Dissecting Sellers Fees: Amazon, Ebay and others

The Photiq team came across an article by Wired magazine today. Apparently there’s a little turf war going on between the two eCommerce giants Amazon and Ebay. We’ve heard a lot about disgruntled merchants not happy with either online retailer. In fact we have heard that because of the really high costs of selling on these sites some merchants have gone out of business. This was one of the reasons that we started Photiq – to give small businesses the ability to compete in the online marketplace and still make the most of their physical presence.

But in this article, Ebay thinks it has the upper hand. This is not  a turf war over users: its over merchants… So, how is it that Ebay thinks it has the upper hand? A much simplified pricing regime and fees that are just that little bit cheaper. The Photiq team was very intrigued by this change in pricing strategy. During our early business planning days, we found both Ebay, Amazon and Overstock merchant fees to be very complex. Etsy is a lot simplier, but the idea of an insertion fee, we did not like. Surely, we thought, there is a win-win situation where both sides could benefit? It is the reason we liked a company like Dwolla. They understand that they succeed when their customers – small businesses succeed.

And here is it in all its glory, that simple and cheap pricing structure. Well, not quite…

Amazon Ebay Compare

After looking at this chart, the Photiq team had to laugh so that we wouldn’t cry. Ok so not terribly confusing, but it could be simpler. Most small business merchants have a wide range of very shallow stock. It takes time to list items and even longer to calculate the full cost of listing. And cheap it is definitely not! There is a fixed fee for everything that a merchant sells. And no cheaper pricing for merchants that sell either large numbers of items or few, very expensive items. The cut it always the same. Up to 20%! If you are a merchant on Ebay, on top of this there are listing fees, Paypal fees, US postage fees (yes really), which must hurt. Amazon also charges merchants just to open a store on their site.

And then we thought about this even more. How does a merchant on any of these sites differentiate themselves from one another? No matter what merchant you buy from, there isn’t much in terms of personalization when it comes to customer service and experience – we are unlikely to remember a seller on Ebay or Amazon after buying an item. The only way to differentiate is on price. And with fees like the ones listed, the Photiq team wonders how merchants make any sort of profit. If merchants have to raise their prices, do they get any buyers at all?

Now the Photiq team started to feel really depressed. Are we the only ones who realize how awful these sites are for small businesses? We did a quick search online and typed “ebay is awful” into Google. We found a really horrible scare story and a list of 10 reasons why Ebay sucks for sellers. There was a lot more negativity  but we thought we would leave it at these two.

But there is still hope. Alternative, less well known marketplace sites do exist. Until we unleash our own product upon the world here are just a few sites that we recommend:

  • Tias has been around for as long as the Internet and is focused on antiques
  • The online auction website EaltBay was initially created so that those who buy and sell legal items that have been banned by eBay would have a place to set up and browse online auctions. Ealtbay offers free listings and very reasonable final value fees. There are also several payment options including PayPal
  • eCRATER is both a free web store builder and an online marketplace. There are millions of products listed, and addition to the free and easy webs store builder, sellers can use Google Wallet at checkout. All listed items area also submitted to Google Product Search. Finally, there is a feature that allows sellers to import their products from eBay to make life that little bit easier

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