eBay vs. Amazon – Part 1 – Comparison of Selling

In previous posts (shown at the links below), I briefly talked about how one of the small businesses I have started over the years was an eBay resale business, and that I think eBay is a very effective medium for people to make extra money around the house by selling their unused belongings.

How to Start Your Own Business

Sell Your Unused Items on eBay

However, in these posts, what I did not address was the fact that internet sellers definitely have a choice for where they want to sell their items. Since I have had a significant amount of experience selling on eBay and Amazon, I figured I would devote a series of postings to seeing how eBay and Amazon stack up against each other.

Executive Summary

In short, my experiences have shown that overall, eBay.com is a much more profitable way to sell your items than Amazon, due to Amazon’s high fees. Additionally, Amazon has structured itself to seemingly put buyers first, instead of eBay who you can tell really makes every effort to keep sellers happy.

So, that is the overall message I am wanting to deliver to you all. Now for the more detailed look at the way Amazon and eBay work, and the cost structure for each. First, let’s take a look at eBay.com.

eBay.com

• Overall structure
  • On eBay, items are listed by default in an auction format. This means that you set a minimum price, and then, depending on the number of bidders you receive, the price can go up (until the listing ends).
    • The auction format has the added advantage of introducing the human urge to buy in to the bidding process. Often, people will bid the price higher just because they “want” the item very badly.
  • eBay also offers a “Buy It Now” feature, which is a fixed price listing, for an extra fee. Generally, I prefer to buy items listed with Buy It Now and sell items in the normal auction format.
• Listing term
  • Default listing term is 7 days. You can pay extra for a 10 day listing.
• Pricing
  • Pricing can either be determined using the auction format or Buy It Now format (both discussed above).
  • You are allowed to have more control of shipping/handling prices that you charge as well so don’t lose money on that front.
• What fees do you pay?
  • There are really 3 categories of fees when listing an item on eBay. See the following link for detailed information from eBay.com –  eBay.com – Fees
    • Listing fee – Charged at the time when you list your auction for your item. Charges can range from $0 to $2, depending on the value of your item.
    • Final-value fee – 9% of the sale price – Dang!!!!
    • Paypal (payment processing fee – this fee is incurred when you use Paypal.com to accept payment for your item that you sell. It is pretty much obligatory to use Paypal, since every one else does.) – 3% to $0.30 – see the following link for more details – Paypal.com – Receiving Payment Fees

Amazon.com

**See the link below for a summary of selling fees and format on Amazon.com

Amazon.com – Selling on Amazon

• Overall structure
  • When selling on Amazon, you simply enter which product you want to sell, set the fixed price, record the condition, and click “Yes,” and your product is listed on Amazon.com
    • This is actually one of the best things about Amazon – the fact that it takes almost no time at all to list an item. On the other hand, with eBay, new listings can be very time consuming to create.
• Listing term
  • Your item will be listed on Amazon until it sells, up to a 60 day maximum period.
• Pricing
  • Prices on Amazon are fixed by the seller. This is one thing that is very tough on Amazon because if your product is not the lowest price, you will most likely not make the sale.
  • Additionally, Amazon does not allow any wiggle room when it comes to setting prices for shipping. In other words, if you sell a book on Amazon, the maximum allowable for you to charge the buyer is $4, irregardless of weight. (I guess you better forget that Priority Mail!)
  • Another pain point I have about Amazon is that it doesn’t credit you with your money from an item sale until after you actually enter the shipment tracking code in to a field. So, again, this is very good if you want to be super buyer friendly. But, not the best for pleasing sellers.
• What fees do you pay?
  • Since payments are received directly from Amazon.com (no Paypal involved) and Amazon does not charge listing fees, there is only 1 type of fee involved with Amazon selling.
    • Closing fees
      • You will be charged $0.99 on each sale that closes, irregardless of price. This means that you MUST make at least $1 of profit on each sale in order to make it worth your while.
      • Additionally, you will be charged ~15% closing fee of the final sale price. On top of that, many of the most common categories (such as books, software, video games, and DVDs) involve ANOTHER $1.35 fee. Highway robbery if you ask me!

Selling Example

Now that I’ve walked you all through the various differences between selling items on Amazon and eBay, let’s go through an example to see how the fees compare for a hypothetical sale of a used Avatar movie DVD.

On Amazon, in order to sell your DVD, you would have to price it at $12.15 + $2.98 shipping in order to have the lowest price. Let’s now calculate what fees you would pay for selling this, and how your profit shakes out (we’ll assume that shipping costs exactly what you received from the seller):

$12.15 sale price

-$0.99 closing fee

-$0.80 additional DVD/Video closing fee

-$1.83 15% value closing fee

——————————-

= $8.53 remaining profit – you paid 29.7% of the sale price in fees

On eBay, the last used Avatar DVD sold for $13.99 + $3.00 shipping (can be seen using the completed listings feature). Let’s now calculate the total fees and resulting profit, assuming that shipping costs you exactly what your buyer paid you.

$13.99 sale price

-$0.50 listing fee

-$1.26 final value fee of 9% of sale price

-$0.81 Paypal fee

————————————

= $11.42 remaining profit – you paid 18.4% of the sale price in fees.

So, as we can see by the previous example, you end up paying more than 10% more in fees with Amazon than eBay. This is mainly due to the fixed fees that Amazon applies, whereas eBay’s fees are mostly all % sale price/list price based.

Obviously, it would be much more profitable to sell your Avatar DVD on eBay!

When would it be better to sell your items on Amazon?

While we have seen that in general, it is better/more profitable to sell your items on eBay, there are several times when it would be a better idea to sell your items on Amazon. These situations are summarized below:

• When you don’t have much time to list items and just want them to be sold/moved out of the your house
  • Since Amazon’s selling listing format is much less personal, it is also much quicker to list items. Feel free to take advantage of this!
• When you want to list item for a long time without paying any extra
  • Since Amazon offers the 60 day listing period, this can sometimes work to your advantage.
• When your item on amazon is selling much higher
  • Sometimes, you will find that an item you are wanting to sell is going for A LOT more on Amazon than eBay. Definitely take advantage of this price parody if you spot it!
  • As a rule of thumb, I always check both Amazon and eBay’s going sale prices for a item, before committing to selling it on one site or the other.

Well, time for dinner for me! I hope this post helps you understand eBay, Amazon, and how the two compare. Please let me know if you have any questions.

To view Part 2 of this series, click the link below:

My Money Blog – eBay vs. Amazon – Part 2 – Comparison of Buying