The Pros and Cons of Selling on Amazon And ebay
In the beginning, it might seem that online storefronts of Amazon and eBay are mutually beneficial for both them and online merchants, as the first gain an expanded products range with no need for physical inventory in the stores, while the online merchants get the exposure they have longed for. However, reality might actually differ a bit when answering the question: Should you start selling on Amazon and eBay?
The answer varies because you should know that there are some pros and cons that apply and you should be aware of it. In this post, we will tackle those pros and cons that you make the optimal decision of whether or not to proceed to sell on those marketplaces after you have carefully studied all factors in play.
The upsides of selling on Amazon and eBay
Increase sales from a high traffic channel
The chief draw of selling on marketplaces such as Amazon and eBay is the scale of their online presence. Amazon draws nearly 184 million visitors a month and eBay is home to over 164 million active buyers—that’s a heck of a lot of eyeballs! And those eyeballs can translate into higher sales volumes.
The main advantage of selling on marketplace giants like Amazon and eBay is the huge size of their online presence. Some statistics could be as large as 180 million visitors on Amazon and 160 million buyers on eBay, the fact that shows you actually large it is and could be lucrative for any eager online merchant who aims at growing their sales. Also, and according to an Amazon executive, sellers experience around a 50% increase in sales as soon as they become part of Amazon online storefront.
Acquire new customers
Especially when visitors come to Amazon and eBay searching for your product, not your store, as they may otherwise have not found them or bought them from a competitor.
Also, when a customer has bought from you once, they are more likely to buy from you again as long as you maintain excellent service and product fulfillment. For example, if you are selling products from a category that is more likely to have recurring purchases, such as hobby supplies.
Many people prefer shopping via marketplaces
Marketplaces are known for their big numbers of visitors, something that is as real as those numbers found in Shopping malls, farmer’s markets, etc.
As people crave the variety and the experience of finding everything in one place, people find that too in online marketplaces such as Amazon and eBay. Secondly, the additional features of a single point of checking out and supporting the fulfillment process are alluring to the buyers and provide them with the seamless experience that makes the buying process simple and convenient.
The downsides of selling on Amazon and eBay
While there are some significant upsides to selling on marketplaces, there are also some drawbacks that need to be considered.
Despite the fantastic advantages of selling on online marketplaces, the disadvantages still need to be considered carefully.
As lucrative as it could be to sell on a marketplace, you are exposed to a cost that you should carefully understand: The marketplace fees, which is a deduction that occurs as a percentage taken from each sale. Such percentage varies from site to site. That’s why it’s crucial to make sure that you are aware of your margins and also the fee structure of the marketplace you are selling on.
Although marketplaces have advantages for online sellers, you need to understand that they are here to benefit themselves in the first place, so that could be reflected as restricting the degree to which your presence could be branded along with the products you might want to showcase.
Besides, nothing could technically prevent them from going around third-party sellers and stocking the most popular products themselves.
Keeping inventory in sync
Being the second point of sale means that the marketplace doesn’t sync the same inventory together with your shopping stock, so it could be challenging to understand your stock levels without a lot of manual intervention to reconciliate.
Choosing a marketplace
It could be tempting to choose all of the online marketplaces to sell online, however, bear in mind that each one has its perks and limitations beside a system that will take time and effort to fully understand and begin to use. So, it’s better to stick to one or two at max. Two of the biggest marketplaces are Amazon and eBay, so here is how each one of them works:
Amazon’s Marketplace takes the sharper retail tack, and as a retailer itself, Amazon provides tools to help third-party sellers become part of a seamless shopping experience for consumers.
Amazon marketplace tends to have a higher retail share, and as it works as a retailer itself it provides tools to help other online merchants to become part of the seamless and popular shopping experience for its customers.
If you opt for Amazon, here is what you should be learning:
- Fulfillment by Amazon, a feature that includes sending your inventory to Amazon as they handle shipping and fulfillment by themselves
- Amazon Prime membership, which has a reputation for remarkably fast delivery with a free 2-day shipping incentive for shoppers.
- The built-in comparison tool on Amazon that puts you against other merchants, something that could either work for you or against you.
- There is usually a monthly fee for listing your products on Amazon; referral and other fees are charged upon making a sale and vary depending on your product category (a 15% commission for most categories).
- Fees include a monthly fee just for listing your products on Amazon, with also, referral and other fees that are charged once a sale is completed, where this vary depending on your product category
Be sure to check out the fees for selling on Amazon and factor that into your margins when you consider selling in their marketplace.
So, make sure you have checked all fees for selling on the Amazon marketplace and put it into consideration while calculating your margins.
eBay is a huge marketplace where you could both sell your products at fixed prices or to the highest bidder in an auction-style, while Amazon focuses on the selling experience, eBay puts emphasis on the tools they make available to the sellers and the possibility of featuring their store in the eBay marketplace.
Here is what to consider before start selling on eBay:
- At a fixed price and 80% of the items sold on the platform are new, not used.
- There is a possibility that you could put items for sale to the highest bidder out there, which will especially attract buyers looking for unique merchandise. But also, more than 80% of the items are sold at fixed prices and most of them are new, not used.
- You have to sort out shipping a fulfillment by doing it on your own or resorting to a third-party fulfillment specialist.
- As for fees, there are insertion fees, fees per category. Despite getting to have a fixed number of listings per month that are free, there are advanced listing options that you can still get to pay for.
When it comes to selling on Amazon or eBay, it depends on the products you are selling and the size of your sales operations.
It’s important to note that you could sell through your own store and also sell on a marketplace to get the benefits of both, besides the fact that you can sell on more than one marketplace, just make sure you take your time to understand the way sales work on each platform.
That’s what many successful sellers are doing; owning their unique personal online brand while leveraging the immense exposure and size of sales coming from the traffic pouring onto the online marketplaces like Amazon or eBay.