Many sellers make the mistake of putting Amazon and eBay in the same e-commerce basket. They fail to realize that the differences between Amazon and eBay are profound.
Let's use an analogy to illustrate my point: Imagine that you are a mechanic for a moment. Now someone with no experience with cars walks in and tells you that repairing a custom hotrod is the same as fixing a pickup truck! You would inform them that yes, the concept is the same, but you go about it in very different ways.
This is the correct way to understand the differences between Amazon and eBay. Unfortunately, these differences are often hard for novice sellers to recognize.
A good understanding of these differences enables a seller to potentially earn a good profit on both sites. But a lack of knowledge can quickly cause a seller to lose a lot of money fast.
Some of the crucial differences that every seller must understand include:
Retailer Versus Wholesaler
Amazon.com is a retailer, while eBay is basically a wholesaler. A retailer exists to sell products to a wide customer base at a reasonable price. A wholesaler sells merchandise at the lowest price possible, usually to retailers who will resell the goods to consumers.
In practical terms, this means you can charge a higher price and make higher profits on Amazon.com (but be aware that Amazon does take a hefty cut out of the sale price). It also means that Amazon.com can be a great place to sell wholesale items purchased through resellers.
A Simple Matter of Control
Amazon.com’s business model gives you much less control than eBay. eBay lets you choose between a fixed price and an auction format. Amazon only allows sellers the option of a fixed price format.
eBay lets you create your own product descriptions, whereas Amazon.com creates the product descriptions for you. In practical terms this means you will do less work on Amazon.com, but the drawback is you will have less control over your marketing.
Selling on Amazon.com will consume less of your time because most Amazon features are highly automated; you will only have to perform a few basic tasks.
On the other hand, most eBay features are not automated and require at least some attention from sellers. Keeping track of items on eBay can be difficult even with more advanced features like Selling Manager Pro.
You can read our in-depth review of eBay’s Selling Manager Pro in this article: Supercharging Your eBay Business with eBay Tools.
Differing Fee Structures
Amazon.com and eBay have entirely different fee structures. eBay charges you a monthly rate for listings. Amazon.com lets you list for free but takes a cut when you make a sale.
eBay charges fees based on your sales on a monthly basis. However, you’ll be happy to hear that insertion fees for the first 50-100 listings per calendar month, depending on listing format and category, are 100 percent free.
This means that selling on Amazon.com can be much more expensive than eBay. Generally speaking, it is best to list only items that have a high volume of traffic on Amazon.com.
The way Amazon.com and eBay pay you is very different. eBay pays you directly when you make a sale; if you use PayPal, you get all the cash right away. eBay then bills you at the end of the month, which ensures you have a constant cash flow rather than waiting for a payday.
Amazon.com takes out the charges when you make a sale and puts the money in escrow for two weeks to cover refunds and returns. This means it can be very difficult to generate a constant cash flow on Amazon. If you need a quick or constant cash flow, eBay is often a better deal.
Size of Customer Base
The potential customer base you can reach on Amazon is much higher than on eBay. Statistia.com estimated that there were 237 million active Amazon.com customers last year. In December last year, the Trefis Team estimated that there were only around 70 million active eBay users.
The implications of these findings are striking: It means that products sold through Amazon.com are more likely to reach a mass consumer market. Those seeking high-volume sales are more likely to find them on Amazon.com.
A Different Type of Customer Base
Amazon and eBay serve very different customers. Amazon serves a mass market customer base, while eBay serves smaller and more specialized markets. Since it is an auction site, eBay caters to those with a strong interest in specific products, such as hobbyists, dealers, and resellers.
Those buying and selling on eBay are more likely to be bargain hunters, merchants and entrepreneurs, whereas those buying on Amazon are more likely to be ordinary consumers.
Understanding this as a seller is crucial to your success, because if you are trying to target hobbyists on Amazon instead of eBay, you are barking up the wrong tree.
A Common Thread
Despite their differences, eBay and Amazon do have something in common: It takes a lot of time, a lot of practice, and usually quite a bit of money to succeed in selling on both sites. Even with today’s informational resources, it will take the average seller several months to a year to figure out how to make good money on both eBay and Amazon.com.
In saying this, developing a good understanding of these sites and the differences between them will make it easier to set up and operate a successful online store. The best way to learn these differences is to sell a few products on both Amazon and eBay. The knowledge and experience you gain will be worth the time and expense involved.
How to Take Advantage of the Differences between Amazon and eBay
You can take advantage of these differences in marketplaces to improve your chances of becoming a successful seller. Try leveraging the following techniques:
Understand which products sell well on Amazon versus eBay. Generally, cheaper items that would appeal to a mass market, such as new clothing, nutritional supplements, and new toys, are popular on Amazon.com.
Used, unique, and unusual items, such as antiques or old books, sell better on eBay. Cheaper products that sell for low margins but in high volumes also do well on eBay because the seller fees are lower.
Check out the SaleHoo Wholesale Directory to locate the kinds of items that can be easily resold on eBay and Amazon.com. There are some real gems to be found in the directory, but only if you take the time and effort to search for them.
Do an Amazon Test Run
Try doing an Amazon.com test run by purchasing a wholesale lot of items (on eBay or from a SaleHoo directory member) and listing them on Amazon.com. You can read our step by step guide to selling on Amazon for everything you need to know to get started. This exercise can show you if you would actually enjoy selling through Amazon.com. Better still, it helps you familiarize yourself with the process.
Sell items on eBay first to see test the difference in the platforms, and to see how well these items sell. Then start offering your better-selling items on Amazon.com. Again, it merits repeating, be mindful of the differences in markets.
Be sure to closely monitor your earnings from Amazon.com and eBay. Your results, which can be easily stored in an Excel spreadsheet, can help you determine which website is the best fit for you. A good rule of thumb is to concentrate all of your attention on the selling platform where you are making the most money.
We have extensive online educational resources available in our seller training center. These resources can help you improve basic sales skill and your e-commerce efforts on both Amazon and eBay. It's also a good way to become familiar with online retail and wholesale buying.
Pay particular attention to our forum. There you will find a great deal of valuable advice about selling on eBay and Amazon.com from experienced sellers.
An experienced seller who has worked with both Amazon.com and eBay that is willing to mentor you is the most valuable resource you can find. Such a person can help you avoid common pitfalls and show you what really works.
Becoming familiar with both Amazon.com and eBay is the best way to become a proficient seller who knows how to actually make money from e-commerce. Both sites are valuable tools that have helped many ordinary people become financially self-sufficient. Taking advantage of both online marketplaces can double your chances of success — and potentially your income!