Amazon and eBay offer huge opportunities for small firms trading online, even if you’re not an e-commerce expert. The process can be easy — for example, Amazon will set up a site for you, store your stock and ship your orders. Chris Dawson, the founder of e-commerce blog site TameBay, finds out what the future holds for small firms trading online
Amazon and eBay are the two biggest UK marketplaces for online sales and, as established as they are, they are still growing fast. “Both sites are providing new opportunities for businesses all the time,” stresses Chris.
“Five years ago, Amazon was very much a book, CD and DVD retailer and eBay was mainly a site for casual sellers selling goods on an auction basis,” he explains.
“Now 62 per cent of eBay sales come from fixed price sales and it has 180,000 professional sellers in the UK. And Amazon has expanded into new categories such as homewares, clothes, toys and electronics. eBay is three times bigger than Amazon, but Amazon is growing much faster — the opportunities are huge.
“The UK is the most densely penetrated internet market in the world,” emphasises Chris. In terms of spend per person per year, we buy more online than the USA and Germany, two of the other biggest online spenders.
“As a nation we spend £1,300 per person per year — and that average includes everyone from babies to pensioners,” points out Chris. “So the high spenders are spending considerably more. And yet online retailing accounts for just 10 per cent of total retailing in the UK — so there’s lots of room to grow.”
Like many online sellers, Chris started small. “You don’t need many sales skills to start selling on eBay, you just need something to sell,” he explains. Chris sells second-hand computer products such as printers, cables and scanners.
“I started selling on eBay seven years ago,” he says. “I had a background in computer and IT sales, but I was made redundant just before I was about to buy a house. I was looking for a job, but I also wanted to make some money fast so I started selling on eBay. Before I knew it, six months had gone by and I realised that I was making money and could stop pretending to look for a job.”
Two years of “happy selling” followed. In that time, Chris started offering his services as an eBay consultant, working with his colleague Sue Bailey, a website designer. Then a friend — Dan Wilson — suggested that they start blogging about their experiences. “So Sue and I set up the TameBay website,” Chris recalls.
Today, TameBay is a popular forum for online sellers to get advice and share experiences. Visitor numbers have grown to such as extent that the website has become self-funding thanks to advertising from the likes of Amazon and the Royal Mail.
Sadly, Sue died in 2011 and Chris now runs the business with Dan. But Chris is also still selling online. “I still sell on eBay and always will do to keep my hand in,” he stresses.
What’s interesting about eBay and Amazon is that their customer bases barely overlap. “Amazon and eBay buyers are very different. It’s only a small per cent that buy regularly on both sites,” says Chris. “So you are a bit silly if you don’t sell on both Amazon and eBay.”
Many online retailers are also expanding their horizons and selling via eBay.eu or by opening an Amazon EU account. “Made in England and Made in Britain carry a lot of weight,” points out Chris. “We’re known as a trading nation and a lot of people speak English, so we’re an easy country to buy from. We have a huge advantage over close rivals in Europe.”
But while online sales continue to grow, it’s clear that consumers are looking for choice when it comes to how they buy the products they want. “People talk about online and offline as if they are mutually exclusive,” says Chris. “But the next stage is the merging of these. Big stores like Argos and PC World are already doing it. You can buy in-store and have it delivered, you can order online and get it at home or you can order from home and collect the goods yourself.
“Smaller retailers need to get smart and do the same things that a lot of big retailers do. You need a range of options so that consumers can buy what they want, when and how they want to.”
It’s also crucial to make sure you have robust terms and conditions, advises Chris. Postage costs, delivery times, returns and refunds — you have to spell out your policy on all of these, he notes.
“Make sure people know you’re a professional business and tell people that you will make it painless for them to return goods. They want to know it’s as safe as buying on the high street.”
For retailers that sell a lot of goods, but don’t necessarily want to pay for expensive storage space, Chris recommends Fulfilment by Amazon (FBA). “You can send all your stock to Amazon’s warehouse and when an order comes in they will ship it,” he says. “And they will deal with any returns — it can even fulfil eBay orders.”
Although this service costs money, it can save on warehouse and staffing costs. “But Amazon have something even better,” adds Chris. “Amazon Webstore manages everything. Combined with FBA you have a fully functioning e-commerce site and don’t even have to process orders. All I need to do is source and market the product.”
Thanks to the reach of eBay and Amazon, small firms can compete with larger rivals. But Chris goes further. “A lot of small businesses and retailers have been saved by eBay and Amazon, they just wouldn’t be here without them,” he concludes.
Get trading on Amazon
There are two ways to sell on Amazon. You can list individual items as and when you have something to sell or you can become a Pro Merchant and upload your entire inventory. The terms differ and Amazon advises that if you sell more than 35 items a month, you are better off selling as a Pro Merchant.
Individuals selling on Amazon Marketplace pay 86 pence per item completion fee, plus a closing fee of 17.25 per cent of the price of the goods (11.5 per cent for electronics and photo items) for each item sold. Pro Merchant subscribers pay one monthly fee of £28.75 plus the closing fee of 17.25 per cent of the price (8.05 per cent for electronics and photo items).
Small firms can dispatch goods from their own premises or let Amazon store and ship their product by using FBA. There are no subscription charges for this service — the fees depend on the type and size of the items.