Thursday, January 31, 2008

Amazon Webstore vs. eBay Store

In a previous post I did a quick comparision of the Amazon's WebStore vs. Yahoo's Store offering and eBay's ProStores, so I thought I would mix it up a little bit and do a comparison between the Amazon WebStore and the eBay Store.

eBay has close to 500,000 eBay Store/Shops globally and is the top Store platform in the world. The biggest advantage eBay Stores have over their competition is that items listed in your store will get some exposure in eBay search. Over the past couple of years though, this exposure has been very limited, bringing the value of an eBay Store down. While this comparison will certainly not be an Apples to Apples comparison, I'm sure you will be able to see the major difference and decide which is the best option for the online seller. You will also see my preference pretty easily.

Amazon WebStore:

  • $59.99 monthly fee plus a 7% FVF (Amazon calls it a commission, which is more accurate) You can put an unlimited number of items in your Amazon WebStore for no additional cost. You can also have multiple WebStores for no additional cost. The 7% fee on each sale also includes any transaction related fees including merchant fees.
  • It has a shopping cart and uses the same technology that has made Amazon an online retail leader. You can merchandise your products (offer discounts, highlight specific products) and have access to effective marketing features like product recommendations, customer reviews, and recently viewed items for your own store.
  • Lots of flexibility with the look and feel and you don't have to be a "techie" to get up and running.
  • Amazon's close to 80 million active users can buy on your WebStore with their existing Amazon account and your customers are protected by the Amazon A2Z guarantee.
  • Designed for SEO (Search Engine Optimization) Helps your items show up in Google and Yahoo natural search.
  • There is no Amazon WebStore search and your items are not available on Amazon.com so with a Webstore you would have to do marketing yourself.
  • You get more margin control because you are not competing directly with other sellers in search this gives you flexibility in your mechandising and promotions.

eBay Store:

  • Different monthly fees based on exposure level and features. I will use the Premium Store (formerly Featured Store) for this comparison as it is the closest to an Apples to Apples comparision. Premium Stores have a monthly $49.95 fee, eBay also charges 3 cents per listing for items with a sale price of $24.99 or less, 5 cents a listing for items priced $25 to $199.99 and 10 cents a listing for items price $200 and up (these are the new listing fees that begin on March 1st.) Each listing runs for 30 days, so if you relist after 30 days you will incur the listing fee again. eBay also charges 12% FVF on the sale of each item, this does not include transaction related charges like PayPal or merchant services etc. When you add PayPal fees or merchant fees to the mix your total fee could be as high as 16%.
  • eBay Stores do not have a shopping cart, which can make it difficult to merchandise your items.
  • A Featured Store gives you 10 custom pages: "Use customizable pages to boost your brand, communicate store policies, and connect with customers."
  • eBay Stores give you a feed to submit to Google Product Search
  • eBay Stores get limited exposure in eBay Search (When 50 or fewer CORE listings are found eBay will display up to 50 related Store listings and lowest price generally gets the sale but store items are competing with CORE items for exposure.
  • Store Items to get exposure in Google natural search
  • Lower prices get the sale on eBay because you're competing directly with other sellers in search.

Okay, so now that we have seen the two different stores and their features and benefits, lets look at what happens when a seller of widgets has 1,000 items to sell and all of them sell for $24.99 in price (for ease of comparison they both have free S&H) and they sell 300 items per month. So lets look at the fees a seller would incur in this scenario. In both cases the seller sold $7,497 worth of widgets in the month and after subtracting COG (cost of goods) they were left with $3748.50 in Gross profit because they had a 50% Gross Margin. (I'm just rying to make the comparison easy to understand) So now lets consider the eBay Stores and Amazon WebStore fees as a Marketing Expense and call it COS (Cost of Sales)

Amazon Webstore:

  • $59.95 per month fee, no listing fees, unlimited items, pages etc. 7% FVF. The total monthly cost on the Amazon WebStore would be: $59.99 plus $524.79 FVF for a total of $584.78. (COS) or 7.8% of Sales leaving the seller $3,163 in Gross Profit.
  • In the case of the WebStore if the seller wasn't able to drive enough traffic to their store to sell $7497 worth of widgets their total cost would be $59.99 plus whatever they spent on marketing.

eBay Store:

  • $49.95 per month for Premium Stores, 10 Custom pages, no shopping cart, 3 cents per listing and 12% FVF. The total monthly cost on the eBay Store platform would be: $49.95 plus $30 for listing fees ($.03 x 1,000 listings) plus $899.64 FVF and an estimated $299.88 in PayPal fees for a total of: $1279.47 COS (cost of sales) or 17% of sales, leaving the seller with $2,469.03 in Gross Profit.
  • In the case of the eBay Store, if the seller didn't get enough exposure in search to sell $7497 worth of widgets their total cost would be $49.95 plus the $30 in listing fees for a total of $79.95 (The eBay Store provides the perception that you don't have to risk money marketing your items.)

So the major difference I see, is that eBay takes the percieved marketing risk out of the equation. The Amazon WebStore seller may have to spend $694.69 or more in Advertising etc. to get the same sales as they would in an eBay Store. The difference being that the customer who buys from you at your Amazon Webstore is your customer and you can offer them deals to your hearts content. The marketing expense becomes customer acquisition rather than strict advertising.

On eBay the customer is eBay's and they place limits on your communication with that customer and you will have to pay the same amount in fees if that customer buys from you again, everytime that customer buys from you again. With an Amazon WebStore your marketing expense is going towards getting new customers rather than selling to your old customers. Developing a brand that you benefit from not Amazon.

With the Amazon WebStore you become an independent online seller who controls your own destiny, rather than having to jump through hoops with every change made by eBay. The beauty of this is, you can still sell on eBay by using CORE for those items that are best suited for that platform; if you choose.

I've been over the math several times so if you see any errors please let me know. Remember the comparision and the numbers were just to show the difference between the two platforms (your results may vary) :)

Update: I forgot one very important point: With an Amazon WebStore you can use Yahoo's PPC (PayPer Click) advertising program to reach out to eBay's buyers. In many cases PPC ads get better exposure than eBay Store listings.

Just my 5 cents!

66 comments:

Tara said...

Hi- This was great. Very informative and so wonderful to have someone sit down and do the math for me! :)
I have been thinking about Amazon as an alternative recently. This really helps!

Thank you!

Randy Smythe said...

Tara, I'm glad you found it helpful. I think eBay Stores a re a good way to get started but not the long-term answer.

I've been hearing good things about WebStores and I really believe in Amazon as a company.

Good Luck!

tekgems said...

> users can buy on your WebStore with
> their existing Amazon account

Its good of Amazon to time their e-mail during a peak of eBay seller frustration! I see Amazon WebStore as just a step away from being an Amazon affiliate. What's with being able to only use Amazon Payment? Add direct credit payment and you got yourself a deal. Until then, I see Amazon WebStore as a method for Amazon to acquire more customers.

Randy Smythe said...

I think that Amazon developed the WebStore to replace Z-Shops. But I'm not 100% on that.

Its very similar to Yahoo Stores, eBay ProStores or eBay Stores. That's why I did the comparisons.

I'm sure there are some stand alone ecommerce Websites out there that would give you the flexibility you want.

The WebStore intrigues me, that's why I wrote the post.

Anonymous said...

With Amazon you can have unlimited stores for the $59.95, but a huge segment of the eBay community can't use them due to category limitations. Amazon doesn't like dusty used stuff that much! [like collectibles, antiques and vintage clothes].

That limitation is keeping lots of sellers in the eBay fold, by default.

One additional point on eBay Stores is the neccessity of "driving traffic" to the Store via the use of auctions. It all adds up.

Randy Smythe said...

Annonymous, Good point about driving traffic to the store via auctions. That is an added expense and is much more expensive than PPC if your conversion rate stinks.

As far as those categories you mentioned not being right for Amazon, you are correct they are not right for Amazon.com becasue they don't have the categories but they are right for the WebStore. Those sellers can open up their own WebStore without having the category limitations of Merchants @ Amazon.

Patrice said...

Randy - thanks for the great information. After reading your post on FBA, I signed up and just sent out my first shipment last week. So far, so good. After eBay, I just can't believe how EASY it is!

Are the Amazon store items visible at all via Google? My eBay store items are unique enough that I get pretty good Google placement on a natural search.

Also, can you sign up for an affiliate program with Amazon and advertise in your store, getting some income in that way?

Keep up the great work!

Randy Smythe said...

Hey Patrice, glad to hear it is going well. Please keep me informed on how it is going.

The Webstore is designed for SEO so it should get you a nice position for natural search. I'm not 100% sure they give you a GoogleBase feed though. If any of my readers know that first hand please let me know or if any of you Amazon employees that read my blog (I see you) know, please email me.

As for the affiliate program; yes that is an excellent option with the Webstore because the affiliate program can be integrated into the site and you can broaden the items you have for sale and make a commission.

In regards to FBA; I really like the fact that I had 931 orders in January and I never once had to go to the post office, answer an email, issue a refund, handle a return, worry if an employee was going to be sick, or pay a monthly office space lease.

One other thing. The second month I was selling on eBay back in 2000 I had 750 orders, went to the Post office every day, answered 10 - 20 emails a day including weekends, issued refunds and handled a couple of mis-shipped items. I was doing it all my self so I didn't pay for an office or have employees.


Good luck and please let me know how its going.

Kevin said...

Once again, thanks for the great information. Not knowing how all of this works, could you please explain the process of how both eBay and Webstore process the proceeds of transactions?

Would my credit card simply be credited these proceeds, and I would simply withdraw from the credit card account?

What about income taxes is a 1099 sent to me each year?

How about the process of sales tax, would customers be charged sales tax based on their location? Does Webstore/eBay distribute these sales taxes to the state(s)?

Thanks again!

Randy Smythe said...

Kevin,

A Webstore is very similar to any other website.

A customer will pay for the items they purchase in your Webstore and Amazon Payments will process their payment and put the proceeds in your online account. You can then download the funds into your checking account.

You are responsible for all sales taxes, and business taxes. Amazon will not provide you with a 1099. Talk to a tax advisor regarding these issues.

eBay is much the same.

Kevin said...

Regarding sales tax, it seems that sales taxes are based on Amazon Webstore state location(s), not my business state location. It is my understanding that sales tax usually only need to be collected for consumers who reside in my business state. Correct?

Randy Smythe said...

I'm not a sales tax expert but I can say, that with an Amazon Webstore, the location of Amazon and their offices has no bearing on your requirement to charge and collect sales tax. You are just using their software. You are the business responsible for sales tax not Amazon.

Contact the Sales Tax department in your county for info on charging and collecting sales tax.

RSK said...

Anyone know the max database size they give you ? Any limit to the number of pages per site ?

Anything wrong with using this primarily as a informational site (with lots of pictures, in my case) to bring in traffic and then have affiilate links to achieve income, and maybe sell a few products from Amazon to support the topic you are explaining ?

Randy Smythe said...

RSK,

I'm not aware of any limits on pages but I wouldn't see a WebStore as a platform for a content site.

Its an ecommerce store meant to sell product. If you want an affiliate store just sign-up for Amazon's aStore

RSK said...

Randy
Thanks for quick response.

I just looked at aStore quickly.
Would I have to set up my own informational website and get a service provider and then have a link to the aStore ? If so, do you have a suggestion for a cheap service provider with easy to use site development tools ?

OR
Can it be one and the same....meaning the Astore is the informational site with a tab within it for the items being sold ? If so, on Astore can i have other affiliate links on it, ie. car rentals, etc. ?
Is there a size limit
to the aStore ? Astore looks free, is this true ?


-----
Eventually, I would want to sell items that are not from Amazon. So should I start with the Webstore as an informational site with amazon products for sale that support my info site. I got the impression from one of the examples Amazon gave...that a travel type info site was doing this.

Or
Sounds like I should go with my origial plan to develop a separate informational site and have affiliate links, and have a tab to go to my webstore which would sell my 3rd party fulfillment items and any amazon items I might want.... handle all the processing for me. But could the buyer get back to my info site easily from the Webstore ? ...They may need to go back and forth.

Is this the best plan?

With Webstore (and maybe astore)I am attracted to the fact that I can get up and running immediately and add info as I go.

Thanks.
Rudy

Anonymous said...

thanks for the great information. After reading your post i signed up for amazon webstore program, so far everything looks amazing, i also found 2 months off promotional offer,that helped me a lot :).

http://www.webstorehome.com/webstore-from-amazon/

Robert

Abhishek said...

hello Randy,
just an update: Webstore actually submits your products to Google Base for you.

Randy Smythe said...

Thanks for the info. That is a nice feature because with an eBay store you have to use Store Connector to do that.

Sam said...

is this catching up. how many sites has amazon sold.

www.walkersresearch.com/emailaddresslists.asp

www.walkersresearch.com

chris said...

Ok I have a few questions that hopefuly you can help me answer. I used to sell on ebay for over 12 years with an ebay store. I sell collectibles. Mainly statues, busts, action figures, comic books, and all other sorts of great weird limioted edition items. Alot of items are really rare pieces that i am the only one with on ebay. As much as I hate ebay itself...it is a great place for my categories. I am looking for an alternate place to sell. What would you recommend I go into? Thanks, Chris

Randy Smythe said...

Chris, eBay is still the best place for that type of product, unfortunately none of the big guys want to get into Auctions or they would have by now.

chris said...

well i never use auctions. i just use ebay store.

chris said...

is there any talk of anyone stepping to the plate to challange ebay and their format? it just seems ebay is trying to get out of the mold they created and the one that worked so well for them for so long. used to be a great place for someone clearing out their attic and listing some cool and unique stuff...those days seem to be numbered...

Randy Smythe said...

Well, that changes the eqution a little, you could open up an ecrater store and get indexed in Google Product search, you might try Etsy.com for some things and you might be able to make the Store work on eBay still becasue you sell really hard to find stuff.

Anonymous said...

We are trying to decide which way to market our goods the most effective way. We have very limited stock, my husband is making rustic furniture pieces, one of a kind, and I am making crafts that compliment his pieces, or that go along with our southwestern theme such as painted pine cones, tumbleweeds, hand sewn pillows, beaded crafts, etc. I am not sure if either Amazon or eBay is the answer since we would have such low volume items. What are your thoughts, should we even try to use either? Thanks for any feedback.

Randy Smythe said...

Anonymous,

Before you make your decision, check out Bonanzle. eBay would normally be my first choice for that type of product, but they are in the midst a mid-life crisis.

Anonymous said...

Thanks for your quick reply and for the helpful info. Glad you're out here for people like us! :-)

Anonymous said...

Hi Randy,

Thanks for all info you input here. The reason why I consider the webstore is because our ebay store got indefinitely suspended. Amazon could be a good option. But we already have an official online store and SEO etc. So would webstore be still helpful? Can merchandise listed in the webstore be searchable on Amazon? Can we sell unique item in the webstore? Your answer would be highly appreciated. - Jolie

Randy Smythe said...

Jolie,

The Amazon webstore does not get traffic from Amazon but the items available on Amazon are available in your webstore.

If you have a website already, you probably would be better off just maximizing that site.

AudioVideoNow said...

Hello,
Interesting comments, but technically you should be comparing Amazon Webstore to Ebay ProStores, this is a much more accurate comparison as they are both stand alone websites using each companies expertise and have a commission structure (and it is easily more expensive on the Amazon store, but the Amazon store has a better infrastructure IMO from a quick glance..although 7% commission is very expensive when working within small margins).
To compare an eBay store to Amazon you really should be comparing the sell on Amazon where you are creating a store within the Amazon structure.
Any chance for you to analyze those two?

Randy Smythe said...

AudioVideoNow,

You are correct the more accurate comparison would be with ProStores. I just chose eBay Stores because many store owners were looking for alternatives.

The 7% is certainly expensive, especially for low ASP items but that includes payments. ProStores have a FVF % plus payments through PayPal which can get up to 4% for low ASP items.

AudioVideoNow said...

Hey,
So we are thinking of actually doing both simultaneously to see the comparison. But what was not clear for the Amazon Webstore was whether it has a way to add to cart to show price a "Click to see price" like the normal amazon website (or pretty much most websites) Any ideas?
Thanks.

Randy Smythe said...

AudioVideoNow,

You can checkout my Amazon WebStore at http://www.inetmediasource.com

Also Amazon is holding a Webstore Webinar on the 14th. I will do a post on the details later this morning.

AudioVideoNow said...

Hello,
Great looks like your are taking full advantage of the affiliate program, but still not really answered my question. So you are strictly sticking with that format to run a business, curious are you satisfied with this revenue stream? Thanks.

Randy Smythe said...

No, I just put up the webstore to test it out. It was very easy to launch and I've sold enough to pay for the monthly fee but I haven't spent any time trying to grow traffic yet.

I generate my revenue directly from Amazon sales. As my inventory grows so will my WebStore sales.

As far as answering your question about show price. The price is always showing both in the cart and on the detail page.

Anonymous said...

What about a Amazon webstore, which instead uses the pyramid setup to sell there products rather then stocking there own inventory

PuReWebDev said...

Great comparison.

The Phoenix Singles said...

Hello,
My question is if you are doing $10K a month or $100K a month do you still have to pay the 15%? Seems like a high percentage.

Theresa said...

Randy,

I want to start an online boutique for women's clothing. All of the items would be new and it is my understanding that ebay stores are the best option for people with catergories such as vintage, or collectibles, used or rare items.

Do you think a Amazon webstore would be a better option for my store? I just want to get an opinion.

Thanks

Desert Duchess said...

I'm confused about the difference between the webstore and selling online with them. Do you have to store your inventory with a webstore? Can you just sell their inventory and let them worry about shipping it to the customer? Like dropshipping? Thanks.

Randy Smythe said...

Desert Duchess,

A webstore is a website where you can display the product you are selling on Amazon. This is product that you will ship to the customer unless you choose to use FBA (Fulfillment by Amazon)

CommonSense2009 said...

Hi Randy,

Your analysis is good but you might consider adding a comparison between Amazon's Webstore and Ebay's prostore. 1) Prostores allow you to list virtually any item without the need for a upc. 2) You can launch any prostores item to ebay as long as it is not against ebay's marketing policies(adult porn, guns etc) 3) You can access googlebase, yahoo search, and two other search optimization outfits. 4) So you have the option of marketing to customers on your own through prostores(customers that remain yours), or marketing through Ebay from your prostores platform which gives you many of the advantages of Amazon's webstore platform with access to amazon listings.

Construction Recruiters said...

please let me know if the Amazon webstore and its Checkout can be used for India

Gayla said...

The (beta) Amazon WebStore is the best option I can find for an online store, but the documentation is extremely confusing. When I realized I was going to have to figure out everything about the Amazon WebStore by myself, I just went ahead and wrote up what I learned in a helpful organized way, so that others wouldn’t have to suffer. The "Tutorial Guide to the (beta) Amazon WebStore" is totally free. Download a 57-page pdf, or read the the Guide, at www.webstoreguide.info

opiatedramblings said...

Is this information still releveant two years later?

ebay store design said...

Very nice article. Certainly a detailed comparison on each of the major online ecommerce platforms.

However, it is difficult to ascertain the validity of statements in any ebay article because they keep changing the rules ever so often. For example, the listing fees for each ebay shop subscription level has increased now.

No doubt ebay does absorb the marketing costs and hence this could mean a few savings initially. However, I did like the fact that on ebay, it is fairly difficult to retain a customer. Having said that, you have newsletter option on ebay, and you can promote your website in the customer notification emails that are sent to a buyer(from the notification preferences section in Selling Manager).

Yes there are pros and cons. It all depends on ROI and success at the end. Some of them are very successful at ebay despite the high fees ebay charges. Some of them are many times more successful running their own stores.

wholesale said...

Hi its a good comparison and discussion too

Alex said...

I am selling on eBay for many years and
just started selling on Amazon a month ago.

The big problem is to list all the item I have on eBay(2000+) on Amazon,
doing it manually was really annoying. So I just listed few items to check how it goes.

I had few sales and now I want to export all my items

I found a service which can make the export-import automatically:
http://www.exportyourstore.com/

Did anyone use it? Or any other services which can help?

Thanks!

Sara Anderson said...

Actually I have worked on amazon webstore and also used this, it is really great platform.

You have provided really very good comparison here. I am happy I have chosen the right option. ;)

Thanks for the information.

Anonymous said...

Hi there
Just thought I would drop a line or two here. I have had an ebay store for 2 years selling brand new goods and it has gone really well up until recently so I decided to expand my selling potential with a webstore. Well in a word 'disaster'. The systems do not work and the web engineers seem unable to fix them. They are very kind and helpful but at the end of the day the webstore bulding application is awful, lengthy and very very frustrating, there is nothing 'drop and click' about it, sorry guys

Amazon Webstore said...

I am happy to find so many useful information here in the post, we need develop more strategies in this regard, thanks for sharing.

Anonymous said...

Hi, I have a webstore with my own domain, I'm selling video game accessories and beauty products and so on.. I have it in server that's called freewebstores.org its pretty easy and looks good. Its perfect to make a webstore, I just don't get enough traffic, I tried adding Google adwrods but still not so great. Would a regular Amazon webstore help me out better ? Maybe more traffic sells. I know that probably Amazon webstoee is more known that freewrbstores. Would really appreciate the responce. Thanks !!

Steve giachello said...

Do you have anyone that can Convert my Ebay store to an amazon ASIM sku . I need someone that can create the amazon ASIM for my I have over 700 ebay item/parts in automotive

please email
sg@getcredithealthy1.com

thanks

Anonymous said...

Have been thinking of continuing with ebay and using other sites as well. Generally have about 900 items (high end) on at one time. Sales very good, but becoming disenchanted with ebay's care of their sellers. Does an AMAZON WEBSTORE work for items that are "used"? Are there sites that can just transfer your ebay items right to their venue?
Thanks

Pankhuri Patel said...

E-Commerce has become the one of important need for any business or it is another way to handle business easily by providing convenient services to public.

In the last two decades, there have been improvements in the way online business is conducted.
E-commerce sites and applications have contributed a lot to these changes, and the changes have improved how many online traders do business.
Where some sites have over the years improved on various areas with a sole aim of improving on the business experience of both parties. On the other hand some sites are found to be very worst and fraud with their services, came to know after a survey, I have some of examples like, Indiatimes shopping, Timtara, Jabong.com, 100bestbuy, Rediff Shopping, ebay. Even I went through some of consumer forums and also found so many complaints against these sites. I think Govt. must take a needy action against these fraud sites.

Amazon webstore developers said...

Nice discussion Randy!!!!!Both the webstore are very useful and nice on their places....but according to me Amazon webstore is best one for me, it gives us lot's of facility....

Rebecca Smith said...

Your post included such great points, nice comparisons, as according to my point of view Amazon webstore is best for in current scenario. I will definitely follow your blog, looking forward for other useful information’s.

kavin smith said...

Hi, I am a amazon developers and I like to read and write article or blogs, mainly I read all blogs, it is my habit to collect information where ever I can, it will never waste ,today I caught your nice blog and it is written nicely with good content.....I appreciate it....

amazon webstore design services

Amazon Webstore Design Services said...

As we all know that Amazon and eBay are both of the world best online shopping store and now a day's they both are preparing for Christmas and New Year, at this time the online shopping increase they don't want to disappoint their buyers.....

Sir Thom said...

Thanks guys, for sharing this conductive collected data at one place.visitor counter

Augustina Federica said...

HI Randy, your post is very good because I want that some one start this process and you make the way now entrepreneur can choose easily than which web store they require, I think amazon is the best plat form and amazon developers can fulfill him requirement.

Mike tyson said...

I have never ever got this type of informative and easy contents yet I enjoyed reading these.infographics design

Amazon Web Stores said...

Very nice article!! I have worked on the Amazon web store platform; it is really a good platform to grow the business. You have provided the best comparison between an Amazon & eBay stores here. I think I have select the right option.

William Carpenter said...

I am living in the United States for now but I plan to move to Costa Rica in the near future. Will I be able to manage my store from another country? Worldwide?

John Lewsam said...

Hi Randy Excellent info,
If the customer can't pay for the goods on my own site then it really puts me off is there anyway i can sell Amazons or eBay products from my eCommerce site without the direct link to Amazon or eBay.
I'm not a techie but it is relatively cheap to hire one these days i'm using Magento CE so there are plenty of great developers to choose from would one of these wizards be able to conceal this link on payment.

Akshay Vyas said...

Hello Randy! This was great information. Really got to know the difference between Amazon and eBay stores. This gives a clear difference to eCommerce sites as to which market place they can choose according to their needs.