The past decade has seen a multisided-platform (MSP) bubble. One reason, undoubtedly, is the success of eBay—and of Rakuten and Taobao, eBay’s counterparts in Japan and China, respectively. Another is that multisided platforms look financially more alluring than resellers. These marketplaces take a cut from each transaction, which goes almost straight to the bottom line. As a result, their operating costs are low and their percentage margins are high. Because resellers must buy and then sell their offerings, they typically have higher revenues but also higher capital and operating costs and lower percentage margins.
The pros and cons of eBay
The pros:
- Easier and less time consuming to create product listings as an eBay account can be managed by a single staff member in some instances
- Larger marketplace with over 150 million active users
- Enjoy a more global audience
- Increased popularity for products
The cons:
- Expensive sales charge – they charge a 10% fee for each transaction and a posting fee after so many items, which can add up
- Unreliability of some buyers
- Unfavorable competitors offering poor quality items
Consider the following when choosing between ESA and eBay
Before you make the final decision to purchase products directly from our home site ESA or eBay, you need to have a clearer understanding of how much it will cost you in terms of your bottom line. We have to inflate our prices on our eBay store to help absorb the cost of, listing, re-listing, and final sales commission.