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eBay vs. Amazon: Winning Online Retail Strategies

Update On :29 October 2014

eBay vs. Amazon: Winning Online Retail Strategies

Amazon and eBay are two giant platforms that online retailers use to maximize reach and sales. eBay is solely a marketplace, but Amazon also doubles as a fierce competitor. They are distinct in many other ways, such as Amazon’s Buy Box and eBay’s auction feature. However, in terms of pricing strategies that help their sellers succeed, the two happen to overlap in one important way. So how can online retailers succeed in the two marketplaces?

How eBay is Different

ebay-ecommerce-marketAlthough Amazon’s massive market share is discussed much more than eBay’s, it’s important to remember that eBay accounts for 19% of global ecommerce, which isn’t too shabby. After nearly 20 years in business, eBay’s original claim to fame is still alive and well. The auction feature attracts many consumers looking to get a good deal.
eBay sellers that want to catch shoppers’ attention do so by setting their starting bids low to grow interest. But this is tricky because setting it too low runs the risk of it never reaching a fair market price. On the other hand, the lower the starting price, the higher it will appear when shoppers search for it. Whether an item is immediately available for purchase or not, pricing is still key on eBay and Amazon.

How Amazon Stands Out

One factor that makes selling on Amazon very different than eBay is the Buy Box. It accounts for a whopping 70% of sales because it easily allows a shopper to add an item to their cart without wading through dozens of listings for the product they want from multiple sellers. Naturally, sellers on Amazon try their hardest to win the Buy Box. The only thing that holds them back is a top secret algorithm that Amazon uses to determine the winner. There are many factors that go into winning, such as consistently having products in stock, fulfillment method, a high seller rating, and a low price. Retailers that want to win the Buy Box must study up on the competitors who have won it in order to A/B test their own selling strategy and learn what combination of factors lead to success.

How Retailers Can Drive Revenue and Profit

amazon-ebay-repricingOne pricing strategy that is effective on both channels is dynamic pricing. This pricing strategy features flexible prices that can change based on a number of internal and external factors. Internal factors, like supply, should affect pricing because running out of a product (especially on Amazon) can have detrimental effects.
Therefore, when a retailer is low on stock, they can raise prices to slow down sales until they have more in stock. External factors, such as demand, have the ability to significantly impact profit margins. When demand is high, raising prices can bring in the extra profit that retailers otherwise would have left on the table.
Another way that dynamic pricing is useful on Amazon, eBay, and beyond is by incorporating competitor pricing. Every online retailer has numerous competitors and due to the nature of the industry, they are incredibly easy for shoppers to access. Instead of having to travel across town or even down the street, all competitors are just a click away, making online retail competition even more intense than in traditional brick and mortar stores. Comparison shopping engines and price checking apps also help shoppers find the lowest price faster than ever. That’s where competitive monitoring and analysis come into play.
If online retailers are aware of how their competitors are pricing in real-time, they can make informed pricing decisions that help them stay profitable at all times.

Main Takeaways

Pricing strategies are key to online conversions, but it’s important to note that they aren’t everything. Shoppers look for value and convenience, on top of low prices. Regardless of the channel on which a retailer sells, delivering a positive shopping experience from start to finish is a surefire way to boost conversions and loyalty.

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