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Side Hustle UK: Selling on Amazon vs eBay
Side hustle ideas come to life when they are shown to work by those who live and breathe them daily.
Since we kicked off FJA, we've grown a truly supportive community of Dream Makers of a similar mindset.
One such community member is Adesanya Ayeni, a health care professional with side hustle expertise in the market places of Amazon vs eBay.
Given his raw practical knowledge and experience of each platform as a regular user, we asked him to contribute to the blog and help others better understand them.
He also runs his own blog over at Abundance Aware and writes about various aspects of money from his experience. Do check him out.
Ok, let's hand over to him now to share more on selling on Amazon vs eBay.
Table of Contents
SELLING ON AMAZON VS EBAY
Two of the world's biggest eCommerce platforms are Amazon and eBay.
In this post, I am going to compare selling on Amazon with selling on eBay.
My journey of selling on Amazon began in the summer of 2017. The motivation for selling a physical product online came after I turned 40 in 2017.
Like most people who like generating additional sources of income, I was searching online for how to create an additional source of income.
My first product was sold on eBay before I transitioned to Amazon where I am leveraging their Fulfillment By Amazon (FBA) programme.
I will talk more on Amazon FBA later on in this post.
I did not stop selling on eBay after I found Amazon FBA. However, most of my eCommerce sales come from Amazon.
Amazon FBA and eBay have helped me to create an additional source of income.
If you are considering selling a physical product online. It is a good idea to start with the Amazon or eBay platform.
I now have over 3 years experience of selling on Amazon and this article will be comparing selling on Amazon and selling on eBay.
Amazon fees range between 15% to 28% depending on the product and category. eBay fees typically don’t go beyond 15% with PayPal inclusive.
eBay final value fees on the item you sell are 10% (on the item price), plus PayPal fees at 3.4% and 20p. PayPal deducts their fee when you receive the payment, but eBay bill you monthly for their fees.
eBay is now proposing their own managed payment system which will be more affordable than PayPal. It has already been rolled out in the US and will soon be available in the UK by the end of July 2020.
Using eBay's managed payment system means sellers will be able to save money on fees they pay for selling on eBay.
When you compare Amazon fees to eBay fees, it is very clear that the eBay fee is lesser than Amazon fees.
The difference between Amazon and eBay fees can be seen in the image below.
Example of a particular product sold on Amazon and eBay for the same price. Using a profit calculator to calculate the profit for both marketplaces.
The net profit on Amazon is £25.75 while the profit on eBay is £27.14. That is a difference of £1.39. You might be thinking that is not a lot.
Assuming you sell 500 units of the product which is possible, that will be £695 more in the pocket of the eBay seller compare to the Amazon seller.
It's easy to conclude that selling on eBay is more profitable. However, there is more to selling physical products than just the profit as you will soon find out if you stay with me.
FULFILMENT OF PRODUCT
When customers buy your product, the product needs to be sent to them. Amazon has a program called Fulfilment by Amazon.
This program allows you to send your products to an Amazon warehouse so they can help you ship your products to customers.
eBay does not have this. With eBay, you have to send the products via post office or other courier services to the customers.
Amazon FBA is the biggest reason why a lot of sellers love Amazon. I love selling on Amazon for this reason too. It kind of automates the whole process.
For someone thinking about starting an eCommerce business and worrying about where to store their products.
You can leverage the Amazon FBA service. You'd simply send the products to Amazon and they take care of storage, delivery, customer service, and returns handling.
Imagine having 500 units of a product to sell. If you sell on eBay, you will need to go to the post office multiple times. If you choose the option of the courier to pick up, you will have to contact them multiple times.
With Amazon FBA, you only send the product to them once and the rest is automated.
It even gets better if you have your own private label product. You can send the products straight from your manufacturer to Amazon.
Your manufacturer can be anywhere in the world. On several occasions, I have sent pallets of products from my manufacturer's factory straight to Amazon Fulfilment Centres.
It is worth mentioning that the Amazon FBA service is not only products you sell on Amazon.
You could be products you sell on other eCommerce marketplaces like eBay, Etsy or others. When a customer places an order you can use Amazon to fulfil your eBay order.
They call this the Multichannel Fulfilment Service.
Creating a seller account to sell on both eBay and Amazon is free.
However, we all know that paid services in most cases offer more values. For people selling as a hubby, a free account on Amazon or eBay is fine.
For anyone serious about selling to create an additional source of income, it makes sense to pay for seller subscription, especially on Amazon.
eBay's basic subscription is £25 (excl. VAT) per month and Amazon charge the same amount for their professional seller account.
The eBay subscription comes with access to an analytical tool called Terapeak which gives you real eBay data for researching new products.
Amazon also has its Brand Analytic tools but you must have a brand registered on Amazon to use it. eBay's Terapeak shows you how many units a particular product has sold while Amazon's Brand Analytics will only show keywords customers are using to search for products i.e ‘Search Terms'
If you don’t sell a lot of products, the subscription fee won’t make financial sense in both marketplaces.
Amazon has two account types
- Basic Account – Free (sell a little)
- Professional Account (sell a lot)
As for eBay, there are four account types
- No Shop (Pay as you sell)
- Basic (reduced fees and tools)
- Featured (more free listings, eBay packaging supplies, free international listings)
- Anchor (unlimited fixed-price listings included and increased benefits across the board)
You have the option to be a private seller or a business seller on both platforms.
CUSTOMER BASE / WEBSITE TRAFFIC
Amazon Prime is one of the features that give Amazon its edge over eBay.
As a seller on Amazon, you have the amazing opportunity of selling to Amazon prime members. These are loyal customer database Amazon has built over the years.
You might be wondering what Amazon Prime membership has to do with selling on Amazon. Prime members pay subscription fees primarily to benefit from unlimited premium delivery of products they purchase on Amazon.
When people pay for a service, we often want to use it to the maximum. For these reasons, prime customers are likely to do the majority of their shopping on Amazon.
By selling on Amazon, you benefit from the huge number of shoppers who are devoted to shopping on Amazon.
In the UK, there are an estimated 15million Amazon Prime subscribers. In the US the estimate is around 112 million subscribers.
Amazon is one of the biggest eCommerce platforms in the world with global prime members estimated as 150million.
Prime is one of the strategies Amazon uses to beat its competitors in the eCommerce sector.
It's a huge advantage that Amazon has over eBay.
Personally, I sell more products on Amazon than on eBay.
From my experience of selling on both platforms, if I sell 2 units of a particular product on eBay per day. On Amazon, the same product will probably sell 10 units per day.
There are some specific types of products that might do better on eBay than on Amazon but generally, Amazon tends to have more traffic going to their website than eBay.
The revenue Amazon generate from their eCommerce activity is evidence that suggests how much opportunity is on Amazon compared to eBay.
According to the report on eBay investor news, eBay's first-quarter revenue in 2020 is $2.4b. Amazon revenue in the same first quarter of 2020 is $75.45 according to the CNBC report.
By Selling on Amazon, you stand a chance to get a bit of the Amazon big pie.
I think one of the revenue generation strategies of Amazon is Pay Per Click (PPC) advertisement.
The cost of advertisement on Amazon is very expensive when compared to eBay.
On eBay, you are only charged if the customer buys your product while on Amazon you are charged as soon as a customer clicks on your product regardless of whether they buy or not.
Advertisement on both platforms can be very useful to get more customers to see your product. However, it has to be done with caution because of the cost.
There is the flexibility of choosing the price you are willing to pay to let Amazon or eBay show your products to more customers.
Advertising here is like an auction and is simply based on the highest bidder. Let's say you are selling a ‘dog lead' and you are willing to pay 35p per click for your ad.
If another seller who also sell a ‘dog lead' is willing to pay 50p. Their product will be put in front of more customer than yours.
Amazon PPC is based on price e.g 50p while eBay product promotion is based on a percentage of your product price.
When you list a product on eBay, you almost own the listing and no one else can sell on the same listing.
This can be good if you are a seller because you have control over the listing.
Amazon, on the other hand, they have a single listing policy for each product. Multiple sellers share the buy box on Amazon.
The Amazon buy box is the white box on the right side of the product details page. Shoppers can click “Add to Cart” or “Buy Now” to purchase a product.
In essence, you can have multiple listings for a particular product on eBay while on Amazon you can only have one listing for any product.
On Amazon, if you create a listing, you don’t own it. Any other seller who has the same type of product can list them under your listing.
While Amazon single listing policy might not be good for customers, it offers a good online shopping experience.
Customers will not need to scroll through a long list of the same product when trying to decide which one to buy.
Each seller creates a listing for their product which means there can be multiple listing for a particular product.
For sellers who sell established brands product on Amazon through Online Arbitrage, Retail Arbitrage and Wholesale.
Single listing policy on Amazon helps them save time on listing products since most products already have listings created on Amazon.
To put your product up for sale on any online platform, you need to list it. The product page is useful in giving customers a good impression of yourself and your product.
While most customers don’t care too much about how fancy your product or storefront looks.
Some products are expensive and customers might be sceptical if the product page doesn’t look professional. Aesthetics sometimes play a role in selling a product.
On Amazon, to have a well-designed professional product page with coloured fonts and different types of font size and type, you will need to be brand registered.
And you will need a trademark to become brand registered.
On eBay, you can do almost everything you want to make your product page look the way you want it to look to please customers.
PRODUCT QUALITY AND PRICE
Amazon has positioned its brand to a stage where they have a lot of integrity and trust. They are known to be customer-centric.
Amazon customers trust them as a place to buy high quality and premium products. Though this is not the case with every product sold on Amazon.
If I have to compare Amazon with eBay in terms of the quality of products available to be purchased.
I will say Amazon is still a platform that people trust to buy original and authentic products.
As a seller on both platforms. I can confidently say that there are more restrictions on Amazon for sellers compared to eBay.
On eBay, almost anyone can sell anything. On Amazon, you will need to jump through a lot of hoops to sell some specific brands and products.
Because customers trust Amazon to provide them with quality products, they don't mind paying more to buy quality products.
Prices of products are not always higher on eBay than Amazon. However, the price of the majority of products is higher on Amazon than eBay.
You can sell used and new products in both marketplaces.
But, used items are more popular on eBay than Amazon. If you want to validate selling as a side hustle, eBay is possibly the best place to start.
If you have random things you no longer need. eBay is a great place to get rid of your unwanted items.
This does not mean that Amazon does not allow sellers to sell used items on its platform. Personally, I prefer to use eBay to sell used items.
In fact, I sell my customer's returns from Amazon on eBay. If the product box has been opened, I leverage eBay to sell them as used.
eBay allows sellers to auction their product whereby you go for the highest bidder. There isn’t any auction feature on Amazon.
When you place an item up for auction, customers will notice a ‘place bid' button next to a box for entering bids along with a ‘current bid' price.
Items placed on auction are available for a given amount of time. When the time elapses, the item is declared as ‘sold' to the highest bidder. Just like a normal auction.
eBay gets a cut of 9% of the selling price to a maximum of $50 when your auction sells.
COST OF LISTING
With individual basic selling account on Amazon, you can create listings at a time by matching your products to existing pages or creating new pages in the Amazon catalogue.
This comes with no additional cost.
Private sellers can list for free on eBay.
Private sellers are allocated 1,000 free listings monthly, charges of 35p for each new listing created will be applied after the monthly allocation has been used up.
eBay sellers with eBay shop (monthly subscription) are given 1000 free listings per month and 100 shorter one or three-day listing. Any listing after this will attract a 35 p charge each.
There isn’t a rule for which platform to choose as the place to start selling physical products.
My suggestion is to start on one marketplace, and after mastering the marketplace, you can then expand into multiple platforms.
The skills learnt in one marketplace are transferable to the next platform.
Using myself as an example, the first-ever product I sold online was sold on eBay. I later moved to Amazon.
Some people only sell on eBay and have a striving business. Some people focus only on Amazon and having a profitable business.
Each one of eBay and Amazon has its advantages and disadvantages. Your job has is to understand them.
I sell on both platforms with different reasons and strategies. There is no rule and winner. So if you are interested in selling physical products, either new or used, you can start with any. Because they are both a great marketplace that can help you earn that extra income.
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Do you currently sell on either Amazon vs eBay? Which is your preferred platform and why? Please share below as a comment
Do please share this article if you found it useful, and remember, in all things be thankful and Seek Joy.
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