The Pros and Cons of Selling on Amazon and eBay

Selling your products on Amazon and eBay seems like an irresistible deal at first. You have their entire customer base at your disposal, and these sites get a hell lot of traffic; what could be a more profitable way to start an eCommerce business?

I mean, Amazon is the world’s largest eCommerce platform and an example of one of the best online marketplace software –both in terms of features and technology stack. It’s a 25 years old brand. Each month, at least 197 million shoppers around the world purchase their favorite stuff from Amazon. Who would not like to do business with a giant that holds a 49% share in the US eCommerce market?

On the other hand, everybody knows eBay. Founded in 1995, eBay is the most popular C2C eCommerce giant. E-bay is still one of the biggest eCommerce giants in the US with a market cap of $33.5 billion, as of September 2019. Can anyone overlook a platform that made $10.7 billion in 2018 and still growing?

You might now ask, how not is everyone selling products online on Amazon and eBay then? Why 46% of the eCommerce business owners in a survey in the UK preferred their own sites to sell on a third-party marketplace?

Is the Mutual Benefit a Thing While Selling on a Marketplace?

Like I said earlier, selling your products on marketplaces seems quite beneficial. You can, in fact, create an online store without worrying about product-warehousing, shipping, packaging, managing a website, or fussing about the SEO and website traffic. However, if you take a closer look, you would still find the benefits, but the actuality of profits for the sellers experiences a bit of change their definition.

Nevertheless, should you be selling your products on Amazon and eBay, or not? The answer varies from person to person and business to business. While marketplaces may be a profitable way to start with the eCommerce business for many, some of us might just overlook the potentials for massive growth with a proprietary business, and behave just like a frog in the well.

There are N numbers of aspects that a merchant must analyze beforehand: types of products you sell, their demand, competition in the general market, competition on the marketplace itself, the revenue you share with the marketplace, restrictions, and scope beyond the marketplace to name a few.

Based on these aspects and many others, you should makes this decision by yourself. That’s why I have talked in detail about the Pros and Cons of Selling on Amazon and eBay in this article, so you can make a well-informed decision after comprehending the fluctuations in all the alternatives.

The Pros of Selling on Amazon, eBay, or Any Marketplace

Selling on a popular marketplace would have its own perquisites. One of the biggest examples would be the ease at with anyone can set up an Amazon or eBay account to start selling on the go. These are some very big corporations backed by fortunes, you can’t just overlook the local as well as international recognition they have already secured in the market.

One of the Biggest Traffic Channels at Your Disposal from the First Day

As we talked earlier, Amazon and eBay are two of the biggest traffic generators on the internet. Each second millions of online shoppers purchase something from these platforms. Having a storefront on one of the busiest streets in the town has its own rewards.

You will have instant access and would be selling products online to over 184 million monthly visitors on Amazon and at least 164 million active shoppers on eBay. Whether you are selling on Amazon, eBay, or on your very own platform, you should be looking for such serious eyeballs to do business. We can’t deny the fact that many merchants have admitted getting a 50% boost in their sales after joining Amazon as a seller.

Generate Sales through Inherited Trust Factors in the Brand by Default

Even if shoppers don’t visit Amazon or eBay looking specifically for your store, the people who trust these platforms already trust your listings by default. They know that Amazon and eBay care for customer experience and they collaborate with only genuine businesses. Once, a customer is there on the site, your listing as trustworthy for them as the platform itself.

So even without your unique brand identity, you work in an environment where you get new customers every day. You may further intrigue the customers into your unique identity as a trustworthy seller via quality services and excellent order fulfillment experiences. Amazon uses its FBA service to take away shipping and storage hassles from sellers and encourages them to focus on customer experience. It is something that a small seller or one-man army merchant cannot deny.

Many People Just Love the All-In-One Nature of the Online Marketplaces

The reason why supermarkets and hypermarkets exist is their ease of finding everything under one roof. If I can purchase everything of my needs with just a single checkout, why would I prefer to visit tens of individual sites to purchase them separately?

The strength of eBay and Amazon lies in the variety of products they offer on a single platform. Considering Amazon and eBay combined, they sell everything from pin to an airplane. Seamless one-stop shopping is what many people love about online marketplaces and visit these sites very often.

The Cons of Selling on Amazon, eBay, or Any Third-Party Platform

It’s no brainer; sellers on Amazon and eBay enjoy a plethora of benefits, which play a significant role in the early development of their businesses. They take away many hassles and offer a range of B2B services that otherwise are not easily accessible to independent merchants who are looking to create an online store of their own. However, like every good thing, the benefits from marketplaces come at some price.

Marketplaces Take Huge Fee from Sellers

It hurts to lose even a minute percentage of your hard-earned revenue; Amazon and eBay take away a significant percentage of it from you. There is a complex list of different types of fees and commissions these platforms take from sellers in lieu of letting them use their platforms. If you are willing to take your storefront in the premises set by Amazon and eBay, be ready to lose a significant portion of the revenue you generate during your stay. The range of fee and commissions differ from product to product and categories to categories. Be ready to do some homework about the charges before you take your products to these marketplaces for selling.

Source: salehoo.com

Besides, sellers can opt for various premium services like sponsored listing, featured listing, FBA, and others to secure a better chance of visibility on the platform. Yes, despite you are ready to give away a portion of your revenue you still cannot make sales unless you are visible to the customers.

You need to opt for premium services to gain good visibility. FYI, Amazon takes 26.7%-60.6% of the sales revenue for the products listed under-advertised categories. This fee is in addition to the regular 6–15% selling fees per-sale.

You Have No Control over Your Business

While you pay the extra premium to get all those infrastructure benefits, you still are not the actual boss of your own business. All that a marketplace cares about is its own benefits. They focus on promoting and selling products online, not the sellers.

Despite spending so much on the platform, you cannot call them your own. All the customers you get while on Amazon or eBay are the marketplace’s customers, not yours. You are just a third-party seller whom they can easily replace with some other seller. Besides, you cannot just upload a product you like. All your listings first go through an inspection and approval process before they are live on the site. They can take your listings down if they don’t find them viable for their business.

In short, even after spending fortunes to compete on Amazon or eBay, you don’t own anything on the platform. They reserve the right to control everything about you, including your product listings, storefront information, and communication with customers; they regulate everything that identifies you as a brand.

Competition Is Insane and Expensive

Apart from all these, you have to compete with the in-house products from Amazon and the giant sellers who capture the listings in almost every category. Hence, selling products online on a marketplace might seem like a seamless way to start with no investment in technology, but you would find it difficult to stand unless your products are really out of this world, or you pay fortunes for premium services and get better visibility.

Therefore, not just the commission-per-sale is inevitable, but also many other overhead costs are involved, which somehow marketplaces present as optional, but a seller is not good without opting for them. If you don’t opt, your rival sellers will opt for sure, and gain an upper hand.

To conclude

Nothing is easily accessible in the eCommerce market. Anything with a benefit comes with a corresponding price. If marketplaces offer the easiest way to start your eCommerce business, they also encompass the cruelest ways to claim a part of your revenue. There is a cost involved in every opportunity.

I don’t say starting your own eCommerce site is an easier alternative, but that also gives you absolute control and ownership of your business. These days, it’s so easier to set up and launch a proprietary eCommerce store. All that you need a good eCommerce script or an online marketplace software, which you can set up, customize, and host on a server of your choice.

Of course, setting up a site is a big commitment and requires some groundwork, but don’t you think it’s worth it, considering all the revenue you can claim for yourself? Even if you are a one-man army, there are simple yet competent eCommerce solutions in the market that you can use to create an online store and manage the same without any help. You don’t have to compete with the likes of Amazon or eBay. Just be a little creative and start something very niche, which can stand out from the rest of the competitors.

Now that you know the pros and cons, analyze your case, and you will have an idea of where to start and how to start selling products online using different ways.