The Ultimate Guide To Dropshipping On Amazon And eBay
You are getting into the dropshipping business and have come to the question: “Should I start dropshipping on Amazon or eBay?
To find the right answer to this question you need to consider numerous factors. We prepared this guide to help you decide which platform is the most suitable for you. We will compare and review both platforms and their unique services to make it easier for you to pick the best one.
In the long run, you will gain more knowledge on the topic, and then decide whether you would like to start your business with either eBay or Amazon.
Before we begin, remember this – even if you decide not to go with either of these two marketplaces, there are still plenty more out there. Most of these marketplaces require subscription and other fees, but the profit margins may be greater than you can imagine.
We will start by defining the dropshipping model and its qualities. Later, we will have a look at the two of the most famous eCommerce marketplaces – Amazon and eBay. Lastly, there will be a bonus section, so make sure to stay with us until the end of the guide.
First and foremost, let’s define the process of dropshipping for the newbies reading this. Knowing what you are getting into is crucial for achieving success in the dropshipping industry.
Dropshipping is a model of online selling goods without having to carry a warehouse or storage space. To clarify, the dropshipping model allows you as a seller to place products in your online store without dealing with the packaging and shipping process. The one that is responsible for maintaining inventory and delivering your products to your customers is your supplier of goods.
More precisely, after your customer places an order in your store, you proceed with forwarding the order to your supplier. From that point, your supplier moves forward with the shipping of the package.
This eCommerce business model ensures low start-up costs, zero inventory costs, and higher security.
What roles play Amazon and eBay in dropshipping? Practically, on these platforms, you can open your online store and start your dropshipping business. Surely, you are wondering which one to pick. Continue further to learn more about selling on Amazon vs. eBay.
Even if you weren’t part of the eCommerce industry, we are sure that you have heard of the eCommerce giant Amazon. It is the top eCommerce platform that attracts every single online seller in the world like a magnet.
To put it in perspective, according to the Similar Web, Amazon holds the title of the most visited eCommerce and Shopping Marketplace in the world. What else do you need as proof of Amazon’s popularity?
As reported by Statista, in 2019, Amazon’s eCommerce sales in the USA amounted to $222.6 billion U.S. dollars and are projected to surpass $302 billion U.S. dollars in 2021.
Furthermore, Amazon announced that in 2019, they had around 50.000 sellers with revenue of over $500.000, while nearly 200.000 small and medium-sized businesses made over $100.000 throughout 2018. The good news is, more than 50% of all units sold in Amazon’s e-stores were made by these small and medium businesses. It means every seller has an opportunity to make a profit by investing time and money.
Similarly, as with Amazon, every human being has heard of eBay. You don’t have to be an online seller to know about this eCommerce marketplace.
eBay proudly stands on the second place on the list of the most visited eCommerce and shopping Marketplaces.
Moreover, according to the latest data published by eBay, there are 182 million active eBay buyers worldwide, which is a major advantage for dropshippers.
When it comes to eBay’s eCommerce sales in the USA, the data published on Statista shows a decline in 2019. The sales amounted to $33.33 billion U.S. dollars as compared to $35.63 billion in 2018. Additionally, eBay sales are expected to further decline in 2020 with a forecast of $31.66 billion U.S. dollars.
So, how to decide between these two major eCommerce marketplaces?
Regardless of their popularity, both Amazon and eBay characterize themselves with different features and qualities. It doesn’t mean that if Amazon is the number one platform based on annual sales it would be the better choice for you. Different businesses have different needs, therefore, you need to analyze and measure every single characteristic of both platforms. Only after this, you can decide which marketplace could best meet your requirements and preferences.
Let’s start by listing the details for dropshipping on Amazon and eBay to help you make a decision.
First off, you can’t think about selling on Amazon or eBay if you don’t know their dropshipping policies.
Let’s look closely at Amazon’s dropshipping policy. Although dropshipping on Amazon is acceptable and generally legal, there are some policy measures you must abide by to be able to sell on the platform.
- Make sure to identify yourself as the seller of your products on all information related to them (invoices, packaging, product slips, etc.)
- Take off all elements that contain information about your supplier before shipping them (product slips, invoices, packaging, etc.)
- Take care of issues with product returns and/or defects
- Comply with all other Amazon seller terms
Finally, Amazon strictly forbids purchasing goods from another retailer and having that retailer ship them to your customers.
If you can conform to these rules, you have a good chance to be a successful Amazon seller.
The same goes for joining eBay’s network of sellers. Ensure to review eBay’s dropshipping policy before opening your store.
Dropshipping on eBay is permitted, as long as it involves fulfilling orders directly from a wholesale supplier.
- Ensure to handle a safe delivery of your products to your customers
- Take care of timely shipping of your products
- Handle product returns and/or defects
Similarly to Amazon’s, eBay doesn’t allow listing an item in your store, then purchasing it from another retailer and having that retailer ship it to your customers.
Just like every other eCommerce platform, Amazon charges for its services. All in all, Amazon’s fees for selling are based on diverse factors such as selling plans and product categories. The platform has two main selling plans: Individual Plan ($0.99 per unit sold) and Professional Plan ($39.99 for an undefined number of units sold).
They also charge a referral fee for each item sold which amount is based on the product category. On the whole, Amazon’s referral fees amount between 8% and 15%.
Lastly, Amazon’s shipping fees vary based on whether the seller fulfills its own orders or uses Fulfillment by Amazon (FBA).
In short, the costs for selling on Amazon depend upon your product type, fulfillment service, and other optional services.
In contrast with Amazon, eBay follows a different approach for their selling fees. To begin with, they have two types of fees: insertion and final value fee which depend on the different product categories.
For most categories of items, sellers with a basic eBay account pay a standard final value fee of 10%. For books, music, DVDs, and movies the final value fee amounts to 12%, while for selected women’s and men’s fashion, the final fee is 0% if the selling price is $100 or more. In case the price is less than $100, the final value fee equals 10%.
Amazon has a rather flexible policy regarding international sales. The eCommerce giant consists of 16 online marketplaces, covering some of the biggest markets around the world. It’s a great choice if you’re looking to expand your dropshipping business internationally and reach millions of customers.
You can officially sell via Amazon to Europe (Germany, United Kingdom, France, Spain, Italy, and The Netherlands), North America (United States, Canada, Mexico, and Brazil), Asia-Pacific (Japan, China, India, and Australia), and Middle-East (Turkey and UAE).
What about unifying accounts? Amazon offers two types of unified accounts – one for North America, and another one for Europe. This allows you to sell on all markets that fall under Europe and North America. However, to sell in the Asia-Pacific region, you’ll need to register a separate account for each country that falls under this category.
Still, before you start selling on Amazon, learn what are the requirements for each of the 16th marketplaces, including taxes and regulations. Only after that, you can consider expanding your business into a new marketplace.
Unlike Amazon, eBay has a more rigorous policy concerning international markets. You’ll need to fulfill several criteria to be eligible to sell internationally on eBay.
First, you need to have an account that is in good standing. Then, you need to have a PayPal account and be PayPal verified. Additionally, you need to offer PayPal as a payment option.
Furthermore, your seller account needs a minimum of 10 feedback points and the first sale must not have happened in less than three months.
There is a limit on which categories you can sell on eBay’s international markets. They’ve excluded specific ones, including car parts, vehicles, DVDs, and video games.
To enable international sales, you can do so by offering to ship to either Europe, the U.K., or worldwide. Also, it’s highly important to specify which shipping service will deliver to any of these regions so that you can rank better in the search results.
You can choose whether you want to sell your products worldwide, or in selected countries only. The products must match the eligibility requirements in each country/region where you plan on selling. You can check out eBay’s International trading policy.
eBay has several unique websites meant for different parts of the world. You can sell in Australia, Austria, Belgium, Canada, China, France, Germany, Ireland, Italy, Hong Kong, Malaysia, Netherlands, Philippines, Poland, Singapore, Spain, Switzerland, Taiwan, Thailand, the U.K., the U.S., and Vietnam. You can try selling in any of these countries, as long as you follow the cross-border rules and regulations provided on-site.
As an overview, these are some of the products you can sell on Amazon:
- Women’s fashion
- Product sampling
- Pet supplies
- Sports and outdoors
- Baby products
- Tools & Home improvements
- Health & Household
- Toys & Games
- Smart home
- Arts & Crafts
- Home & Kitchen
- Video games
- Industrial & Scientific
- Beauty & Personal care
Even though selling in a category doesn’t require Amazon’s approval, certain products might require approval for selling. Therefore, before deciding what kind of products you are going to sell, it’s vital to know which categories and products require approval by Amazon.
As an overview, these are some of the products you can sell on eBay:
- Books, Movies & Music
- Collectibles & Art
- Home & Garden
- Sporting Goods
- Toys & Hobbies
- Business & Industrial
- Health & Beauty
Additionally, while you can sell numerous products on eBay, in compliance with local legal restrictions, there is a list of eBay’s prohibited and restricted items. Ensure to double-check the nature of your products before entering the eBay marketplace.
Finally, by the looks of it, Amazon has its product categories divided without having to add too many subcategories. On the other hand, eBay has fewer categories, each one with several subcategories, to make it appear more organized.
According to users, Amazon is better with most product categories due to following the trends in global market demand. Vice versa, eBay is much more popular with its ‘eBay Motors’ category, mainly because of electronics parts and accessories for cars.
Amazon leads the list because they focus on current market trends instead of total sales per category, while eBay’s marketing team probably checks statistics for each category before they place new products for sale.
Amazon has its own fulfillment service called Fulfillment By Amazon (FBA) that was launched in 2006. Since then, their service operates with the aim to provide storage, packaging, and shipping to sellers. FBA is a program that enables sellers to ship their products to Amazon’s fulfillment centers. They are stored in these facilities until an order has been placed. After this, Amazon proceeds with preparing, packaging, and shipping the product(s) to the end-customer(s).
If you decide to go with FBA there are some fees you will need to pay to Amazon for its services. Fair enough, if you are an FBA seller, Amazon will be completely responsible for handling the orderly packing and shipping. This comes at a fee. The FBA fees are determined by the size and weight of the products you are selling, starting from $2.41 and ending $5.26 for standard-size products. Additionally, there are special fees for oversized products starting at $8.26 for small oversized items to $137.32 for special oversized items.
Aside from this, the FBA program comes with storage fees for the space your products seize in Amazon’s fulfillment centers. These fees are charged monthly or long-term for products that are stored for more than 365 days.
In a similar way, by the end of 2020, eBay will launch its own fulfillment service called Managed Delivery. The idea is to provide the end-customers with timely and reliable delivery. However, unlike Amazon who owns and manages its own warehouse network, eBay will build a network of third-party logistics partners(3PLs) that will oversee the storing, packing, and delivery of products.
eBay is expected to build strategically located warehouses to enable sellers to keep their inventory closer to their customers. The goal is to guarantee timely and fast delivery and even reduced shipping costs.
We have explained the essential differences between Amazon and eBay to encourage you to make the right decision for your online business. In this bonus section, we will talk a little bit about how to bring the most of both eBay and Amazon by using practical keyword tools.
Selling on Amazon and eBay can be significantly easier and simpler if you invest in implementing keyword tools. This is how sellers on Amazon and eBay make millions each year in sales. To start making profits on these marketplaces in the blink of an eye, these tools are an absolute necessity.
The majority of the keyword tools are known to provide valuable word combinations that, when placed strategically, can boost a product or service and make it appear on the first page results. We gathered some of the best tools that, depending on your platform of choice, you can incorporate in your SEO strategy to create a lucrative online business.
Available both as a free and paid version, the Keyword Tool is visited by over 4 million SEO researchers each month. This tool can provide you with over 750 long-tail keyword suggestions for every term you put in the search bar. Offering a large range of keyword results, Keyword Tool helps its users gain knowledge of their competition on both Amazon and eBay.
Although not free to use, MerchantWords is still a very useful tool with precise results and dominant categories. SEO researchers and companies pay $60/month to check out the most popular keywords on Amazon. However, some of its advantages include ‘autocomplete’, a very convenient feature to help speed up the process.
Algopix is an effective and useful tool used for online stores on eBay and Amazon. It is designed to save you time and resources and increase your sales. With it, you can perform bulk research and analyze different price quotes, as well as get valuable insights for your competitors’ businesses.
One of the best tools on the list, AMZ Tracker is unfortunately highly expensive compared to other premium tools. Pricing packages reach up to $400 per month, although you may choose basic packages for up to $40 per month (when billed annually). This Amazon SEO tool will not only show results of currently popular keywords, but it may be able to predict future popular keywords.
Keysearch is a tool that guarantees to make the most of your SEO efforts and eBay experience. It is simple and easy to use keyword generator with which you can search for and find keywords that will take you one step ahead of your competitors. It comes with a one-month free trial, after which you could pick one of the two available pricing plans – Starter for $17 per month, or Pro for $34 per month.
The Helium 10 Chrome extension is a complete web software full of useful tools such as keyword trackers, processors, research, trends checker. It’s available for multiple users to work on it at the same time, but it does require you to install their Chrome extension for a better experience. Prices vary from free up to $297 per month. Overall, it’s one of the best amazon keyword tools available on the market.
Terrapeak is one of the most popular tools used by eBay sellers. It supports users to which products to sell, as well as when and where to sell them. Furthermore, it provides the opportunity to shape up the best prices for your products by analyzing the efforts of your competitors. Terrapeak is a valuable tool equipped with the option to search by keyword, product, and filters to get to the necessary information.
Sonar is available both as a web app and a Chrome extension. This tool’s complex algorithms have analyzed more than 110 million keywords and 156 million products so far, using only top-page Amazon Standard Identification Number (ASIN) results. This provides the user with essential information on their competitors.
The Keyword Tool Dominator (KTD) is free to try, though you’ll have to make a one-time purchase once the trial period expires. It is available for Amazon to help you find product keywords and auction listing keywords from eBay. Regardless of the platform, you are selling on, with KTD you can find a relevant niche, short-tail, and long-tail keywords.
Available at $39.95/month with free trial included, KeywordInspector offers a unique “reverse ASIN” tool, filled with over 72 million keyword combinations. It’s available for Amazon’s U.S.A., U.K., Germany, Canada, Mexico, Italy, India, and Japan web editions. Many reviewers rate it as one of the best Amazon keyword tools, so if you are planning to join Amazon, you can check it out.
Launched in 2016, ZIK Analytics is used by over 20,000 dropshippers, resellers, and wholesalers, who are part of the eBay network. This tool provides can help you become a better eBay seller by giving you the possibility to discover which are the most profitable items to sell. Besides, with Zic Analytics you can learn more about how to rank higher than your competitors. The tool comes with two pricing plans – $59.99 if you decide to be billed monthly, or $40, if you go with the annual plan.
A free Amazon SEO tool (paid editions are included) to help rank better on the market. Pricing varies from $20 to $180/month, but the free edition can also do the work if used properly. There’s a week’s trial for all pricing plans in case you want to upgrade this tool. You can also track keywords and sales with it.
AmaSuite is available for multiple countries such as the U.S., Canada, U.K., Germany, Italy, France, etc. Besides, it’s also available for Mac as well as Windows OS. There’s a 30-day guarantee and it can be bought either for $268 (in 4 monthly payments) or a full-pay option of $197, which saves you $100. Bonus tools are available at your disposal and the creators claim you’ll ‘uncover hidden product opportunities’.
Another option for a keyword tool for both eCommerce platforms. No matter if you choose to sell on Amazon or eBay, you can use Kparser to maximize your sales. This tool can provide you assistance in finding the most appropriate short-tail and long-tail keywords for your product titles and descriptions.
Trusted by more than 4,500 SEO professionals, Keyword Keg is an effective tool for keyword research and analysis. With it, as a seller on eBay, you can research and find listing ideas, as well as investigate and compare product listings. Keyword Keg can help you save valuable time by easily optimizing your eBay listings.
To sum up, each marketplace has unique traits and services for starting and growing a profitable online store. Selling on Amazon vs. eBay is a subject of discussion across numerous online forums where eCommerce professionals share personal stories and experiences. Each owner of an online store has a favorite marketplace for placing its products and you can’t argue with that. Each opinion is based on personal experience, therefore you shouldn’t blindly follow everyone’s advice.
The right approach is to measure the pros and cons of both marketplaces and compare them against your needs and requirements. Whatever you choose after reading this guide for dropshipping on Amazon and eBay, you won’t be mistaken.
Ultimately, your decision should be based in accordance with your type of product, preferred fulfillment, and desires for international business expansion.