Selling on Amazon vs eBay & other Marketplaces
So you are finally ready to dive into selling on Amazon. You will find a lot of information online about selling on Amazon but we are going to go over the biggest advantages and disadvantages of selling on Amazon.
In the world of online marketplaces, Amazon reigns supreme. It is one of the easiest marketplaces to list, scale and manage inventory. Amazon also boasts over 304 Million Active users that are ready to buy your products.
Other marketplaces such as Ebay only have half the amount of active users and are far less seamless in their product listing capabilities.
While Amazon boasts great accolades, it is still necessary for a seller to see if selling on Amazon is a good fit for their business.
Let’s take a look at some of the advantages and disadvantages of selling in the Amazon marketplace
If you look at the price of items on Amazon compared to websites like Ebay you will notice that the selling prices on Amazon tend to be higher.
So why in the world would people buy from Amazon when they could get it for less on eBay?
One word: CONVENIENCE
People who shop on Amazon mostly shop there for convenience and because they trust Amazon’s customer service. This is great for you as a third-party seller because you can piggyback off of Amazon’s world-class reputation. This allows you to make more profit off of your items than you could in other online marketplaces.
The idea of fulfillment centers is nothing new in the E-commerce world but when it is mixed with Amazon it is a match made in profit heaven. Amazon FBA allows sellers to package and send their goods into Amazon fulfillment centers around the US. You just add your products to your inventory and set your price. From their Amazon handle everything else.
One of the biggest benefits of Amazon FBA is the amount you save on shipping. You can package a large amount of product and send it to the Amazon FBA Fulfillment center at the shipping rate that Amazon gets. Amazon is the largest shipper in the world so they have the best shipping rates out there. Once your products are received by Amazon they will box and ship out your items at no additional cost to you.
No extra payment fees
One great thing about selling on Amazon is there are no extra fees that are charged for payment processing. On marketplaces like eBay, you are charged selling fees as well as an additional 2.9% plus .30 cents for a payment processing fee. This can be tricky especially for new eBay sellers as they do not know exactly how much they are going to be charged in fees.
Amazon uses their own payment processing system so the fees that Amazon charges you as a final value fee are the only fee that you have to worry about
Here’s more information on Amazon’s seller fees.
Free shipping for Amazon Prime members
One of the biggest advantages of selling on Amazon is being able to offer free two-day shipping to Amazon prime members. In the past the only way to qualify to offer free shipping to prime members was to operate through Amazon FBA but recently they have started allowing third-party sellers to utilize this shipping service if they qualify. On Amazon people love fast and free shipping and they’re willing to pay more for the actual product to get their items to their house quicker.
This is a BIG Competitive advantage!
One reason Amazon is such a popular company in the e-commerce world is because they put their customers first no matter what. While this is usually a good thing it causes a lot of trouble for sellers because no matter whether or not the customer is right or wrong they mostly always get their way. This is an issue both from a fraud standpoint as well as in cases where customers who simply change their mind about wanting a product for no reason.
No Customer Mining
One great thing about marketplaces like Ebay is that you are able to get a lot of information about the people who are buying your products. On Ebay you can get your customers name, address, email address and sometimes even their phone number which is a great tool for remarketing to them and getting them to purchase from you directly.
Amazon controls the entire Customer relationship which means that you only receive enough information to ship your products to the customer and nothing else.
Strict Selling Metrics
Amazon is infamous for shutting down seller accounts that underperform it’s Selling Metrics. While this isn’t a completely bad thing it causes historically good sellers to have their account suspended and sometimes banned permanently.
Amazon is very cautious with Sellers who start to sell high volumes of products. You would think Amazon would accept rising sellers whole heartedly but they are very skeptical when it comes to authenticity and quality of products. This makes it necessary to slowly grow your business to avoid suspension…
Make sure to read over Amazon’s Seller Performance Measurements.
Gated Categories and Products
One of the most frustrating parts of selling on Amazon can be dealing with Gated Products and Categories. Say you found a great source for a profitable product and you go to list it on Amazon and find out the product is Gated. When a product is Gated it means that in order to sell that product you must be approved by either Amazon or by the Manufacturer.
While this is frustrating, it does have a logical reason behind it. Many of the categories that are Gated are done so because the items sold in that category have a quality standard that has to be met for the good of the customers. Most products and brands that are restricted are done so because the items are very popular and are highly counterfeited items.
Learn more about Amazon Gated Categories & Restricted Products.
Overall Amazon is the best online marketplace to sell on. The biggest mistake people make is not knowing how to play by Amazon’s rules. As long as you know what you are getting into and prepare for it you will do great!