Online shopping and marketplaces such as eBay and Amazon go hand in hand. Changes in our shopping patterns over the years have shown that we’ll shop around for the best price possible. Certainly since the birth and popularity of online marketplaces, we have witnessed a massive increase in transactions on eBay and Amazon.
By Chris Barling, chairman of Actinic
Why go there?
Over the years the numbers and profits for small to medium businesses has risen substantially. Here are some statistics:
- In 2010 eBay’s UK-based small businesses turned over £446m and five businesses achieved turnover in excess of £1m in their first year of trading.
- The Next Web reported that there are now 40m live listings on eBay UK at any given time, with fixed-price goods constituting almost two-thirds of all items sold on eBay.
- There are 180,000 registered businesses on eBay.co.uk. There has been a surge of businesses starting up on eBay since the recession which shows the vital role online businesses play in supporting the fragile UK economy.
- On Amazon, the percentage of third-party sales in 2011 remained the same as 2010 at 29% of all sales. There were about 1.4m merchants globally using the platform last year – 18% up on 2010.
Exports also play an important role in the business and one of the key benefits of selling on eBay and Amazon is the opportunity to sell globally at a very low cost.
With reports and studies such as the one by Boston Consulting Group who says the web economy presence of $2.3 trillion (in 2010) will grow to $4.2 trillion. This will largely be driven by mobile devices, as smart phones that can access the internet are increasing in availability and market penetration. Figures show that Amazon Marketplace for Android continues to gain popularity.
For an online business, it makes sense to branch out into at least one, if not both the big players in online marketplaces.
Costs of selling
Amazon offers two entry points into its Marketplace scheme, SellerCentral, which caters for the sole trader or small business up to the largest retailers.
SellerCentral costs £25 plus a fee per item if you sell 35 items or more a month, or 75p plus a higher fee per item if you sell less than 35 items per month. You decide which international markets you sell to. There is a restriction on the categories of products where you can sell on the lower monthly tariff.
The additional fee, charged as a percentage of the sale price, normally 15% but is in range 10 – 20% and is non-negotiable.
Amazon derives about 40% of its sales from affiliate marketing called “Amazon Associates” and third-party sellers who sell products on Amazon. Unlike eBay, Amazon sellers do not have to maintain separate payment accounts; all payments are handled by Amazon.
eBay charges an insertion fee for every item that is listed for sale which is typically from zero to £1.30. They also charge a percentage of the final selling price which is typically 10% up to a maximum of £40. If you use Paypal, you will pay an additional percentage of around 3%.
Final thought
For some etailers, marketplaces such as eBay and Amazon may be direct competitors. Maybe so, but with such benefits, low costs, low risk and huge marketing potential, it comes down to the popular saying – if you can’t beat them, join them.
Useful links:
Actinic Whitepaper for Selling on Amazon/eBay
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