eBay vs. Your Own E-Commerce Website – Which Platform Should You Choose to Make More Money Online?
When you want to start your online business by opening an online storefront, you have to decide where you want to sell. And if you narrow down the countless choices out there, it boils down to two choices: Your own e-commerce website or an online marketplace.
An online marketplace is like eBay, Amazon, or other websites where many different sellers gather to sell their products. One benefit is that many online shoppers know these websites, and go to them to for a bargain or convenience. I will focus on eBay because I am most familiar with it, and the things I say about eBay will apply to other marketplaces very similarly.
Your own e-commerce website is your own website with a unique website address. So your customers recognize your store. And you have more freedom when running your website, and you don’t have to pay fees for each sale.
I sell on both eBay and my own e-commerce website. So I know the pros and cons to each. In this hub, I will discuss different pros and cons to each choice, so you can clearly know the difference before you start.
1. Start-Up Costs
When I say start-up cost, I mean the money you need to spend to get your online store up and running, and the necessary marketing you need do to get visitors to your store and actually make a sale.
Start-up cost is higher for building an e-commerce website. Your start-up cost includes: hosting service fees, domain registration fee, designer fee to design your website, credit card processing setup fees, and marketing fees. These fees can range somewhere around $1000-$2000 or more for the first month. And that is a lot for a person without money to invest.
On the contrary, when you are selling on eBay, your start-up cost will probably be less than $100, even if you sign-up for an optional eBay store (Recommended for sellers with more than 100 listings). And since eBay already has millions of visitors every day, you don’t have to spend any advertising fees to get your products out there in front of interested customers.
2. Maintenance Costs
Let's look at the maintenance costs.
Since eBay charges me a certain percentage of all my sales, my monthly fees are as follows for past 7 months, compared to my monthly sales. And these fees are not including the credit card processing fees (PayPal fees), which is 2.2% of my monthly sales volume.
Nov 2011 / $1,724.86 / $33,036.72
Dec 2011 / $2,624.71 / $23,798.94
Jan 2012 / $1,515.82 / $20,952.65
Feb 2012 / $1,561.10 / $17,270.13
Mar 2012 / $1,415.87 / $16,541.19
Apr 2012 / $1,383.73 / $23,401.52
May 2012 / $1,312.67 / $14,499.42
As you can see, the eBay fee is quite high, roughly about 10% of my monthly sales, even though I’m getting 20% discount on fees because I’m a Top-Rated Seller and also a Gold Power Seller. So as my business grows on eBay, sometimes I feel that I’m doing more good for eBay.
On the contrary, I do about the same business on my e-commerce website. But I pay about 3%-4% of my monthly sales for credit card processing, and no one takes 10% from every sale I do. That is about $1,500 saving every month in fees. With the $1,500 I saved, I spend about $50 for website hosting and around $500 for marketing every month. So that is roughly about $1,000 more I make every month for the same amount of sales I do.
I must admit that e-commerce website do me more good in the long-run, when all the start-up costs are earned back. But that is when I only look at the costs.
3. Business Support
Business support is the help you need to grow your business.
eBay is a giant corporation and have been around for a long time. And as of today, eBay ranks #21 among the most visited website around the world. And you’ve probably heard of many eBay millionaires. And because of what it is, eBay has a lot to offer. Within eBay, there is eBay University and forums to learn from other fellow eBay sellers. And the support gets better as you climb up the Power Seller levels. eBay even offers health insurance discounts for your company’s employees and your family members. And that’s pretty neat.
On the contrary, when running your own e-commerce website, you are basically on your own. There are no guides other than the sales persons trying to sell you their products and services. So you need to know what to do on your own, or you’ll end up spending a lot of money, especially on marketing and website design.
When you are online, you want to build your brand. If you are selling books online for example, you want people to remember your store when they need to buy a book.
On eBay, it is hard to imprint your store on people’s minds. When someone buys something on your eBay store, they will probably say “I bought a book on eBay,” not “I bought something at Paul’s store on eBay.” But there is a feature where buyers can save their favorite sellers. If someone was very satisfied with your store’s service and wants to find you again for future needs, but when that customer visits eBay, there will always be other sellers who compete with you.
For an e-commerce website, people will remember your website address. My customers remember ManyVites.com, and come back to my website for vitamins and supplements. I’ve built my brand, and I’m growing my popularity as a company. And when someone comes to my website, no one is competing with me.
5. Promotions & Offers
Online shoppers are looking for deals. They want coupon codes and rewards when they shop online.
eBay introduced something called eBay Bucks. eBay gives you back the part of money you spent on eBay as a store credit, so you will shop on eBay again. This keeps buyers coming back to eBay. If you’re selling on eBay, you definitely benefit from more people shopping at eBay.
If you have your own e-commerce website, you can offer as many promo codes and coupon codes as you like. You can even make a business card with your website address and 10% off promo code on the back. It is your website, and you can do whatever you want. And if people like the offers you have, they will come to see your products, and your products only.
I know it is hard to choose between the two. When I first started, I spent a lot of money on an e-commerce website, and I failed. Then I came back with eBay. I made money with eBay, and I started e-commerce website again, and was successful. Now I run both eBay store and my own e-commerce website successfully.
If you ask me where to start, I would advise you to start with eBay. If you are successful on eBay, you will have some idea on how to approach selling online.
As always, if you have any questions or concerns about information on this hub, please leave me a comment. I will improve this hub with your help.