Each of these platforms have their advantages and disadvantages—which means some will work better for certain people, while other platforms work better for others.
Two popular platforms that you can choose from when you decide to make the jump into eCommerce are Amazon FBA and eBay.
Let’s take a look at each of these platforms and why you may or may not want to consider them.
Understanding Amazon FBA
FBA stands for “fulfillment by Amazon.”
Essentially, the way Amazon FBA works is like this:
Business owners purchase merchandise and then store it in Amazon’s warehouse. The merchandise is then listed on Amazon for purchase. When a customer purchases the product (or products), Amazon fulfills the order and ships it to the customer.
It’s actually pretty simple!
Why Amazon FBA?
Amazon FBA has some major advantages. Below are three...
1. It’s Great For Higher Quality/Higher-Priced Goods
People have very high expectations from their purchases on Amazon. Because of this, if you have a high-quality product that you want to sell, Amazon is a great place to do so.
Consumers on Amazon also expect to pay a little more than on other sites (like eBay) because they know they're going to get quality, brand-new goods (unless they specifically choose a used version of the item).
So, if you are selling quality goods—even if they are a little more expensive—Amazon is a good place to sell them.
2. Brand Recognition
At this point, the instinct of a lot of consumers is to jump on Amazon before anything else to see if the item that they're looking for is there.
People like and trust Amazon, and they assume that when they purchase from Amazon, they're going to get what they are looking for.
This sort of trust allows businesses that sell on Amazon to enjoy the brand recognition that comes from selling through their platform.
If a customer sees a product that’s on Amazon, a lot of the time they won’t even check the specific seller—because they trust Amazon as a brand.
This means less work trying to win over new customers.
3. Variety of Goods
One great thing about selling on Amazon is that you can sell a large diversity of items. This includes everything from $10 squeeze toys to $400 watches.
No matter what goods you are selling—as long as they are high-quality and legal—you can probably sell them on Amazon.
Cons of Amazon FBA
While Amazon FBA has some major advantages, there are also some disadvantages that you’ll want to consider…
1. Expensive Upfront Costs
If you're buying a bunch of merchandise in bulk, you're going to have to spend a lot of money upfront—especially if you're buying enough to justify paying Amazon to warehouse and fulfill the goods for you.
While you can negotiate a bulk rate, you'll need some startup money if you are using Amazon FBA.
2. Responsibility For Bulk Purchasing Or Manufacturing
Amazon FBA also doesn’t do the purchasing for you. Instead, you’ll need to find your own suppliers and purchase from them.
The same goes for if you want to manufacture your own goods—which will also lead to more money being required upfront.
3. A LOT Of Upfront Work
Finding your supplier, having your goods shipped to a warehouse and building your business infrastructure will be a lot of work upfront—there’s no real way to avoid it.
While these cons can be pretty big, the pros will far outweigh them—especially when you consider how much money you can make through Amazon FBA!
Now that we’ve discussed the advantages and disadvantages of Amazon FBA, let’s take a look at eBay.
Here are some of the advantages of selling goods on eBay…
eBay is—at its core—an auction site. Because of this, people are able to sell their goods at a decent profit…as long as the customers bidding on the goods are willing to pay more for them.
This makes eBay a great place to sell rare or difficult-to-find goods.
2. Great For Used Goods
Unlike with Amazon, most people expect to get something used when they search on eBay.
So, if you have a lot of used goods or have access to used goods that you can resell, eBay is a great option.
3. Great For Beginners
eBay is pretty straightforward and easy to use. This makes it a good choice for people that are just starting out with eCommerce and getting used to running their own online business.
Cons of eBay
Below are a few of the cons that you’ll run into when you are selling through eBay…
1. Lower Levels of Trust
There is a VERY low bar for what you can sell on eBay and what condition you can sell it in. Because of this, people don’t trust eBay sellers the same way that they trust a company selling on Amazon.
2. NO Warehousing!
If you want to sell in bulk on eBay, you're going to have to find somewhere to store your goods!
On top of that, you’ll need to package and ship your orders—or you’ll have to pay a company to do that for you.
3. Lower Sales Prices (On Average)
Unless you're selling some big-ticket items, you'll probably be making less money per item than you would with Amazon. This mainly comes down to the prices that eBay shoppers are used to paying, as well as the fact that a lot of items being sold on eBay are used.
Amazon FBA Or eBay?
If you're new to eCommerce and don’t have a lot of money upfront, eBay may be a good way to dip your toe in the water and get started.
If you're looking to build more of a business and have some capital upfront, Amazon FBA may be your best bet.
(Note: Want to learn more about setting up a successful eCom business? Check out our free course, eCom Millionaire 101, with expert Dan Dasilva.)