The eBay and Amazon trap

At ShopFactory we believe running your own, independent online store is an absolute must. At least if you want to establish lasting success as online seller.

Yeah, right.

After all, there are millions of people who offer their wares on eBay and Amazon every day. Are we really claiming they are all getting it wrong?

The answer is: it depends. On what they want to achieve and how willing they are to gamble with their future.

Because the business goals of Amazon and eBay are very different from yours. And that difference can turn setting up on their portals into quite a gamble.

Let me explain.

The Lure to suck you in

The lure to suck you into this gamble is that eBay and Amazon have huge lists of customers.

So you don’t have to find your own.

Your bet is that you will hit it big by selling loads of products to these customers.

Because Amazon and eBay will do all the work and you just have to collect the money.

And just like in gambling the reality can be very different.

As we have learned from the many clients who switched to ShopFactory over the years after being burned by the big guys.

Lowest profit margins

While there are some exemptions, for most sellers Amazon and eBay are all about:

  • constantly sourcing new product lines and
  • selling them at the lowest profit margins possible

Whenever a product stops selling, you move on to the next product, hoping it will do better.

Until your competitors undercut your best price for that product too, and you have to move on to the next product again (and get rid of the unsold stuff in your garage or warehouse by offering lower prices than someone else who is still dreaming of making a profit).

That’s because Amazon and eBay actively force you to cut your margins to the barest minimum by promoting your lower priced competitors.

Directly on the pages where your products are listed.

They will even make your competitors aware of your successful products, to help them start undercutting your prices.

Why are they doing this to you?

Because Amazon’s and eBay’s declared goals are NOT to turn you into a profitable and successful online seller with a secure future.

Offering the lowest prices

They just want to attract as many customers to their portal as possible, by offering them the lowest prices on just about any product.

They do this by pushing sellers into accepting extremely low profit margins, so that the sellers have all the risk and the portals have all the upside.

Whether you make any profit simply doesn’t matter to them.  

After all, they will collect their fees of up to 20% per sale from you, whether you have made a profit or not.

Effectively you are gambling with every product you list that you will be able to sell it cheaper than your competitors.

Building their own brands

It works for eBay and Amazon, because they are interested in building their own brands.

Not yours.

And it works, because for every seller who gets spat out after being sucked dry, there are plenty of new sellers joining up, to keep this merry-go-round going.

If you want to play this game and you play it well, there is of course good money to be made.

You can find quite a few success stories and advice on how to sell successfully via Amazon or eBay on the Internet.

And some sellers, who don't care about what they sell, have an uncanny ability to constantly find new product lines before everyone else, which allows them to stay ahead of the curve.

But it is interesting to note, that many of the success stories online are by formerly successful sellers, who now work as consultants to help others become successful by selling on Amazon or eBay.


If they were so successful, why did they stop selling on Amazon?

Hit and miss game

Because it’s a hit and miss game which is hard to control for you.

A success today does not translate into a success tomorrow.

That’s not just because of the low price mentality of Amazon and the buyers it attracts.

It’s also because all the customers – even those buying from you - will always belong to Amazon or eBay.

So every time you list a new product you have to start all over and find brand new buyers.

You are not allowed to contact people who purchased from you in the past.

And you are definitely not allowed to market to them.

Which makes repeat business very hard to get.

Especially as the kind of people who buy on Amazon or eBay usually buy on price and have no loyalty to you, whatsoever.

If they want a product you stock next time, and a competitor is 10 cents cheaper, you are out.

I bought it on Amazon

You can’t even make them a special offer to win them back.

They’ll never say “I bought this product from John’s online store”.

They’ll say “I bought it on Amazon.”

So you are not even getting the benefit of good word of mouth.

To put it bluntly: eBay and Amazon give you access to hundreds of millions of cheap ass buyers with no way to gain their business other than by listing your products at the lowest possible prices.

And there is no way to make any success stick, as the customers never become your own.

That’s just not a good base to build a sustainable business.

To do that you must be able to control you profit margins.

And most of all you must have access to your own customers.

Even if it takes you more work to gain them, in the first place.

Your customers are your lifeblood

As the saying goes: Your customers are your lifeblood.

There is no shortcut for this, if you want to think long term success.

If you cannot talk to your customers, if you cannot market to them and if you cannot point them to your own product offerings, how can you convince them to buy from you again and again?

Or that your better service is worth paying extra for?

How to steal customers from eBay and Amazon

However, if you have your own independent store, then you can even use it to successfully steal customers from the big portals.

One ShopFactory client sells his leftover stock on Amazon.

To turn Amazon buyers into his own customers, he includes a discount voucher in every order he delivers, which they can only use in his ShopFactory store.

This turns Amazon customers into his own customer, who he can include in his marketing.

By putting only his leftover stock on Amazon, he is also protected against the tactics used by Amazon to steal traffic from his website.

As his current products are only available in his ShopFactory store

Sales shifting to Amazon

One way to succeed on Amazon is with your own brand of products. Provided you can control the sales channels.

This way you don't have to worry about your prices being undercut by other sellers.

But many manufacturers found that sales in their own web store shifted to Amazon, after listing their products on the portal.

Suddenly they had to pay fees for sales they had owned before.

 This happens, because Amazon - based on its size and traffic - often ranks higher in search engine results than your own website.

It actively uses its size and its strength in search engines such as Google to steal the traffic from your website.

You will have to work out if the upside makes it worth listing all your products or just some specials and leftovers.

Use the big players to your advantage

So while selling on eBay can be a gamble, you can also turns this to your advantage, if you know how to play the game right.

ShopFactory Marketeer allows you to export products from your ShopFactory store, so you can also list them on portals such as Amazon and eBay.

You have to decide, if that is a tactic worth pursuing.

We firmly believe that, whether you sell on Amazon or not, you'll need your own, independent store if you want to create a secure future for yourself as online seller.

Of course I hope you will select ShopFactory to do this.

But even if you don't, I trust that this information will help you plan for the future.

All the best,
Steffan Klein
ShopFactory Co-Founder