Thursday, May 13, 2010

Online Selling: eBay vs. Amazon, Part 1

When people think of online selling, eBay is the first site that comes to mind. Amazon.com, however, is superior to eBay when it comes to selling a number of items such as books, movies, and video games. Below, I will describe some of the differences between the two sites and describe when it is preferable to use one over the other:

1. Listing an Item
Listing an item on eBay requires the seller to categorize the item, name it, describe it, find or take a picture, pick a price to start the bidding at etc. Amazon.com, on the other hand, makes it much easier for sellers to list items. All the seller has to do is search and find the item they're selling, and then describe it's condition. Almost every item already has a name, picture, and description included. For generic items, such as books, video games, board games, movies, or electronics, Amazon is far superior to eBay because of the ease of listing the items. When selling rarer items (which might be difficult to find on Amazon), or those which are very old or in bad condition (in which case taking your own picture would be the best option), eBay is the better site, since it has a wider range of items, lets you give a more specific description, and lets you take your own picture.

2. Pricing
eBay and Amazon have different pricing structures. eBay has an auction structure, in which the seller must decide on the length of the auction and the minimum bid. Also, the seller has an option of offering a "Buy it Now" price, which gives the buyer the option of paying a single price and snagging the item without having to participate in the auction. Amazon.com doesn't use auctions: it just offers the buyers a single price. As a seller on Amazon.com, the site alerts you to the price that other sellers are charging for the same item. This makes it convenient to price your item (you just put it 1 cent below the competitor's price). Also, if competing sellers lower the price of their item (which they probably will do to stay competitive), the site lets you know and makes it easy for you to keep lowering your price to beat out the competition.

As a seller, I've found that items generally sell a lot faster on Amazon than eBay and that I usually get more money for my items on Amazon (by pricing items 1 cent lower than the competition it's hard to get ripped off). eBay is usually more erratic: there are times when you get lucky and earn a huge surplus for your items and there are times when you get completely ripped off. If you can, try to sell items on Amazon. When Amazon's pricing system fails is when the seller is selling an item that is very rare or obscure. When the item is very rare, there might be one or two random prices on Amazon which don't reflect the item's true value. One example was a rare record I tried to sell, in which the two competing prices were $45 and $80 (even though the record wasn't worth more than $15). If you try to sell an obscure item like this, it is likely that you will overprice it and it will never sell. Another issue for rare items is that there may be no entry for the item on Amazon, which means that you will have to create one (this involves finding a picture, description, price, etc). This is a lot of work and should be avoided. Because eBay is likely to have sellers with a wider range of items and because eBay allows you to create a more specific description, eBay would be the better site in this case.

3. Payment/Shipping
The two sites differ in the way they handle shipping. eBay, requires the seller, before even listing the item, to determine how much they want to charge buyers for shipping. This forces the seller to weigh the item, and than do some research to determine which type of postage s(1st class, media, etc.) would be best to ship that item and how much the shipping is going to cost the seller. This can be extremely annoying. The one advantage is that once you receive payment from the buyer through PayPal, eBay has already paid for your postage (by removing money from your payment account) and has your shipping label ready. Nevertheless, shipping on eBay is not perfect. Amazon's shipping system is better in almost every case. Amazon charges the buyer a flat rate to cover the seller's shipping costs (usually $2.99 or $3.99 depending on the item). When buyers pay for items, money is sent to an account on the Amazon sellers site, which transfers the money to the seller's bank account every week or so. To ship the item, the seller only has to print out their return address, the buyers address, and then pay for postage at the post office. This is a much quicker and more efficient system then eBay's, but sometimes backfires when the cost of postage for the seller is more than the cost charged to the buyer (this is very rare). As long as you are selling relatively small items (3lbs or less), Amazon's shipping model is a lot easier and more efficient. For larger items, where the shipping may be more complicated, eBay's option of choosing the price you want buyers to pay for shipping is probably better.

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