E-commerce has changed dramatically between 2019 and 2021. While websites like Amazon and eBay have always been popular places to buy, the worldwide pandemic has caused an even larger surge in online shopping.
In fact, Consumer Trends reports that a whopping 74% of people think they will continue to do most of their future shopping via online retailers. This is great news for anyone with an existing e-commerce business, or anyone who is thinking of selling on either Amazon or eBay.
But which site is better for sellers, and on which can you make higher profits? When it comes to selling on Amazon vs eBay, which is better for you and your business? Let’s look at the main differences between the two sites, and how those differences affect buyers and, especially, sellers.
Which Has a Better Reputation, Amazon or eBay?
Both Amazon and eBay have existed for nearly three decades. Amazon was founded as Cadabra in the summer of 1994, and eBay followed in the summer of 1995. Currently, Amazon ranks as the #1 best-performing e-commerce site in the world, while eBay ranks as the third best. Both rank higher than Walmart, Etsy, Shopify, and other major online retailers.
Interestingly, eBay’s mission statement focuses on sellers and selling, while Amazon’s reveals its commitment to buyers. eBay’s stated mission is “to provide a global online marketplace where practically anyone can trade practically anything.” Meanwhile, Amazon includes in its mission its four main principles of “customer obsession,” “passion for invention,” “commitment to operational excellence,” and “long-term thinking.”
These varied approaches to a business model seem to attract customers accordingly. A 2019 Feedvisor poll found that 89% of online shoppers are more likely to buy from Amazon than any other e-commerce platform. Furthermore, nearly 70% of consumers use Amazon as a search engine when trying to find new brands or products.
Amazon’s return policy is generous, and makes for an easy, hassle-free process. Shoppers can return an item for a full refund if they aren’t fully satisfied with it or the time in which it was delivered. They simply mail it back, or drop it off at a nearby partner store.
On the other hand, eBay allows sellers to choose a no-returns policy. This is an appealing feature for online sellers, but might frustrate buyers who aren’t sure if they can trust what a seller is selling.
Fulfilling Orders: eBay vs Amazon
On eBay, options are few and sellers retain most of the control over their online store. Sellers must pick, pack, and ship their items themselves. However, they do have the option of signing up as a Managed Payments Seller to have eBay handle all money issues.
When it comes to selling on Amazon, sellers have two options when it comes to fulfilling orders. The first is Fulfillment by Merchant, or FBM, which requires sellers to pack and ship their outgoing orders themselves. The second option is Fulfillment by Amazon, or FBA, and it can significantly lighten a seller’s workload.
When a seller’s products are FBA, Amazon will store, pick, pack, and ship, plus deal with any returns. Though FBA fees are slightly higher than FBM, FBA sellers still manage to save money because of the additional time it allows for other aspects of business management.
Online Seller Fees: eBay
The fees a seller pays to sell via an e-commerce site can greatly affect their bottom line, so it’s important to understand them all. eBay’s seller fees are comparatively lower than those charged by Amazon. eBay sellers can expect the following:
Insertion Fee
This is the main fee charged to the seller when eBay lists the product on the website. Sellers may create up to 50 listings per month for free, with a nominal fee charged for every additional listing. Sellers who run an eBay store also have the opportunity to earn more free listings.
Final Value Fee
eBay’s Final Value Fee is a percentage of the final sales price. It always includes shipping and handling but does not include sales tax. In most categories, the Final Value Fee is 10%, with a maximum charge of $750. Fees for other popular product categories include:
- Books, DVDs, and movies: 12%, with a maximum of $750
- Heavy equipment: 2%, with a maximum of $300
- Musical Instruments: 3.5%, with a maximum of $350
- Clothing: 0% if more than $100, or 10% if less than $100
Payments Processing Fee
PayPal is the primary payment method on eBay. Sellers who charge their customers via PayPal will pay a Payments Processing Fee of 2.9% of the total sales price, plus an additional 30 cents. This fee includes the sales tax. Alternatively, those eBay sellers using the Managed Payments option will find that the Payments Processing Fee is already included in their Final Value Fee.
Optional Listing Upgrade Fee
eBay charges sellers who want to enhance their product listings with subtitles, bold fonts, or a minimum or reserve price an Optional Listing Upgrade Fee of a minimal amount. Though eBay’s additional fee list may seem overwhelming, there are several online eBay fee calculators to help sellers figure out pricing, and exactly what fees they can expect when they list their product. For example, a product listed on eBay for $22.95 will have fees totaling around $5.00. If the item sells with free shipping, then shipping costs will also need to be paid by the seller.
Online Seller Fees: Amazon
The fees charged to an Amazon seller are determined by whether an item is Fulfilled by Merchant or Fulfilled by Amazon. All sellers, whether FBA or FBM, pay the Selling on Amazon Fee, which is either a per-item fee or a subscription fee.
Those registered with Amazon as “individual” sellers pay a 99 cent fee for each unit sold on the website. Alternatively, those registered as “professional” sellers with professional accounts pay a monthly subscription fee of $39.99. All Amazon sellers also pay a Refund Administration Fee. This fee is only charged if an item is returned, and is either $5.00 or 20% of the refunded amount, whichever is less.
Sellers who sell their items as Fulfilled by Merchant are responsible for the Selling on Amazon Fee and the expense of shipping. Those sellers who choose to sell their items as Fulfilled by Amazon are responsible for the Selling on Amazon Fee (which includes the Variable Closing Fee and the Amazon Referral Fee) and the Fulfillment by Amazon Fee.
This latter fee consists of monthly storage and fulfillment fees and is determined by the weight and dimension of the item. For example, if an item is sold for $23.00, an Amazon FBA seller would be charged around $8.40 in fees, while an Amazon FBM seller would pay around $3.50 in fees.
Product Type and Quality: Amazon vs. eBay
Amazon has primarily remained a retailer. It restricts what can be sold based on a product’s quality, which limits selling on Amazon to official businesses both large and small. On the other hand, eBay has been a marketplace for third-party sellers since its founding in 1995. It does not restrict what can be sold (as long as it’s legal, of course), and people greatly prefer eBay over Amazon when it comes to purchasing used items and collectibles.
eBay also offers the unique auction model, which has become a very popular way to buy and sell used items. While the auction model provides both fun and great deals for buyers, it takes away the seller’s control over the final selling price. Because fixed price items don’t sell as well as auction model items on eBay, the auction feature may not make eBay as appealing to those with an online business.
The Amazon Prime Factor
Amazon Prime is a huge factor when it comes to selling on eBay versus Amazon. For a small monthly fee, Prime members are offered incredibly fast, two-day or occasionally three-day shipping. A subscription fee in exchange for super fast shipping makes customers check Amazon before any other online retailer because they want their money to go as far as possible instead of to waste.
Amazon Prime means there is already a massive customer base for an Amazon seller’s products. How massive are we talking? There are 112 million Prime members in the United States, and just under 50% of U.S. households subscribe to Prime. Furthermore, there are more than 200 million Prime members worldwide. They search for products first on Amazon, and they spend big money during major holidays, on Black Friday, and on Prime Day.
Do You Make More Money on Amazon or eBay?
As with anything, the potential to make money via e-commerce depends on a million factors, including the seller’s product(s), inventory, and time put in. A profitable business doesn’t just happen overnight either. But generally speaking, it’s very possible to make good money selling on either Amazon or eBay.
According to Indeed, the average annual income of a U.S.-based eBay seller is around $76,000. That’s about $6,000 per month and is 35% higher than the national average. Meanwhile, a whopping 71% of sellers report making at least $1,000 per month on Amazon, while only 26% of sellers make less than $1,000. Even more interesting is the statistic that 6% of Amazon businesses have made their sellers millionaires.
It is important to note that some product categories and niches sell better than others. For example, Webinterpret reports the three best-selling eBay categories for 2020 and 2021 are mobile phone and accessories, health and beauty, and home and garden.
Pros and Cons of Selling on Amazon
Pros:
- Currently ranks as the #1 best performing e-commerce site in the world, thanks in part to the 200 million+ Amazon Prime subscribers
- Amazon stresses its “commitment to operational excellence” and its desire to be the object of “customer obsession,” as outlined in its mission statement
- 89% of online shoppers are likely to check on Amazon before any other e-commerce site
- Sellers can choose to store their items with Amazon, and have the e-commerce site pick, pack, and ship sold product
Cons:
- Slightly higher selling fees than eBay, though there is the opportunity to save money if a Fulfilled by Amazon seller
- Amazon product categories are restricted, and items sold are limited to new and/or high-quality (with the exception of books and media)
Pros and Cons of Selling on eBay?
Pros:
- Is currently the world’s third most popular e-commerce website
- Prides itself on being “a global online marketplace”
- Sellers have complete control over the selling process, including the decision about whether or not to accept returns
- Can register as a Managed Payments Seller to have eBay handle all money issues
- Seller’s fees are slightly lower than Amazon’s
- Allows products that are both new and second hand
Cons:
- Sellers are required to pick, pack, and ship their sold items
- eBay’s famous auction model tends to attract buyers looking for great deals
- The auction model takes away a seller’s control over the final sales price
So Which is Better, Amazon or eBay?
If you are an online retailer with products to sell, then you probably already know that there has never been a better time to begin an online business. Nearly 80% of Americans see themselves fulfilling most of their future shopping needs via e-commerce sites.
Whether you choose to focus your sales on Amazon or eBay likely depends on the type and quality of your product, how much control over the selling process you want to keep in your hands, and fees. Amazon is probably the better option for sellers with high-quality, new products. As the most successful e-commerce site in the world, Amazon is focused on pleasing buyers through excellent customer support and a generous return policy.
Amazon offers sellers a Fulfilled by Amazon option, which takes from the buyer many of the tasks involved in selling and shipping items and dealing with any returns. This is an appealing feature for new sellers, or for those who prefer to focus on other aspects of their business. Although Amazon charges quite a few separate fees, business owners are still likely to save money overall.
Sellers who specialize in selling collectibles and other second-hand products are likely to be happiest with eBay. eBay describes itself as a “global online marketplace where practically anyone can trade practically anything.” This commitment to sellers is apparent in eBay’s simplified fee structure and in the way in which eBay sellers retain most of the control of their sales process. However, eBay’s famous auction model can be frustrating for online sellers.
Though they have their differences, both Amazon and eBay offer sellers both new and experienced the opportunity to sell their products and grow their business.