Posted by William Charles on February 11, 2016
Reselling

Published on February 11th, 2016 | by William Charles

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Reselling Part 8: Amazon vs. eBay vs. Craigslist/Other

This is the 8th part of Oren’s (from Oren’s Money Saver) guide to reselling You can check out the first 7 part to the series here

This is meant as an introduction into the various platforms for reselling.  There are very many nuances to each platform which are beyond the scope of this series but this should get you started.

Amazon: Fulfillment by Amazon

By far and away, selling on Amazon with FBA (fulfillment by Amazon) is my favorite selling platform and the one I have the most experience with.

A little bit of background on FBA.  When you sell via FBA, you list the item from home, Amazon sends you a shipping label to send the item to an Amazon fulfillment center (you pay shipping but at a highly discounted rate).  Once your item reaches a fulfillment center, it is inspected by Amazon and placed in your inventory.  Until that time, your item is not available to be purchased by a customer.

There are so many reasons Amazon FBA is great but it is far from perfect.  Lets go through Pros and Cons one by one.

Pros

  1. Everyone loves buying from Amazon.  You want to sell where people are buying.  Amazon has been experiencing massive growth for the last decade because they make it so easy to buy and the items come reliably fast.  I buy tons from Amazon as well. Buyers want their items prime eligible and will pay a premium for that.  When you sell with FBA your items are automatically prime eligible.  This is a huge advantage.  Half the time buyers don’t even realize they are buying from a third party seller if it is prime eligible, they think they are buying directly from Amazon.  In addition, there are a lot of people who think that they are always getting the best price when they buy from Amazon.  You can use that to your advantage. Part of the increase in buyers also comes with an increase in sellers and competition.  That’s life
  2. Very low fees for electronics.  Fees are 6% for electronics.  That’s really cheap, especially when you get to the expensive items like laptops and iPads.
  3. All sellers list their item under one listing.  For instance, you can find all the sellers for iPad Air 2 16 GB Silver here.  This makes pricing easier and the barrier to entry easier as well.  Buyers (for the most part) are not looking at individual sellers, they just buy the one in the buy box (the one seller on the main page) or the cheapest one (not always the same). This also makes decisions on pricing easier since you know how much your competition is selling for, your expected sale price and return.  Not everything works out but you get a general sense.  You also can determine your own pricing.  You may not get your price or you may have to wait a long time but you aren’t forced into a price lower than you are comfortable with. The same item can have multiple listings but there will usually be one listing with more reviews and a much better rank (and usually a better price).
  4. No storage in your house/apartment. This is huge for me with my apartment!  I don’t have to rent a place to store my merchandise until it sells.  That can save you hundreds or even thousands a month.  I have to pay Amazon storage fees once my merchandise has been there for 30 days or more but it has never been more than a couple hundred dollars in one month.  I would have to pay a lot more than that if I stored it myself.
  5. Amazon fulfills the order for the customer and provides customer service.  This a huge time saver for me.  If I had to fulfill every order myself, it would take me at least an extra couple of hours a day and all day during quarter 4.  Ain’t nobody got time for that!
  6. Highly discounted shipping to Amazon fulfillment centers.  Think $10-$15 for a huge printer and $1-$5 for a iPad depending on how many you are sending in one box.
  7. 4th Quarter Explosion – really only from November until the middle of December, but Amazon just straight explodes for the holidays.  It is very difficulty to keep anything popular in stock and prices skyrocket as well.
  8. Liberal reimbursement policies– when Amazon loses or damages something of yours they reimburse you (you will likely have to ask for it).  Trust me, you will definitely need it.

Cons

  1. Returns – Amazon has an ok return policy.  You can pretty much return anything for up to 30 days for any reason but the customer has to pain for return shipping if there is nothing wrong with the item.  You will see a lot of “item defective” returns that haven’t even been opened to save on return shipping.  Once the customer acknowledges that they will return the item, the customer has 45 days to ship it back to Amazon. It’s annoying to deal with returns but this return policy is actually not very robust compared to the return policies of many stores like Walmart and Target (with a Red Card) and other big box retailers that allow 90 days.  I will gladly take the tradeoff of more returns since it gives the customer confidence to purchase.  I also get a large percentage of customers who say they will return and never send the item back. A big issue can be scammers who send back their broken item as a return and keep your new item.
  2. Competing with Amazon – sometimes Amazon will sell items themselves.  Watch out.  They are fierce competitors who don’t mind lowering their price for sales and often have very large inventories of whatever they are selling.  This can be very frustrating when you found a great purchase, send it in and then Amazon swoops in and drops the price on you like a boss. Check out this post
  3. Poor inventory/returns reconciliation.  Amazon loses a ton of items.  Amazon damage items.  Customers say they will return items and don’t. All of these are supposed to come with reimbursements from Amazon and they are liberal in giving them to you but sometimes they “forget” to credit your account without a friendly prod.  You need to be on top of how many items you sent in, how many got there, were any lost, were any returned but not returned, etc.
  4. Only paid every 2 weeks.  This is a big issue.  The cycle of buying the item, selling and then getting paid can take a very long time.  You need to be able to float that money because your credit card bill is coming due before you get paid by Amazon the vast majority of the time.  Don’t buy anything you can’t pay for without it selling.  Otherwise you will either sell at a much lower price than you’d like or you are looking at a big late fee on your credit card. Both situations are not helpful. There are some people who have some old seller account who can request a payment daily.  I’m very jealous but anyone new needs to wait for a bimonthly payout.
  5. Some fulfillment centers are very slow.  I’m giving you the stinkeye CHA1!  That means that sometimes you send your item to Amazon and it doesn’t make it into your inventory until a week after it is delivered.  The good ones consistently get it in your inventory within a few hours of delivery.
  6. Low cost items can have massive FBA fees.  You can end up paying 25-50% in fees for toys that are very inexpensive ($20 and below).  Always checked the FBA calculator before purchasing.  Hopefully we will do a separate post on what to check before making your purchase.

Amazon: Fulfillment by Merchant

Instead of shipping your items to Amazon, you can ship your items directly to the customer after it is sold.  You are listing and selling on Amazon but Amazon never touches your inventory.  This is called Fulfillment by Merchant or FBM.

Pros

  1. Available to sell faster since it doesn’t need to be shipped to Amazon
  2. You can determine your own return policy
  3. Lower fees from Amazon since they are not handling the order or customer service.

That’s it

Cons

  1. No discounted UPS shipping
  2. Very rare to win the buy box.  You usually have to price significantly lower for buyers to buy from you.
  3. Scammer can claim they never got it and Amazon may side with them.

eBay

Pros

  1. The best thing about eBay is that they pay you much faster.  No waiting 2 weeks for a payout once it is sold.
  2. Seller ranking matters – buyers aren’t buying from eBay and they know that.  They are buying from you and your reputation matters a lot since there is no one inspecting the item before it is sent.  Buyers know that and care.  This is great if you are an established seller, not as great if you aren’t.
  3. More options for pricing.  You can choose a fixed price.  A fixed price with or Best offer.  Auction style.
  4. You can choose your return policy or lack of return policy.

Cons

  1. Shipping is more expensive than Amazon but it can be reasonable for smaller items.  Large items can be prohibitively expensive to ship.  However, you can choose “Local Delivery Only” to save the shipping costs but that severely limits your pool of buyers.
  2. Buyers are looking for unique items or deals.  Most people do not think of eBay as a marketplace to buy their regular items.  Many people are looking for collectibles/lightly used items at a discount.  Full price is not on their radar.  They are willing to tolerate a worse search and buying experience for lower prices.  That means that it can be tougher to sell for as much money on eBay if there isn’t anything special about it.
  3. Fees can be high. eBay charges 10% and PayPal charges 2.9%.  Depending on the category with Amazon that can be a lot more or a lot less but you still have to pay extra for shipping. Note that if you sign up for an eBay store (it does cost a little), the fees drop to between 4-9%, a big difference. Also, if you are Top Rated seller, you get a 20% discount, more on that here.
  4. You need to store all your merchandise until it sells.

eBay Valet

eBay Valet is eBay’s answer to FBA.  Similar to FBA, you send your item to eBay, they inspect it and sell it for you.  However, there are some major differences.

Pros

  1. Free shipping – eBay provides free shipping for you throughout the entire process.  This would be great for large, expensive items that would be very expensive to ship otherwise.
  2. No storage necessary and no fulfillment of the order necessary by you

Cons

  1. You are not able to set your own price.

How do valets price items?

Valets research items like yours on eBay, looking at items that sold within the last 90 days, and price items according to this research. Items are for sale for up to 60 days. If your item doesn’t sell, valets reduce the price and relist it.
2) Fees are based on the price of the item
Fees are deducted from the sale price of your items.
Sale priceYou earn
Less than $5060%
$50 to $20070%
More than $20080%

Anything $200 or more isn’t bad.  $50 or less has a massive fee and $50-$200 is not great either.

Craig’s List and other local services

Craig’s List and other local services (like OfferUp) can be amazing for sellers.  There are no fees at all for selling.  Just post and if it is sells, you keep the whole thing.

Pros

  1. No fees.  This is huge.  You can sell for much less sometimes and still make more money depending on what the fees would be on Amazon or eBay.

Cons

  1. You need to meet the person or work out payment/shipping.  This can be dangerous.
  2. Limits your pool of potential buyers to your local area.

Conclusion

There are pro’s and con’s to selling with each different site, most reseller’s usually stick with FBA but it’s a good idea to test the different selling platforms to see what works for you and different items.

As always, a big thanks to Oren for putting this guide to together. Make sure to check out his site andfollow him on Twitter if you haven’t already.



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CE

Any thoughts on using http://www.amazon.com/gp/help/customer/display.html?nodeId=200242760 amazon Multi Channel fulfilment to ship eBay sales? You get a mixture of eBay pros and FBA pros, and also a mixture of the cons, would be interested in your take on it.

Oren

To be honest, I hadn’t heard of this. Looks interesting. I will definitely look into it. Thanks!

Cowboyguy
Cowboyguy

If Amazon Fulfillment center charges 6% for electronics, and under Fulfillment by Merchant, you stated that the fees are lower than Fulfillment by Amazon, why was I just charged 15% on the headphones that I just sold myself (not through FBA)?

Oren

Can you post the listing?

Kevin
Kevin

Because only tablets or computers count towards the 6% fee.

HC
HC

Selling on Craigslist is such a major pain. Buyers make an appointment and then flake out all the time. People who do show up always want to haggle and many are willing to walk when they don’t get the “deal” they want, wasting your time.

I only sell on Craigslist for items that can’t practically be shipped, and hate it every time.

Oren

Yeah, I’ve been lucky enough that I’ve gotten people who flake on me before I have to go meet them. I haven’t had a no show yet.

AM
AM

I’ve been selling a lot of electronics through FBA but kept hearing horros stories when people would be banned for violating various Amazon policies. And the major issue that many retail arbitrage sellers violate is by selling items without a valid warranty as “New”.

Most manufacturers don’t honor warranties on unauthorized dealers and if the customer (or manufacturer or an authorized reseller) complaints to Amazon that they couldn’t service their product Amazon could quickly give you the boot, because the rule is clear, and you can’t get out of it, by saying that others sellers do it too, like you can’t get away from paying for speeding ticket by telling the cop other drivers speed too.

And consequences with Amazon are quite severe, you often get permanently banned even for minor violations, and they will often not even tell you which rules you broke. So retail arbitrage sellers are building their business on quicksand with Amazon. I think something like 10% of sellers got suspended just over holidays. I was never suspended, but I don’t want to take any chances by doing something I know I am not supposed to.

“New: Just like it sounds. A brand-new, unused, unopened item in its original packaging, with all original packaging materials included. Original protective wrapping, if any, is intact. Original manufacturer’s warranty, if any, still applies, with warranty details included in the listing comments.”

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[…] product reselling on eBay, see Reselling Part 8: Amazon vs. eBay vs. Craigslist/Other where we compare selling on eBay vs. Amazon. And see Reselling Series Part 5: Reselling Products […]

Get Found

Bottom line is that Amazon does what they want. I talk about this here https://www.getfoundmarketing.org/ebay-vs-amazon-selling/ , because even if you “have a return policy”, it doesn’t matter about your policy..it’s all about the “A to Z Guarantee” and making the customer happier that a pig rolling in $hit.

That’s why you should always diversify.

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