM, “Fulfilled by Merchant”, which is useful if you are using a third-party dropshipper to manage your dispatch.
As you may be aware, eBay does not offer dispatch. Your goods will need to be dispatched by you or a third-party. Your brand is rated on speedy dispatch which can limit dropshipping opportunities.
Seller fees – Amazon
Amazon FBA has additional charges which you will want to explore if you are considering selling on Amazon. But we’re interested in their standard seller fees.
An Amazon Professional Account is £25 + VAT per month in the UK. Depending on the goods you sell and how many listings you have there may be additional fees on top of this. Once you have decided if your store will go through Amazon FBA, you will need to examine this more closely. E-commerce stores do retain less of the profits through Amazon, but their FBA service allows for more automation.
Seller fees – eBay
Fees are significantly cheaper on eBay, although you don’t get the same degree of customer trust that Amazon FBA entrepreneurs do. As you have a large number of free listings each month, you are unlikely to need to pay fees here, but you will have to pay a final value fee. Depending on the product and its value, this can range from 0% to 12%. There are varying options to set up a shop on eBay. A basic shop is £25 a month.
On top of these fees, you will need to pay a payment processing fee. If you receive payment through eBay’s managed payments system, this will be deducted along with your final value fee. If you are paid through PayPal, you will be billed 30p + 2.9% by PayPal directly.
Amazon vs eBay – Refund management
If you are selling through Amazon FBA you will be billed 20% of the value of the item, up to a maximum of £5, for each refund they process.
As you are responsible for the dispatch process on eBay, you are also responsible for dealing with complaints and refunds. There are no associated fees, but these events should be dealt with swiftly to avoid negative feedback.
Condition and format
Mega-marketplace eBay has become well-known for being somewhere you can sell anything (as long as it’s legal). Amazon, on the other hand, has stricter rules on what it will allow. If you are selling second-hand or vintage goods, eBay is more welcoming. It will also allow auction pricing models, although this can leave you with unpredictable profits. New items, however, sell well on Amazon. Members of Amazon Prime dip in and out of the site with no delivery costs so are happy to purchase a small, new item without getting over a delivery threshold.
Amazon or eBay?
Amazon FBA tempts a lot of e-commerce entrepreneurs who are setting up their store while in full-time employment. On the other hand, those looking to maximise profits tend to prefer eBay if they have the time to manage the store. Either option puts your store in front of a large audience without the need to create a store and market it through PPC ads, making them an effective way to get your store up and running.
Next Steps
No hard and fast rule that says you have to be loyal to one platform. Many e-commerce stores use Amazon and have their own store, for example. Just be aware that the more platforms you are on, the more fees and requirements you will need to stay on top of. We hope this Amazon vs eBay comparison has helped you on your way. For more information on the best way to track accounting transactions for your store, please get in touch.
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