EBay dropshipping vs Amazon dropshipping is a common question for aspiring entrepreneurs looking for an online business model with an affordable startup cost and low entry barrier. Because both the dropshipping business model itself and these platforms are extremely accessible to anyone, selling on either platform comes with similar challenges. You’ll have to compete with millions of other sellers, find suppliers you trust to provide high-quality products with sufficient shipping times to maintain customer satisfaction and high platform ratings, and follow strict platform rules regarding dropshipping.
However, you can find success dropshipping on either eBay or Amazon. The main difference between selling on the two really comes down to a few differences between the platforms themselves, like what type of customers shop there and what products sell better on each. In the following article, we’ll take a closer look at these platform differences so you can decide which is a better opportunity for your dropshipping business. Plus, a life saving tip that can help you avoid a financial catastrophe for your dropshipping business!
What is dropshipping?
Before we compare dropshipping on these two platforms, let’s overview what the dropshipping business model actually is. With dropshipping, you profit by acting as the middleman between a supplier and a customer. You’re responsible for presenting the product to potential customers either by creating your own virtual storefront or, in the case of selling on platforms like eBay and Amazon, by using a product listing. Dropshippers are able to profit because they source products for cheap from places most internet shoppers don’t bother looking. For example, dropshippers use supplier marketplaces like AliExpress to find products at extremely low prices, and then customers turn to familiar places like eBay or Amazon to buy those products for the “fair” market value, allowing dropshippers to pocket the difference.
The biggest draw to dropshipping is that you don’t have to do any inventory management or even pay for products until after they’re sold. Instead, the customer pays you for the product, and once you receive payment, you go to your dropshipping supplier to purchase the product from them and provide them with the shipping address of your customer so that the product goes directly from your supplier to your customer.
Alternative Online Business Model for Long-Term Passive Income
For those who prefer to be engaged and actively working on their business, dropshipping is an excellent option. However, if you’re looking for a more passive income online business, local lead generation may be a better option for you. With local lead generation, you develop a piece of valuable digital real estate, and then “rent” it out for hundreds to thousands of dollars each month with very little maintenance or overhead cost. Learn more about local lead generation here.
Why decide between eBay dropshipping vs Amazon dropshipping?
An Amazon or eBay dropshipping business allows you to access a large marketplace of established customers. While you could create your own dropshipping store, and many people find Ecommerce success going this route, you’ll then be solely responsible for attracting customers to your website. For example, if you have your own Shopify store, you’ll have to work hard to draw potential buyers to your website through SEO and advertising. Although you’ll still have to do some SEO and advertising when dropshipping from a platform, the purchase intent of someone searching on Amazon or eBay is much higher than your Shopify store showing as a result on informational search engines like Google or Bing. Furthermore, people are accustomed to and trust buying through these established platforms over a small-scale online store.
So which of these two platforms is better for your drop shipping business?
eBay’s global reach is impressive
According to eDesk, there are 159 million active users on eBay, and around 109 million visitors browsing through products on the platform each month. With 23 global sites, eBay has a large international presence. In fact, over half of its annual revenues come from buyers outside the United States.
eBay seems to draw users that are young and tech-savvy. The largest age group demographic for eBay users is 18-24 years old, followed by 25-34 as the second largest. The majority 61% of sales on the platform occur through eBay’s mobile application. Interestingly, men seem to favor the market more than women, as 62% of users are male.
Amazon Prime members are high value
Amazon draws 197 million shoppers each month that buy over 4000 products per minute, according to Oberlo. Its customers aren’t your ordinary customer though, as a large portion of them are high-value Amazon Prime members. Amazon Prime members spend an average of over $1400 a year on the platform.
According to SimilarWeb, the majority 60% of shoppers on Amazon are women. Furthermore, research shows that Amazon shoppers tend to be wealthier, with an average age between 45 to 54. Amazon shoppers are more likely to have children and college educations as well, notes RepricerExpress.
Platform selling fees
You don’t need a subscription as an eBay dropshipper, but it could save you
There are a few fees to consider when dropshipping on eBay. These are the most common dropshippers can expect to pay.
eBay charges a percentage fee on the total sale price of the item you’re selling. In most cases, it’s 10% or lower.
This is a fee eBay charges sellers to list their items on the platform. Sellers without an eBay store subscription get 50 free listings per month, after which the cost for most categories is $0.35/item.
These are optional fees that many dropshippers end up paying to increase their opportunities. Listing upgrades allow you enhancements like international visibility, bold text, and larger product images.
Many dropshippers can also benefit from paying the subscription fee associated with running an eBay store. The eBay store subscription fee ranges from $4.95/month for small dropshippers up to $59.95/month for high-volume sellers. This is an option expense, especially for small dropshippers just getting started, but it makes it easier to scale your business by providing increased free listings, lower final value fees, and access to additional tools that increase conversions.
Avoid FBA fees when dropshipping on Amazon
Sellers are quitting Amazon FBA because of the rising fees associated with outsourcing fulfillment and customer service to Amazon. However, dropshippers automatically bypass these FBA fees by outsourcing fulfillment to the supplier instead of Amazon. Even so, there are two main fees an Amazon seller has to consider when dropshipping through the platform.
Amazon sellers have two account choices when signing up to sell on Amazon. You can either choose the Individual selling plan and pay $0.99/item sold, or pay a flat $39.99 flat rate fee to sell unlimited products with an Amazon professional account.
Percentage Amazon charges on the sales price for listing on its platform. Referral fees for most categories on Amazon range from 8 to 15%. If you’re planning to sell any sort of clothes or accessories like T-shirts, that goes up to 17%.
Sell only against other third-party sellers on eBay
According to eDesk, there are 19 million eBay seller accounts worldwide. eBay doesn’t sell on its own platform, but you can expect to compete against anyone from small-scale retail arbitrage sellers with a few sales a month to large brands like Adidas, Best Buy, and Dyson. As is the case with any marketplace that is easily accessible with low barriers to entry, competition on eBay is high.
Amazon sells its own products on its platform
Like eBay, you’ll be competing with other-third party sellers on Amazon. However, you’ll also have to compete with Amazon products too, as Amazon has their own private label brands they sell on the platform, like their Amazon Basics line. According to eDesk, there are around 9.7 million Amazon sellers worldwide, but just under 2 million are actively selling on the platform. While fewer sellers could mean less competition, the reason there are so many fewer sellers may just indicate it’s more difficult to excel on the Amazon.
Dropshipping rules and regulations
Dropshipping from retailers is against eBay’s rules
Dropshippers can use eBay for their business operations, but not all dropshippers. If you’re planning to dropship by purchasing from another retailer or marketplace, you may want to look elsewhere because eBay specifically states that is not allowed. If you want to dropship on eBay, you’ll have to source and organize order fulfillment from a legitimate wholesale supplier. Not following this policy can cause eBay to take action against you, including:
You need to be the seller of record if you want to be an Amazon dropshipper
According to Amazon, dropshipping is not acceptable on their platform, UNLESS it’s clearly stated for the customer that you are the seller of record.
To remain in compliance with Amazon’s dropshipping policy, you should:
Failure to comply with Amazon’s dropshipping policy could lead to restrictions on your ability to use Amazon's Merchant Fulfilled Network (MFN).
Electronics are most popular on eBay
According to Oberlo, 16.4% of products sold on eBay are of the “Electronics and Accessories” category, which is the best-selling on the platform. An eBay customer is also very likely to turn to the platform for:
Products for the home are where Amazon really excels
"Home and Kitchen" is by far the most popular category for Amazon sellers, with 32% of sellers listing under the category according to Jungle Scout. Beyond that, these categories are also hot for Amazon sellers.
Platform visibility and advertising
eBay shows the most relevant listings with its Best Match algorithm
Completing a product listing is simple and easy on eBay. You don’t need to include a barcode number on the product when setting up the eBay listing, and the turnaround time for seeing the listing on the platform is within 24 hours. eBay dropshippers optimize for eBay’s Best Match algorithm by completing listings fully and accurately, providing reasonable shipping times, and using competitive prices. Your track record as a seller is very important to your product listing ranking on the platform.
Where eBay listings really differ from Amazon is that dropshippers can either use an auction or fixed pricing style. This can be useful to dropshippers because it can tell you how customers actually value your product and provide data showing whether the product could be a long-term winner. Auction style also allows potential customers to find the product more easily.
eBay Promoted Listings are useful if you’re in a competitive niche
If you want to skip the line of SEO and get your product listing showing on the first page, you can use eBay Promoted ads. According to data by WebInterpret, Promoted Listings on eBay increase impressions by 4 - 5x and generate up to 70% increase on product page visits. The cost you pay for the eBay ads is taken as a percent of the sale price. Promoted listings work on a bidding system where eBay dropshippers can bid from 1 to 20% of the item’s price.
Optimize your product listing with Amazon SEO
When setting up a product listing on Amazon, you’re required to include barcode information to complete the listing and you can expect it to go live within 72 hours. Amazon product listing optimization requires in-depth Amazon keyword research, as Amazon’s algorithm is complex and uses both front end and back end product listing data for indexing and ranking on the platform. Amazon SEO sets a solid base for your product listing to succeed, but you’ll also need to provide a high-quality product that can generate healthy sales volume and product ratings if you want to move up in Amazon’s organic ranking.
FBA sellers have a major advantage over Amazon FBM merchants, which is how dropshippers sell on Amazon, so it can be extremely difficult to get dropshipping products to rank well organically on Amazon. FBA products are fulfilled by Amazon and reach the customer rapidly, while dropshiped FBM products can take much longer to reach the customer, so Amazon’s algorithm prefers FBA products.
An advertising budget is necessary for all Amazon sellers, especially dropshippers
If you want your product to be seen on Amazon, especially if you’re at a disadvantage to rank organically from the Amazon algorithm as a FBM drop shipping seller, you’ll need to spend on Amazon advertising if you want to make any sales. Amazon Sponsored Products ads allow you to stick your product listing on the first page for keywords of your choice. Amazon advertising works on a bidding system, with you setting the price you’re willing to pay if someone clicks on your advertisement. According to Jungle Scout, you can expect to pay anywhere from $0.05 up to $10/click, depending on the category and niche of your product.
Improve your opportunities by selling on both platforms together
Both eBay and Amazon provide an excellent place for a drop shipper to list and sell their products to an enormous marketplace of global customers. In fact, many dropshippers are likely to find it beneficial to sell on both platforms. Dropshipping on both eBay and Amazon can allow you to:
- Increase profits - As a dropshipper, you operate on thin margins so you have to sell many units in order to make a decent profit. By selling on both platforms, there’s a good chance you’ll be able to dramatically increase your sales potential, especially if you find a few excellent products that do well on both platforms.
- Improve testing - Part of the product research process for dropshipping is doing a small-scale test on the platform before increasing your advertising budget. You can test on both platforms and see which does better for a specific product.
- Expand your base of potential buyers - Either of these is considered a massive dropshipping platform by itself. Put together? You have some serious reach!
- Sell a greater catalog of products - Demographics are slightly different on these platforms, so you can incorporate separate selling strategies for each to sell more.
- Protect yourself from a financial catastrophe - When you’re operating by somebody else’s rules, you have to tread carefully. Account suspension, especially in a somewhat gray area business like dropshipping, is not uncommon on either of these platforms. If you sell on both, at least you don’t lose all your income if one of your accounts is suspended.
Dropshipping isn’t a get rich quick scheme, but it’s a proven online business model for making a solid income online with minimal risk. Amazon and eBay both present opportunities for dropshippers and the question of which to sell on really depends on what you’re selling.
Creating long-term income can be nearly impossible with the dropshipping business model, though. Besides local lead generation as a long-term passive income generating alternative, Amazons FBA program can provide similar benefits to dropshipping for those who want to sell physical products. With Amazon FBA, you outsource inventory storage and customer service to Amazon. Outsourcing fulfillment to Amazon will allow you to better compete in the Amazon marketplace. Amazon FBA also works with many Ecommerce business models, like retail arbitrage, wholesale and private label. No matter if you choose dropshipping, Amazon FBA or another online business model, the most important thing is to take action and make your first dollar online to prove to yourself this is possible.