Are you choosing between Amazon Retail Arbitrage vs eBay? What do experienced e-commerce sellers prefer?
Sellers who like customer service and who want to outsource inventory management and shipping prefer Amazon. Those who want to sell more products and don't like to deal with too many strict policies prefer eBay.
But which platform is best for you? In this article, you'll discover 6 reasons some sellers prefer doing Amazon retail arbitrage and 4 reasons other sellers prefer eBay retail arbitrage.
Both platforms though suffer from intense competition, unpredictable income, and high time commitment. I believe it's better to start an online business that gives you more control over how you do things, gives more predictable income, and doesn't take so much time. In my experience with local lead generation, which involves owning and renting out your own digital asset, you maintain control over your business. You also have that predictable income. And, once you rank your site, very little maintenance is involved.
What is the Difference Between Selling on eBay and Amazon?
Amazon
eBay
Market Size
larger user base. 310M users and still growing
large user base but declining. 138M users
Fulfilment Options
FBA or FBM
merchant only
Continuous Improvement
continuous improvement of platform
seldom have improvements
Product Listing
can scan to list items
can only scan to list trading cards. other items listed manually
Customer Trust
high customer trust; 2020 Trusted Brand
low score on Trust Pilot
Inventory Handling
with FBA, Amazon handles inventory
need to handle their own inventory and storage
Product Restrictions
many restricted brands and categories
less restrictions
Return Policy
allows customers to return for any reason
allow sellers to set their return policy
Competition
heavy competition from other sellers and even Amazon
still have competition but can carve own niche without fearing competition from eBay
Seller Fees
higher fees
lower fees
Income
unpredictable
unpredictable
Sourcing
takes a lot of time and effort to source products
takes a lot of time and effort to source products
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, but Amazon has a bigger market and value-added features like Prime and FBA.
Pros and Cons of Amazon Retail Arbitrage vs eBay
Pros of Amazon Retail Arbitrage
#1. Market Size
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 and 200M of those are Amazon Prime subscribers.
Prime customers are more likely to shop because of free shipping and fast delivery. This increases visibility and sales of products, another plus for Amazon FBA retail arbitrage sellers.
#2. Fulfillment By Amazon
This is an important point, though. An arbitrage Amazon seller needs to use the Fulfillment by Amazon (FBA) program to take advantage of the Prime program. Almost 50% of Amazon sellers use FBA, according to Amazon. While it adds fees to your cost, the increase in sales can often offset this added cost. Sellers who use FBA experience about a 20-25% increase in sales on average.
FBA is a key advantage for the Amazon retail arbitrage seller. It simplifies the shipping and handling process, allowing you to focus on product research and gaining more inventory. For retail arbitrage, you want to spend less time packing and more time sourcing products.
#3. Seller Tools
Amazon provides seller tools and analytics to help sellers track their sales and improve their business, tools such as the Amazon seller app, FBA revenue calculator, and product opportunity explorer, among others. This helps the Amazon seller systematize his business and saves time.
#4. Continuous Improvement
Amazon continues to invest in infrastructure to help sellers. Amazon has invested more than $30 billion in logistics, tools, services, programs, and people to support the growth of its sellers. Responding to increasing complaints of buyer fraud, Amazon invested more than $700 million in combating fraud and abuse. As a seller, you can look forward to continuous improvements from Amazon.
Cons of Amazon Retail Arbitrage
#1. Product Restrictions
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 can also happen that you’ve been selling a brand for years that suddenly become gated. As a retail arbitrage seller, you don’t have a fight in this policy other than to get approval from Amazon to sell the brand.
#2. Return Policy
Amazon has strict return policies in place to maintain customer trust, which 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 like user reefcreatorsinpa about this issue.
#3. Competition
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 2,000,000 sellers on Amazon and about 3,700 sellers join every day. Foreign sellers come in, especially from China, and undercut everyone in the category they entered. And the biggest competitor is Amazon itself, entering your category.
Amazon has 118 of its own private-label brands like Amazon Basic, Happy Belly Snacks, Amazon Collection jewelry and Amazon Essentials clothing, among others. They are continuing to invest in more private label brands. They have an insane advantage and if Amazon enters your category, it’s going to be very hard to compete.
#4. Seller Fees
Amazon charges higher fees than eBay for selling and fulfillment. The higher fees cut into seller's profits so retail arbitrage sellers really need to buy at the right price.
For an individual seller account, you will pay $0.99 for every listing sold. When you are selling over 40 products per month, it’s time to move to the professional seller account, which costs $39.99 per month.
You also pay referral fees when items are sold, usually, 8-15% depending on the category except for Amazon Device Accessories (45%), Clothing and Accessories (17%), Fine Art (5-20%), Gift Cards (20%), Jewelry (20%), and Watches (16%).
If you avail of Amazon FBA, you will pay fees for shipping and storage that vary depending on the size of your products. It’s not a percentage of your selling price, so you need to use the FBA calculator to 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 large storage space because you need to be selling many items to make it a worthwhile business.
#5. Sourcing
Sourcing products is time-consuming even if you have a list of top stores for retail arbitrage sourcing. Most of the time, you will rely on big-discount or 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. To save time, use the top retail arbitrage sourcing tips.
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 will allow you to scan online stores for potentially profitable products.
Do sellers recommend Amazon?
Some sellers recommend Amazon for the level of customer service they provide. In comparing Amazon vs eBay, the selling experience is different according to experienced e-commerce sellers on Reddit. Some don't like Amazon because of the long wait time to get paid and product gating.
Pros and Cons of eBay Retail Arbitrage
Pros of eBay Retail Arbitrage
#1. Relaxed Return Policies
eBay has a more relaxed selling environment compared to Amazon, with fewer restrictions and policies. Sellers are given the freedom to set their own return policy although 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.
#2. More Products to Sell
eBay has a wider range of products available, including used and vintage items, which can provide more opportunities for profit. eBay does not have gated brands, so an arbitrage seller can sell almost anything. Of course, there are prohibited items the same as Amazon, but brands don’t get to tell eBay to restrict selling their products.
#3. A Ready Community of Collectors
While eBay may have a large and active customer base, it’s not as large as Amazon’s. But what it does have is a community of buyers that are dedicated to buying collectibles and vintage items.
Cons of eBay Retail Arbitrage
#1. Customer Trust
eBay's reputation and customer satisfaction is lower compared to Amazon. Amazon has invested a lot of money and resources to earn the trust of buyers through many tactics such as giving fast, free shipping and the A to Z Amazon Guarantee.
eBay's customer support and resolution process can be slow and ineffective, which can lead to disputes and negative feedback for sellers and the platform. On Trustpilot, eBay has a rating of 1.2 stars.
#2. Unpredictable Income
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, which can get tiring when you have to respond to all these messages daily.
#3. Product Listings
Listing products on eBay can be a chore. Unlike Amazon, where you don’t have to create a product page if the product already exists, you need to create listings for all of your products on eBay.
#4. Inventory Handling
eBay does not have a fulfillment or storage service, unlike Amazon FBA. 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 storing your products, you could end up wasting time retrieving sold products. Also, you need to spend time and money packing your items.
Do Sellers Recommend eBay
On Reddit, some sellers recommend eBay because it has low fees. User orangecrushpatches on the r/Flipping subreddit only runs an eBay store because of costs. He doesn’t have a lot of listings so that’s why he’s opting for eBay, although I think he can still open an Amazon store using the individual seller plan.
User fly4fun2014 on the r/Ebay subreddit used to do Amazon retail arbitrage, but they suspended his account when a competitor filed a complaint saying that he sells counterfeit items. He stopped selling on Amazon and sells exclusively on eBay now.
On the r/UnpopularOpinion subreddit, user dande1on99 recommends eBay for its fees and Amazon for its ease of use.
User usernames_suck_ok in the r/ecommerce subreddit thinks eBay is actually easier to use and significantly better than Amazon. To him, it’s better when selling no-name stuff or your own products. But he acknowledges Amazon has a bigger market because it operates as a shopping search engine.
Some sellers, like BoneGolem2 on the r/Flipping subreddit, recommend eBay because they can sell more products.
On Reddit, it seems more sellers prefer eBay over Amazon, and the numbers don’t lie. eBay has more than 18M sellers as of 2022, but that number is down 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.
Frequently Asked Questions About Selling On Amazon vs eBay
Retail arbitrage is simply buying one item at one store and reselling in another. You can do retail arbitrage on both Amazon and eBay as long as you follow the rules.
eBay allows retail arbitrage. As long as you are the owner of a product or the “seller on record”, there’s no restriction on where you can resell it as long as you are not selling a prohibited product.
You can sell many types of products on Amazon and eBay for retail arbitrage. Amazon started as a marketplace for books but has since branched out to allow sales of 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. eBay is also famous for collectibles, vintage and obscure items which are profitable niches if you know what to look for.
Note that there are products that are prohibited from being sold on these platforms. 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 and lose money. Also, Amazon has product categories that are restricted for new sellers but can be lifted by requesting for 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 such as hazardous materials, tobacco and used cosmetics. Again, it’s best to check the platforms for their specific prohibited lists.
If you are doing retail arbitrage the right way, you don’t need to worry about eBay and Amazon actually 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 through retail arbitrage.
Both eBay and Amazon also prohibit one dropshipping practice, which is also arbitrage. They don’t want you to dropship products from retail stores because you need to be the “seller of record”. This means your name needs to show up on the packaging, receipts and invoices. This is to prevent buyers from being confused. And if they need to return products or make complaints, it’s clear who they will complain against - the “seller of record”. Retailers have no way to do that, so eBay and Amazon prohibit this practice. However, you may dropship from wholesalers as long as the packaging and invoices show you as the “seller of record”.
Conclusion: Amazon Retail Arbitrage vs eBay - Which is Better?
While retail arbitrage is a good model to follow for someone starting out in e-commerce, it doesn't seem to provide the best conditions for an entrepreneur to thrive even in the two most popular marketplaces in the world.
While Amazon is the largest marketplace in the world, the amount of competition on the platform is becoming more absurd every day with even more sellers entering the ecosystem and Amazon itself creating its own private-label brands and competing with its 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 in the future to get users to come back, it might not be a good idea to start an eBay business now.
If you're like me and you want a business that is predictable, scalable, and profitable, local lead gen may be the right online business for you. It's a business with less competition, has a growing market, and provides predictable passive income.
