The main differences between Amazon retail arbitrage vs eBay retail arbitrage are:
- Market size
- Fulfillment options
- Business innovations
- Product listing process
- Customer trust
- Inventory handling
- Product restrictions
- Return policy
- Competition
- Seller fees
Amazon offers simpler inventory, product listing, and fulfillment processes. They streamline your daily operations. Because of this, they have higher operating fees and stricter product and return policies. eBay is more lenient with its inventory management, product restrictions, and returns and refunds. This is why they have lower fees. Unlike Amazon, eBay doesn't compete with its sellers. However, both platforms suffer from intense competition, unpredictable income, and intensive time commitment.
Retail arbitrage is good for people who don't have enough budget to start their business. It involves buying items from retail chains to resell online. You can sell your products on e-commerce platforms like Amazon or eBay. Sellers in this business model usually buy their goods at brick-and-mortar stores. They take advantage of clearance sales and holiday sales. This way, they can get discounts or avail of in-store promotions.
One Redditor revealed how he and his wife earn $80K yearly from Amazon retail arbitrage. The strategy is to increase sales volume each year. Another Reddit user said that he makes a good profit with eBay retail arbitrage. He's been running a basic eBay store for many years. He suggests using store discounts to get products at a low price.
eBay allows retail arbitrage as long as you're the owner of a product or the “seller on record”. There’s no restriction on where you can resell it. Similarly, retail arbitrage is legal on Amazon. But, it has gated product categories and brands. Both companies are legitimate platforms for doing this business model. Just remember to steer clear of prohibited and counterfeit products to avoid suspensions.
This Redditor points out the issue with product returns on both platforms. Amazon has higher fees. And they accept returns regardless of the reason. On the other hand, eBay offers low fees. They also let you set your refund policy.
Doing retail arbitrage on Amazon and eBay can be lucrative if you know where to source your goods. As this Redditor mentioned, it's important for maintaining your business. Product prices can easily fluctuate on e-commerce platforms. You also compete with hundreds of thousands of other sellers globally. Succeeding in this business model means strategizing carefully.
But which platform is best for you? In this article, we'll discuss the main differences between Amazon retail arbitrage vs eBay retail arbitrage. Plus, we provided the pros and cons and top reviews of each platform. Dive in and discover the best way to make money online in 2024.
Amazon Retail Arbitrage vs eBay Retail Arbitrage: Main Differences
Amazon
eBay
Market Size
It has a larger user base (310M users), and still growing.
It has a large user base (138M users), but is declining.
Fulfillment Options
FBA or FBM
Merchant only
Continuous Improvement
Amazon has continuous platform and process improvements.
eBay seldom has improvements.
Product Listing
You can scan to list items.
You can only scan to list trading cards. Other items are listed manually.
Customer Trust
Amazon has high customer trust. It garnered the 2020 Trusted Brand award.
eBay has a low score on Trustpilot.
Inventory Handling
With FBA, Amazon handles your inventory.
On eBay, you handle your own inventory and storage.
Product Restrictions
Amazon has many restricted brands and categories.
eBay has fewer product restrictions.
Return Policy
They allow customers to return products for any reason.
They allow sellers to set their return policy.
Competition
You can experience heavy competition from other sellers and even Amazon.
They have tight competition. But you can carve your own niche without fearing competition from eBay.
Seller Fees
Higher fees
Lower fees
Income
Unpredictable
Unpredictable
Sourcing
Sourcing takes a lot of time and effort.
Sourcing products takes significant time and effort.
QUICK SUMMARY
The nature of both marketplaces is different. eBay functions as an auction house, while Amazon is an online mall. eBay has a simpler fee structure and lower total fees. Amazon has a bigger market and value-added features like Prime and FBA.
Amazon Retail Arbitrage Pros and Cons
Amazon Retail Arbitrage Pros
Amazon has the largest active customer base in all e-commerce marketplaces. This provides retail arbitrage sellers with the biggest potential audience for their products. Amazon has more than 310M active customer accounts. 200M of those are Amazon Prime subscribers.
Prime customers are more likely to shop because of free shipping and fast delivery. This increases your product's visibility and sales.
An Amazon retail arbitrage seller needs to use the Fulfillment by Amazon (FBA) program to take advantage of the Prime program. According to Amazon, almost 50% of their sellers use FBA. While this adds to your cost, the increase in sales can often offset this added expense. Sellers who use FBA experience about a 20%-25% increase in sales on average.
FBA is a key advantage for an Amazon retail arbitrage seller. It simplifies the shipping and handling process. This allows you to focus on product research and gain more inventory. For retail arbitrage, you want to spend less time packing and more time sourcing products.
Amazon provides seller tools and analytics to help you track your sales. They also help you improve your business. These include the Amazon seller app, FBA revenue calculator, and product opportunity explorer. This helps systematize your business and save time.
Amazon continues to invest in its infrastructure to help sellers. They have invested more than $30 billion in logistics, tools, services, and programs. Amazon invested more than $700 million to combat buyer fraud and abuse. As a seller, you can look forward to continuous improvements from Amazon.
Amazon Retail Arbitrage Cons
It's hard to look for products to sell because many products are restricted by category or by brand. Ignoring product restrictions is a surefire way to lose money on Amazon. You’ll have to pass up many good deals if the products are gated. It's also possible to experience selling a brand for years that suddenly become gated. You don’t have a fight in this policy other than to get approval from Amazon to sell the brand.
Amazon has strict return policies in place to maintain customer trust. But this can be difficult for some sellers to navigate. Although Amazon has invested resources to combat fraud, they still lean on the customer being 100% right. So you’ll find complaints on Reddit from sellers about this issue.
Competition on Amazon is intense. You have many sellers offering similar products. Amazon doesn’t give preference to older sellers. They are aggressive in getting more sellers on board their marketplace.
There are over 2 million sellers on Amazon, and about 3,700 sellers join every day. Foreign sellers come in, especially from China. They undercut everyone in the category they enter. And the biggest competitor is Amazon itself.
Amazon has 118 of its own private-label brands. These include Amazon Basic, Happy Belly Snacks, and Amazon Essentials clothing. They are continuing to invest in more private label brands. Amazon has an insane advantage. If they enter your category, it’s going to be very hard to compete.
Amazon charges higher fees than eBay for selling and fulfillment. The high fees cut into the seller's profits. That's why retail arbitrage sellers need to buy at the right price.
For an individual seller account, you will pay $0.99 for every listing sold. When you sell over 40 products per month, you need to upgrade to a professional seller account. This costs $39.99 per month.
You also pay referral fees when items are sold. They're usually 8%-15%, depending on the category. This excludes Amazon Device Accessories (45%), Clothing and Accessories (17%), Fine Art (5%-20%), Gift Cards (20%), Jewelry (20%), and Watches (16%).
If you use Amazon FBA, you will pay fees for shipping and storage that vary depending on your products' size. The fees are not a percentage of your selling price, so you need to use the FBA calculator. Make sure that before you buy a product, you can still sell it for a profit.
If you don’t avail of FBA, make sure you factor in your shipping and storage costs. In the beginning, you might store the items in your garage. But if you plan to make this a business, you will need a large storage space. You need to sell many items to make it a successful business.
Sourcing products is time-consuming even if you have a list of top stores for sourcing. Most of the time, you will rely on big discounts, liquidation sales, or buying from thrift stores. You will always move around and scan items to find good deals. It’s time-consuming, but it’s needed in the retail arbitrage business.
You can go with online arbitrage where you buy from online stores, but that has its own challenges as well. Other buyers will search the same categories as you, so you have more competition. You need to wait for the product to be shipped. And you need to pay for software that allows you to scan online stores for profitable products.
eBay Retail Arbitrage Pros and Cons
eBay Retail Arbitrage Pros
eBay has a more relaxed selling environment compared to Amazon. It has fewer restrictions and policies. Sellers are given the freedom to set their own return policy. But you still need to abide by the global eBay policies. For example, you can say that you don’t accept returns. But if the item qualifies under the eBay Money-Back Guarantee Policy, you need to accept the return.
eBay has a wider range of products available, including used and vintage items. They can provide more opportunities for profit. eBay does not have gated brands, so an arbitrage seller can sell almost anything. Still, there are prohibited items like on Amazon. But brands don’t get to tell eBay to restrict selling their products.
While eBay may have a large and active customer base, it’s not as large as Amazon’s. However, it does have a community of buyers who buy collectibles and vintage items.
eBay Retail Arbitrage Cons
eBay's reputation and customer satisfaction are lower compared to Amazon. Amazon has invested a lot of money and resources to earn the trust of buyers. They did this through many tactics like giving fast, free shipping and the A to Z Amazon Guarantee.
eBay's customer support and resolution process can be slow and ineffective. This can lead to disputes and negative feedback for the sellers and the platform.
Because eBay follows an auction model to sell products, it’s hard to predict your profits. You will need to know your products very well and pray that your listed products get bought. You can get many low-ball offers. And it can get tiring when you have to respond to all these messages daily.
Listing products on eBay can be a chore. On Amazon, you don’t have to create a product page if the product already exists. On eBay, you need to create listings for all your products.
eBay does not have a fulfillment or storage service. Some items can take a long time to sell. Plus, you need to take time to pack and organize your inventory. If you don’t have an organized system for product storage, you could end up wasting time retrieving sold products. Plus, you need to spend time and money packing your items.
Top Reviews on Amazon Retail Arbitrage vs eBay Retail Arbitrage
Amazon and eBay retail arbitrage have tons of reviews among online sellers and aspiring business owners. eBay has a 1.2 rating on Trustpilot. 14% are 3- to 5-star reviews, while 82% are 1-star reviews. On the other hand, Amazon has a 1.7 rating. It has a 61% negative review and a 23% positive review.
This Redditor has been doing well with Amazon retail arbitrage. After doing it for a year, he's now earning more because of wholesale deals. He even partners with local distributors. Another individual mentioned making money with local online auctions on eBay. He finds products that are around $1-$5 and sells them for $20. This lets him earn around $10 or more.
You also need to consider unexpected account-related problems. This Amazon retail arbitrage seller experienced a sudden account suspension. Amazon didn't contact him or provide any reason. He even tried to reach the customer service desk but failed. Some sellers also have negative experiences with eBay. Another individual reported covering return fees even when it should be the customer's responsibility. eBay doesn't always follow its stipulated rules.
Do Sellers Recommend Amazon Retail Arbitrage?
Some sellers recommend Amazon retail arbitrage because of good customer service. Because of the huge user base and simple selling process, you can expect better sales. However, according to long-term e-commerce sellers on Reddit, the selling experience is different. Some don't like Amazon because of the long wait time to get paid and product gating. That's why many sellers don't start a business with Amazon.
Do Sellers Recommend eBay Retail Arbitrage?
Some sellers recommend eBay retail arbitrage because it has low fees. This Redditor revealed that he only runs an eBay store because of the lower costs. He doesn’t have many listings, so that’s why he’s opting for eBay. Alternatively, Amazon charges its sellers $40 monthly.
This Redditor used to do Amazon retail arbitrage. But, they suspended his account when a competitor filed a complaint saying that he sold counterfeit items. He stopped selling on Amazon and now sells exclusively on eBay.
Another Reddit user thinks eBay is actually easier to use. He thinks that it's significantly better than Amazon. To him, it’s better when selling no-name stuff or your own products. But he acknowledges that Amazon has a bigger market.
On Reddit, it seems more sellers prefer eBay over Amazon. eBay had more than 18M sellers as of 2022. That number decreased from 19M in 2021. It’s been steadily declining from its peak of 25M sellers in 2014. Compare that to Amazon, which has only 2M third-party sellers. But that number is growing by 3,700 sellers per day, according to eDesk.
What Products Can You Sell on Amazon vs eBay?
You can sell many types of products on Amazon and eBay for retail arbitrage. Amazon retail arbitrage items include books, apparel, beauty products, toys, home & kitchen, shoes, and 25,000+ other sub-categories. You can also sell many of the same categories of products on eBay. But eBay is famous for its collectible, vintage, and obscure items. According to Jungle Scout, eBay has more used or second-hand items than new ones.
If you are doing retail arbitrage the right way, you don’t need to worry about eBay and Amazon enforcing their policies against arbitrage on you. They don’t prevent you from selling items that you actually bought. They do guard against a few things. Amazon restricts certain brands from being resold through retail arbitrage. These brands ask Amazon to restrict or “gate” the resale of their products.
Amazon and eBay have their own prohibited lists. So, it’s best to check them to make sure you’re not selling anything that could get you banned. Also, Amazon restricts product categories for new sellers. But they can lift this rule by requesting approval from Amazon.
Some of the prohibited items for sale are anything illegal, alcohol, adult items, and weapons to name a few. Most items that can pose a health risk are prohibited for sale. These include hazardous materials, tobacco and used cosmetics.
Can You Sell on Both eBay and Amazon?
You can sell on both eBay and Amazon as long as you follow their rules. You can do retail arbitrage on Amazon and eBay at the same time. The only challenge with retail arbitrage is when you have limited stock. If you only have one item in stock and it gets sold on both Amazon and eBay, you need to cancel one order. Quora user Shivam Pandey also mentioned on-time orders as another challenge with selling on multiple platforms. If you do this often though, your seller rating will go down. And you could get your account suspended or canceled.
To prevent that, you may be forced to buy an item at retail price and sell it at a loss. So, instead of making a profit, you get a loss. And this is not a good way of doing business. If you have a limited stock of a product, choose one platform to sell it.
Quora user Vera Janie also stresses the benefits of multi-platform selling. On Amazon, you have tons of potential customers. On eBay, you can find buyers with different needs. Selling on Amazon and eBay allows you to diversify your income and gain market insights.
Is Amazon Retail Arbitrage More Profitable Than eBay?
Amazon retail arbitrage can be more profitable than eBay retail arbitrage if you manage your orders, customers, and inventory well. Business Insider featured the Needham brothers for making $30M in profit in 4 years. However, many sellers have also achieved success on eBay. According to Marketplace Pulse, the top 2 sellers are SecondSalecom and musicMagpie Shop. They make over $100K monthly.
This Redditor revealed making $40K-$60K net profit monthly from Amazon retail arbitrage. He started with only $25K in capital. Another individual mentioned earning $900 in profit weekly through eBay retail arbitrage.
One Redditor mentioned doing retail arbitrage on Amazon despite being a college student. He makes around $700 monthly. Another individual revealed earning 340% in profit margins from eBay retail arbitrage. He said he could've made $20K yearly with more effort. But he stresses that this business model isn't passive at all.
Both platforms offer significant income when you have the right systems and strategies. That's why it's important to observe the market and your customer's buying behavior. Pricing strategies and demand forecasting are also crucial.
Amazon Retail Arbitrage vs eBay: Does Local Lead Gen Offer Better Returns?
Retail arbitrage is a good model to follow for someone starting out in e-commerce. However, it doesn't provide the best conditions for an entrepreneur to thrive even in the two most popular marketplaces in the world. Local lead generation offers better returns than Amazon and eBay retail arbitrage. You can earn by simply creating a niche website for local services. Plus, the market is localized. You have fewer competitors than eBay and Amazon.
While Amazon is the largest marketplace in the world, the amount of competition on the platform is growing. More sellers entering the ecosystem. Even Amazon itself is creating its own private-label brands. They compete with their own sellers. More Reddit sellers seem to prefer eBay over Amazon. You could carve a niche as a seller of collectibles and vintage items. But eBay is slowly dying and losing users and sellers. Unless they make significant improvements, it might not be a good idea to start an eBay business now.
Local lead generation is an online business that gives you more control over how you do things. It offers more predictable income while giving you more time for yourself. It works by building websites for niche services in local areas. You have to rank your sites organically on search engines. Once you top the SERP rankings, you can get unlimited free leads. Sell these to local businesses, and you can make up to $10,000 monthly per site. You maintain control over your business. You also have that predictable income.
Choose a business that gives you 80% to 95% profit margins. If you want less competition and a growing market, then a local lead gen biz is the right fit for you.
