Selling Products Online – Amazon Seller Central or eBay Auctions?

As an eBayer since November of 1999, I had the chance to watch eBay grow from a very basic auction site with hardly anything for sale and even less buyers to a full-grown e-commerce super site. Not only do they still offer standard auction style sales, but now you can open your very own eBay Store and populate it with as many items as you see fit.

And then there’s Amazon Seller Central. For years now, Amazon has opened its doors to sellers wishing to unload their new and used products to anyone wishing to buy. I have recently started using Amazon for this very purpose, so today I’ll explore the basics of both.

eBay Auctions

Over the years, I’ve mainly used eBay as a means to sell old “junk” that I didn’t need, but didn’t want to throw away. From time to time, I’ve found some really great stuff to buy on there as well. Today, I’m in a fairly unique situation where I have tons of products to sell and have continued to use the eBay platform as my main sales tool. However, today’s eBay is much different than that of yesterday’s. Now you have higher fees—fees for every custom detail, a fee for using PayPal (and you’re forced to), fees for shipping charges, final value fees (on auction items) and a fee just for listing the item. After all is said and done, eBay takes quite a bit of your profit margin.

Of course, one can’t really complain because unlike your local neighborhood garage sale, eBay is putting your item(s) in front of millions of potential buyers. As a result, you either accept that you are paying a premium to sell your item and take a slight loss or you start the bidding high and hope buyers will subsidize your costs.

Here’s how eBay fees work:

  • Insertion fee – Your first 50 items per month are free, but after that, you’re paying a fee from $0.10 to $2.00 depending on your starting price or $0.50 for a fixed priced item over $0.99.
  • Listing upgrade fees – Depending on whether you want your title to be bold, have a second category, have your item be featured or have a 10-day duration, you can expect to pay from $0.35 to over $4.00.
  • Final value fees – If your item is sold, you pay 9% of the final price (final bid + shipping) up to a maximum of $100. eBay separates the 9% charge on the final value fee and shipping fee, so it always looks like you got charged twice.
  • PayPal fee – Just to use PayPal (and you have to these days), it’ll cost you 2.9% plus $0.30 for every transaction.

To generate a proper test for eBay, I looked back on the last eight items I sold and found some surprising numbers. Among these items were five Sony Blu-ray players, an HP laptop and two Adobe software products. I created an Excel spreadsheet that took into consideration the cost paid for these items, how much I sold them for, how much the shipping costs were (charged to buyer and actual) and all fees mentioned above. After all the math was done, I ended up with:

  • Total sales: $1,242.86
  • Shipping charged to buyer: $170.46
  • Actual shipping costs: $164.98
  • Total fees: $165.29
  • Cost of products: $1,100.00
  • Total profit: -$16.95

As you can clearly see, eBay won this round! It should be noted that I started every auction at $0.99. The tough part about eBay is that it was originally designed to be an auction-only site, therefore the visitors going there expect to win items at the lowest bid possible. You could open an eBay store and start selling fixed-priced items, but then you run into the real possibility of not ever selling your item.

And that brings us to Amazon Seller Central…

Amazon Seller Central

The main difference between Amazon and eBay is that Amazon only allows you to sell products at a fixed rate. The upside to this is that you don’t have to search high and low to find out what your price point should be. Simply search for a product and instantly you’ll see a “11 used from: $XX” or “11 new from: $XX”. These links take you to the secondary Amazon marketplace where individuals just like yourself can sell any item they want!

This is where you get to play the retail game…a never-ending competitive standoff with your fellow sellers all in hopes of getting the most for your item while selling it fast. The main drawback with this is that your item won’t sell in 7 days or less like it will on an eBay auction. Your item can sit there forever if nobody wants it. I’ve had music cds on Amazon for months now priced at one cent and they still haven’t sold!

But let’s see how Amazon stacks up to eBay. First of all, Amazon offers two programs under their Amazon Services banner that can dramatically change how much money you make selling.

Amazon Seller Central

Selling for “free” on Amazon requires you to pay $0.99 per item sold plus percentage-based fees on each sale and finally a closing fee. The list for these fees is quite long, so I won’t get into all of them here. However, some of the more common fees are:

  • Personal computers: 6%
  • Video game consoles: 8%
  • Music: 15%
  • Kindle accessories: 25%

The range is from 6% to 25% and anything that is not included in the exhaustive list at Amazon’s website is a standard 15%. The closing fees are set charges like $0.80 for music or $1.35 for books in most cases. Other items such as computers, Kindles, toys and sporting goods all cost $0.45 plus $0.05 per pound! These fees change depending on the shipping method chosen by the buyer. However, Amazon credits you for shipping so in most cases, you get enough back to cover the actual shipping cost and some of these fees. On the other hand, there are times when you might be out a dollar or so because of shipping charges.

My two cents

There are advantages to selling on both sites, but it all comes down to the item you’re selling. For example, if you have a music cd to sell, eBay might only find you a buyer or two who happen to be looking for that very album at the time you have it listed. Plus, you have to compete with the many others who are likely listing the same album. On Amazon, you still have the competition to worry about, but the main difference is that you only need to list the item once and it stays up until it’s sold. This way, every time someone comes to Amazon looking for your album, you have a new chance of selling it. Since you can price your item at or below a competitor’s price, you have a better chance at scoring a buyer.

Storing items is one issue that Amazon creates for you. Since you never know when your item will sell, you have to sit on it indefinitely until that happens. With eBay, your item WILL sell if it has at least one bid…you just need to wait for the clock to count down. Another issue with not knowing when your product will sell is that you might be away on vacation when you get an email telling you to pack up your item and get it sent off to the buyer! At least with eBay, you know when you should be around to finalize the sale.

As I said before, I use both websites for very different reasons and they both provide different results at different costs. Find which one works best for you or if you don’t mind paying upwards of 12% in fees and other charges, try your luck at your local garage sale.

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