eCommerce Sites vs. eBay: What Do Most Businesses Prefer?

Posted by on October 15, 2012 in Retail, Sales 2.0 [ 3 Comments ]

ecommerceMerchants can sell pretty much everything online, whether on your own ecommerce site or those such as eBay. There are auto parts stores (known for carrying sometimes millions of SKUs online) and those who do well for themselves by carrying a single product.

The factors that determine how many products you can list for sale depend on the type of merchant, niche, and the competitive landscape.

Selling on eBay

One of eBay’s biggest merchants, Cameta Auctions – a camera equipment retailer, has over 9,000 items listed in fixed price and auction formats in their eBay store. Because of the nature of their niche, specialty electronics, they are likely not operating on huge margins, but play a volume game because they have many auctions closing at any given time.

The secret to their success lies in their approach to using all of the listing formats possible. Currently, they have just a shade below 9000 listings live and a little less than 1% of their items in a true auction format where the starting price has been $0.99.

This works for them because their loss leaders are mostly point and shoot digital cameras that are very main stream and in high demand because of their attractive price point. Buyers have very little self-control when they face the prospect of getting a shot at a cheap digital camera with the bidding starting so low. On the surface this loss leader strategy ends up working out because of the sheer volume of buyers they get from running these “penny auctions.”

eBay vs. Traditional eCommerce

During the time I worked at eBay in their Seller Development Department, I was part of a rather large scale study that followed eBay and eCommerce selling trends for eBay’s top sellers over a 3 year period of time. The consensus was that 9:1 online merchants favored selling on their own websites over eBay’s platform.

These are the top five reasons why merchants would rather sell on their own websites than eBay:

  1. They are charged a final value fee for successfully sold items through eBay; with Paypal, usually no less than 12% of the total sale. Merchant account fees, however, are the only fees assessed at the end of a transaction taking place on a personal ecommerce site.
  2. Store branding opportunities are easier to come by with their own sales rather than sales made on eBay (merchant website URLs were more memorable than eBay seller IDs.) Also, because of the 1,000s of sellers on eBay, differentiation becomes an additional challenge.
  3. Merchants are able to price their products according to their own business needs and are less subject to the pricing whims of the eBay marketplace.
  4. Merchants’ internal customer service issues for eBay sales create challenges not encountered with sales on their own websites – overall, eBay sellers felt their buyers were less familiar with purchasing online.
  5. eBay’s feedback policies and DSRs (Detailed Seller Ratings) have become increasingly adversarial for eBay’s top sellers.

Here we have covered why merchants favor selling on their own websites, but there are nearly twice as many reasons why merchants of all sizes must consider eBay as a core sales channel; the biggest reason to leverage eBay is eyeballs. Many small merchants who are starting out selling online would not have the luxury of exposing their products on an Alexa top 10 web property, but with eBay they do.

While merchants must make selling on their own eCommerce platform a focus/priority, it’s also important to consider leveraging websites such as eBay as an integral part of a sound selling strategy.

Photo credit:

Jordan Foutz is the Director of Marketing at Pinnacle Cart.  Pinnacle Cart offers eCommerce software  to SMBs who are serious about selling their products online. Some unique features of Pinnacle Cart include easy eBay listing export, quick and easy Facebook store setup, a mobile web option for merchants, and adherence to the industry’s highest security standards: PCI / PA-DSS compliance.

3 thoughts on “eCommerce Sites vs. eBay: What Do Most Businesses Prefer?

  1. avatarGail O

    We sell on eBay, Amazon and our own website. Yes, it is more profitable to sell from our website. It is difficult to build your brand when you are selling on eBay as the customer associates the product with eBay and not with your store. It is tough to get repeat customer and to build a loyal base when most of sales come from eBay or Amazon.

    However, without eBay and Amazon, there were few sales in a new online business. You need the traffic.

  2. avatarLeon

    One major issue that I am coming across is that, yes, the traffic does exist, however eBay’s search algorithm is quite dishonest. They push overseas sellers that have the cheapest pricing to the top, as well as members with the most feedback (which is fine I guess).

    There is also the fact that Manufacturers are selling into our markets at a price that is underneath our wholesale costs. They assure members the products are located in Australia when in fact they are using services that store small products in warehouses and act as a third party drop shipper that is not affiliated with the products.

    eBay allows the most dishonest practices to occur but I don’t understand why they allow secretive drop shipping.

    Traffic is a great thing, but lets be honest; they will direct traffic far away from you even if you are a powerseller, to factors that conflict with eachother.

    The best price will be stood higher than the highest feedback. The highest feedback will be trumped by premium services. Premium and high feedback will be trumped by best price. it is an ever changing method to their algorithm that cannot be won.

    I have an item that about 10 others are selling, yet my item has 270 watchers, theirs have around 20. I’m on page two, yet a lower viewed item, with a members of higher feedback, gets page 1 consistently. I get bubkis.

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