Happy Birthday, eBay! (Or, eBay versus Amazon)
Valued at 40 billion dollars, eBay is a rather small company among the Internet giants. Considering that Amazon was once smaller than eBay, with its whopping current value of 1.6 trillion dollars, you’d think eBay was not not even playing in the same league.
Taking a deep dive look into eBay, however, you may be surprised. If you aren’t an eBay regular, the initial impression is a little bit like visiting Amazon. With eBay’s daily 250 million searches and the extensive ability to build shops, eBay is certainly not a moldy oldie that should be pushed to the side.
eBay versus Amazon
If you are considering selling your products on an online marketplace, you should first compare the attributes of eBay and Amazon.
- Amazon: There is one HUGE difference between the two—competition. If you sell on Amazon, Amazon competes against you. They use the small vendors to test the market and identify opportunities and trends. Then Amazon moves in and undercuts them as soon as they see an opening. Vendors have reported that if they have a good moving product, Amazon usually moves in within 6 months to take over. Percentually, Amazon is selling less every year compared to third party vendors (74 percent in 2007, down to 48 percent in 2018); but, this is their strategy. They cherry pick and ensure they keep focusing on the best moving and lucrative products.
- eBay: eBay, on the other hand, does not compete with its sellers at all. Though eBay still has the reputation tinge of an online garage sale, 81 percent of items sold on eBay are actually brand new.
Platform to build and sell items
- Amazon: Amazon’s platform offers good functionality, but maintains a long list of products that are restricted from sale by third party sellers. This does not support building your brand.
- eBay: eBay also offers very good and extensive shop building abilities, but with the ability to build your brand within the eBay ecosystem. The platform itself is better than Amazon’s platform and provides more options to sell. Best of all, you only compete against other sellers, not against eBay itself.
- Amazon: Amazon has approximately 300 million monthly users. The typical Amazon shopper is willing to spend a little bit more money in exchange for getting quick shipping. They expect low prices, want to be sure they don’t overpay; and, overall are mostly value-based buyers.
- eBay: eBay has approximately 167 million monthly users, but their users care more about the quality of service and the product itself than brand names. The typical eBay buyer expects rock bottom prices.
- Amazon: Internationally, Amazon maintains 12 website domains and is making approximately 33 percent of its revenue internationally.
- eBay: eBay maintains 25 website domains internationally and is generating approximately 57 percent of its revenue outside the USA.
Fees: which is cheaper?
- Amazon: Though it is cheaper to sell on eBay, in all fairness, Amazon provides shipping and other services that eBay doesn’t provide, which costs Amazon money.
- eBay: Selling on eBay is cheaper than on Amazon. Your profit margin is approximately 5 percent higher with eBay than with Amazon, which is significant. In the end, it depends on what type of business you (want to) have. If you are okay with doing the shipping yourself and if profit margin matters more to you than additional fees, then eBay is your better option.
The Bottom Line
One is not better than the other. Just like with fees, it all depends on your business—the one you have and the one that you want to have for the future. Measuring the following criteria will help you decide which platform is best for you.
Choose eBay if the following criteria apply to you:
- ou don’t need another company to manage your shipping and storage
- You want the absolute cheapest marketplace in terms of fees
- You want to sell internationally
- You want to build a brand within the eBay environment
- You sell collectibles, used or brand name items
Choose Amazon if the following criteria apply to you:
- You want to have a full service environment that includes shipping and handling and you are willing to pay extra fees for lower margins in exchange
- You are not interested in selling internationally
- Building a brand within Amazon is not important to you
- You are not selling items from Amazon’s restricted list and all your items are new
- You are not bothered by the fact that Amazon might be undercutting your product offerings
We’ll be paying more attention to eBay after this comparison, and we hope we’ll see eBay’s 50th birthday!