The number of people purchasing products online is continually growing. Indeed, statistics published in a report by the Office for National Statistics (ONS) indicate that 16.9% of total sales in 2010 were made online – a rise of 0.8% from 2009. This figure has doubtlessly increased again during 2011. As a consequence, many businesses are choosing to expand and start selling their produce online, either to stay a step ahead of competitors or simply to keep up with them.
Any business looking to establish itself online will likely be thinking of creating their own dedicated e-commerce site. However, there is an alternative that they may not have considered – opening an eBay store.
Creating and running an eBay store is an avenue that has allowed many new businesses to start-up and flourish, its main appeal being a very low start-up cost. The basic eBay store package costs as little as £14.99 per month, and once setup its products are immediately visible to and searchable by the site’s millions of unique daily visitors (at the time of writing, eBay.com is ranked at #21 in the world’s most visited websites).
Despite the instant access to eBay’s many visitors, there is a major drawback to owning a store: insertion and final value fees. For every product listed, an insertion fee of 20p is required. Plus, for every product sold, eBay will take a cut of the final price, which they call their ‘final value fee’ (the current rate being 10% with a maximum of £40). If a store is listing and selling thousands of products, these costs can really have an impact on profits.
An e-commerce site has none of these fees. Although a larger initial cost is required, including paying a professional web developer to build the site, the only costs the owner can expect once completed are the monthly hosting fees – regardless of how many products they sell. The downside, however, is that the new site will start with no traffic. Instead of being able to tap into eBay’s millions of visitors, promotion of the site and attracting customers is the responsibility of the owner. Depending on how effective and successful the promotion is, sales may well take some time to grow.
Should a visitor search for a product on eBay, it is likely their search results will contain similar products from other stores (depending on the rarity of the item they are searching for). Therefore, the need for constantly assessing prices to ensure they are competitive becomes far more essential, because in most scenarios one would expect the customer to go for the cheapest option. With a professional e-commerce site, however, visitors do not have alternative prices so readily-available, granting the owner a little more freedom when pricing.
In summary, the choice really depends on the long-term ambitions of the business. If the owner is planning to only sell small quantities of items, or isn’t really sure where they want their online presence to go, it might be better to start with an eBay store. If the store takes off, they could always consider investing and upgrading to their own e-commerce site. Conversely, if they felt that the business would immediately be selling a large quantity of items, an e-commerce site may be a better solution as eBay’s insertion and final value fees would become more of a problem.