As Amazon makes it way to being the most valuable company in the world, we all know that selling on Amazon is the thing to do. But it amazes me how most people still ignore eBay. Yes, eBay: that little company from the 90’s that people used to make a little bit of extra cash from by buying and reselling items they picked up at garage sales. Believe it or not, eBay is still relevant today, even for private labelers.
It is true that Amazon is a grapefruit and and eBay is a pea. Amazon’s sales are about $135billion whereas eBay’s are just a fraction of this at $9billion (and as we’ll see, strictly from a North American marketplace perspective it’s even less than this). However, there are still a lot of advantages to selling on eBay. Aside from the boost to your sales that eBay can give you, I’ll show you four other reasons you need to be selling on eBay right now.
The Real Size of the eBay Marketplace
How big is the eBay marketplace? Well, the answer is that it’s about the same size as it was 5 years ago. eBay’s marketplace sales have been relatively flat for years now. So that means if you were selling on eBay in 2012 (when the Amazon third-party marketplace was still in its infancy) your eBay sales probably haven’t changed too much. However, while eBay has bee flat, Amazon has doubled in size. Basically, ecommerce is growing like crazy and Amazon is taking ALL of that growth.
eBay vs Amazon growth
Today, eBay is approximately 5% of Amazon’s marketplace sales (marketplace sales basically being their retail sales not including other services like eBay’s Stubhub or Amazon’s AWS services). So you can look at this in one of two ways. Either, wow that’s a minuscule amount of sales OR wow that’s 5% growth I’m leaving on the table.
Pros and Cons of eBay
Before we get into the five reasons you need to be selling on eBay immediately, let’s review the pros and the cons to eBay.
Advantages of eBay
- You can brand your store/product
- You get the customer’s email information – higher lifetime value
- More forgiveness for lower quality products
- Some niches still have very large audiences
- Slightly lower commissions
Disadvantages of eBay
- Much smaller audience
- No eBay fulfillment offered
- More time consuming to launch listings
- Non-transparent listing fees
The biggest advantage of eBay it is not nearly as restrictive on branding and protecting buyer’s information as Amazon is. Branding is a big component of eBay. Your eBay listings and eBay store should more or less reflect the branding of your website. And while eBay technically forbids advertising outside URLs, it’s well known many sellers advertise their URLs through email addresses, i.e. dave@MYCOMPANYSWEBSITE.com, watermarks, and just blatant advertising of the URL in headers and such. My former company did it for years and never so much as got a warning.
The biggest disadvantage to eBay is, of course, the small audience size. As we’ve gone into here, the eBay audience is about 5% of Amazon’s audience. Compounding this, eBay is a lot more time consuming for a couple of main reasons. First, there’s no fulfilled by eBay option. You can, of course, ship non-Amazon orders from Amazon FBA but it’s not nearly as seamless as a true Fulfilled by Amazon listing. Second, setting up and maintaining eBay product listings are just a lot more time consuming. eBay has forever been stuck in that awkward no-man’s land of not quite being an auction only site and not quite being a real Buy It Now retail site. Listings expire and have to be relisted, you can’t really use variants, listings require a lot of manual HTML editing, and countless other small annoyances.
The Five Reasons You Need to Sell on eBay
Alright, so why should you sell on this dinosaur of a sales channel (and a very small Compsognathus dinosaur at that) that is also a burden to list products on? Well, there’s actually several good reasons. Here are the top five reasons you should be selling on eBay now.
#1) Build Your eBay Feedback and Increase Selling Limits NOW In Case You Ever Need to Liquidate Your Inventory
Much like Amazon, eBay puts you in a bit of a sandbox for a certain period of time until you prove yourself as a seller. You have selling limits placed on your account that only allow you to list so many products (often around $5000-10,000 worth). Moreover, eBay buyers depend more on the feedback of a seller than on Amazon. If you have zero stars or just a few stars on eBay, your conversion rate will be lower than someone with thousands of stars.
If you have no stars on eBay or just a few, your conversion rate will suffer drastically.
You’re probably thinking, so what? I don’t ever want to sell on eBay anyways. Well, eBay is your hedge to give you an opportunity to sell through your inventory if you ever get whacked by Amazon. An Amazon suspension sucks because you don’t lose just potential sales, you also lose all the money you have tied up in inventory. Many Amazon sellers have about 10-20% of their gross annual sales tied up in inventory and many Amazon sellers also have a large percentage of their personal savings tied up in inventory. If you have an active eBay account with at least some feedback history you can at least sell through some of this inventory on eBay. The one good thing about an Amazon suspension is that you normally still keep the ability to ship multi-channel fulfillment orders (re: your eBay orders).
Even if you don’t think eBay has a long term place in your company you should at least build up your feedback history to 100 stars or so. Ideally you do this through selling products (my estimate is around 50% of customers leave feedback so that means you only need to sell 200 products) but you can also do it by buying products on eBay and getting buyer feedback.
#2) Build Your Highly Targeted Email List for Free
One of the biggest wins with eBay is the fact that you get access to the customer’s email address. Because of this, you can generate a highly targeted email list essentially for free.
The approach my previous company followed may be slightly frowned upon by eBay but we never had a single complaint from a customer or eBay about it though. In my previous company, we used Mailchimp’s eBay integration to email customers after purchase if they’d like to signup for an extremely relevant ebook which had very good confirmation rates (well into the double digit percentages). Each month we would generate 100+ emails from this strategy. Our email list for this segment converted at around 1% with an average transaction value of $200 so needless to say getting access to the customer’s email information was absolutely invaluable.
So while the eBay marketplace may be small, the lifetime value of each customer you gain can be way higher than Amazon.
#3) Diversification of Your Sales Channels
If you’re an Amazon only seller, at some point you need to diversify your sales. IMO, there’s a lot of juice to squeeze out of the Amazon lemon before you start looking at other channels. Initially when you first start your company you should really be spending your time building your product catalog and perfecting it, not dealing with eBay. However, within 2 or 3 years of starting your Amazon business you should be looking at other sales channels like eBay.
In my experience, the best progression is to start with Amazon, then your own website (normally Shopify) and then eBay. Below is my very approximate guide on what sales channels you should be focusing on and when (this guide will probably come under a lot of attack but as a very rough approximation I think it is pretty accurate).
#4) Selling Your Unfulfillable Inventory
A lot of people have the misconception that eBay is only for selling liquidated and used merchandise. It’s not! It’s a great marketplace for new products as well.
…But, there’s no denying it, it is indeed a great channel for selling liquidated and used merchandise.
In my previous company we would hold monthly auctions to sell of all of our unfulfillable Amazon merchandise. As you’ve probably experienced, Amazon will often very liberally declare merchandise as unfulfillable even if it only has very minor damage to the packaging. On eBay, buyers are a very forgiving of these types of things (whereas Amazon customers are typically a lot more picky).
If you’re simply having Amazon dispose of your unfulfillable inventory you may be disposing of free money. Instead, have it returned to you either your address or a 3PL and sell it on eBay in a no-reserve auction.
#5) Capitalize on Strong Categories of eBay Motors and Electronics Parts and Accessories
eBay, overall, is only about 5% of Amazon’s sales. Admittedly, this is a small number to get very excited about. However, there are certain categories which eBay is still very strong in, particularly eBay motors and electronics parts and accessories (such as iPhone screens, cords, etc.)
For whatever reason, eBay motors and any products in the automotive/boating/RV space eBay is still very strong in. Speaking from experience, our eBay Motors sales for my previous company were about 15% of our Amazon sales. That’s a big enough number to warrant starting to sell on eBay almost immediately. I know many people in the electronics parts and accessories space, specifically cheap, lower quality Chinese electronics who report similar sales experience.
eBay may be a forgotten ecommerce giant but its heart is still beating. In fact, it’s not that eBay has gotten smaller, it’s just that Amazon has gotten so big. eBay can be a burden to list on and often it may feel like the results aren’t worth the work. And for many businesses first starting, the effort required might not be worth it to heavily invest into eBay. But as your company grows and you pursue growth that doesn’t require any more capital investment, eBay can be an excellent opportunity. It’s also an excellent hedge against the threat of an Amazon suspension.
Do you use eBay at all? Do you feel it is worth the effort or is it better ignored?
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