Amazon and eBay's advertising revenues grew, but sellers' operating costs increased

For sellers on e-commerce platforms, advertising and marketing costs are also a considerable expense. In order to make their products visible to consumers among thousands of similar products on the platform, it is necessary to promote and attract traffic to the products, which will inevitably increase the operating costs of sellers.

According to foreign media reports, advertising is currently becoming one of the important sources of income for these e-commerce platforms. Amazon and eBay both have more than 100 million advertisers , including sellers on these e-commerce platforms. If sellers want their products to rank high in search results, they need to spend money to become sponsored products that appear at the top of search results in order to gain more attention and purchases from consumers.

In Amazon's second-quarter financial report , we can see that the revenue of the division, which mainly consists of advertising, increased by 83% compared with the same period last year. The division has generated more than $7 billion in revenue in each of the past three quarters .

Similarly, eBay's advertising revenue is also increasing year by year . eBay said that in the second quarter, eBay's advertising revenue was nearly $224 million, an increase of 8% over the same period last year . In the second quarter, more than 1.4 million sellers promoted more than 430 million product listings.

Sellers who advertise on these e-commerce platforms usually need to pay the company a certain percentage of sales as a promotion fee . In the past few quarters, eBay 's rate has been steadily rising , from 9.2% in the second quarter of 2020 to 11.3 % in the second quarter of 2021. This may be an important reason why eBay's sales volume declined in the most recent quarter , but its revenue is still increasing.

For e-commerce sellers, advertising is also gradually becoming "involutionary". More and more sellers are spending money to get priority in search results. With so many competitors, they can either increase advertising spending or lower their rankings.

As these e-commerce platforms become pay-to-play markets, sellers’ profit margins are being squeezed significantly. It is undeniable that eBay and Amazon do have the right to set their advertising fees and can also choose to extract more advertising fees from sellers to increase revenue . However, this approach also comes with certain risks , which may cause sellers to choose to turn to other platforms due to high operating costs .

Amazon Platform

eBay Platform

Advertising costs