Amazon and eBay: two growth strategies

While the auction company is becoming more of a facilitator in online commerce, Amazon's dominance in online retail segment is increasing.

By Trefis Feb 16, 2012 6:02PM
EBay (EBAY) and Amazon (AMZN) seem to be taking two markedly different approaches to building their business.

While eBay, which owns PayPal, is increasingly moving toward being a facilitator in online commerce, Amazon wants to be a one-stop shop for customers. This could work out favorably for both companies, but we believe eBay's marketplace stands to lose market share as Amazon continues its push.

That said, eBay's efforts to become an e-commerce platform help support its value, which we estimate at around $41 a share, about 25% above the market price.


EBay becoming a payment platform


PayPal's contribution to eBay's stock price has consistently grown, standing at close to 27% by our latest estimates. EBay's Marketplaces revenue has stagnated while PayPal has aggressively expanded into mobile and other platforms. This trend is expected to continue, with PayPal is trying to partner with large retailers to compete head-on with incumbents like Visa (V) and MasterCard (MA).


If this materializes, PayPal could see more revenue from the offline commerce market. This could ease eBay's rivalry with Amazon, since Amazon is so focused on the online retail market.


Amazon takes a toll on business


Amazon's willingness to take a large hit on its margins has contributed significantly to its 35% to 40% revenue growth in past quarters. It's also pressured eBay's own merchandise unit, which has grown at a sluggish pace compared with PayPal.


Amazon has moved from its books, music and media roots to all manner of general merchandise. It has also expanded into offering cloud storage for consumers and businesses.


Additionally, Amazon hopes to increase this consumption further with its array of devices like the Kindle Fire. We expect these trends to continue threatening eBay's Marketplaces, which stands to lose share in online commerce.


Number of Merchandise listings on EbayAlthough both eBay and Amazon are among the largest players in the e-commerce space, the companies are increasingly veering towards different strategies. This should help eBay avoid direct competition with Amazon in the online retail segment while using PayPal and acquisitions like GSI Commerce to become more of an "e-commerce solutions" company.
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Feb 17, 2012 1:11AM
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Anyway, as far as buying/saving on eBay goes:

Check the feedback of the seller.  Maybe send him a question about the item to see their responsiveness, if they don't reply back, maybe not the best seller to deal with.

If you send the seller a question about an item, find another of their listings, and send the question from that item page, rather than from the one that you actually want. This will add a little bit of work for the seller, if they want to add the question/answer to the item description page that you are actually interested in. Maybe they won't bother, and maybe any potential bidders/buyers would not bother to send the seller the question themselves, rather just looking for another one.

If you see an item that you want listed in auction format, send the seller a message asking if they will accept $x to end the auction early and sell the item to you. May be telling them that they would not have to wait as long to get their money (they would probably know that, but it still might help). If that does not work, use a sniping service such as Bidball.com to bid for you. It'll bid in the last few seconds, helping you to save money and avoid shill bidding.

If there is a particular item that you are looking for, and especially if it is relatively rare on eBay, use a site like Ebuyersedge.com to set up saved searches. You'd get an e-mail whenever a match is listed. Great for "Buy It Now"s priced right. You can use the price, category, exclude Word, etc. filters to narrow down the list of results that you receive in the e-mails.

Probably a long shot, but if the item that you are looking for is difficult to spell, try a misspelling search site like Typojoe.com to hopefully find some deals with items that have main keywords misspelled in the title. Other interested buyers might never see them. Then, if the item is listed an auction format, after a few days of no bids (hopefully anyway) send the seller and offer to end the auction early and sell the item to you. They may worry that no one is interested, and take whatever they can get.
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