Running Head: BUSINESS COMPARISON 1

Business Comparison
Name
Institution Affiliation
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Business Comparison
A lot of individuals used to purchase or even ordering services online, majorly employ

either Amazon or eBay. Amazon.com, Inc. was founded on May 28, 1996, and is concerned with

the business of customer service through its retail websites, majorly focusing on convenience and

selection (Bezos, 2017). Amazon generates plans that permit a corporation to sell their products

on its websites and to get orders through them, with also plans that back filmmaker, musicians,

app developers and authors, allowing them to publish their content. Also, the company designs

its websites to permit millions of goods to be vended via its website. Amazon offers customers

the minimum permissible prices via low daily product pricing and shipping offers, for members

already subscribed to Amazon Prime. The platform is simple, timely and reliable. eBay,

established in September 1995, is a worldwide market leader. Through its platform, it links

millions of buyers and sellers across the globe, emboldening individuals and generating

opportunity for everyone (Comberg & Velamuri, 2017). The company’s services and

technologies are intended to enhance the choice that buyers can access choice, while at the same

time providing sellers with an inventory of what is available for sale around the world.

Both corporations do focus on consumers, who want to buy a product from whichever

platform, as the consumers searches products with favorable prices. eBay, compared to Amazon,

normally focuses on individual consumers whereas Amazon concentrates on professional third-

party merchants. The platform notwithstanding, the aim of both corporations is to offer a

marketplace that links buyers and sellers. Additionally, Amazon does provide goods directly to

the consumers. The key value proposition that is provided by both companies is the ease of

purchase and payment, and delivery. Nonetheless, Amazon mode of payment is well integrated
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because the person making the purchase is not required to be redirected out of Amazon.com so

as to complete the transaction, whereas eBay’s users are re-directed to the PayPal platform.

A key noticeable deviation between eBay and Amazon is, if a novice seller desires to sell

unwanted items online, that individual is more likely to select eBay over Amazon. Additionally,

eBay functions like a countrywide garage sale for numerous buyers searching for a product or

service at very pocket friendly prices (Comberg & Velamuri, 2017). By comparison, Amazon is

considered as one of the biggest online retailer sites, and a majority of its listed products are

usually from big corporations and professional sellers.

Comparing the Annual report for eBay and Amazon, eBay is seen to generate a huge

chunk of its proceeds from listing and commission fees that emanate from its marketplaces and a

payment platform such as PayPal. On the other hand, a majority of Amazon’s proceeds originate

from reselling items purchased from third-party suppliers (Bezos, 2017). Since Amazon

functions more as a retailer compared to eBay, the two corporations’ cost structures vary

significantly. According to Bezos (2017), approximately 87% of Amazon’s operating expenses

emanated from sales cost, whereas 69% of eBay’s administrations expenses were from

Marketing and Sales, 23% Product development and 27% G&A as depicted in the 2017 Annual

reports for both corporations (Bezos, 2017).

Amazon’s Investments in technology infrastructure, product differentiation and

fulfilment costs have assisted the corporation to realize a fast resource speed with “an impressive

cash flow cycle of 30 days between the time it received payment and had to pay suppliers”

(Varambally, 2020). The retailing mode of allows it to have a better control of the customer

experience in comparison to eBay. Moreover, eBay similarly has lower operating costs and
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increased profit margins by merely linking buyers and sellers. However, eBay suffers more from

negative same-side network impacts compared to Amazon as its platform is highly vulnerable to

an unevenness between sellers and buyers. Both corporations have comparable pricing strategies

regarding the subsidy side though Amazon’s pricing is comparatively highly complex.

Additionally, both companies control the quality of their suppliers by employing product

reviews, however, Amazon has a good grasp over the supplies quality as it functions majorly in a

retailer method.

For eBay to enhance its books, I believe it would be required to expand into merchant

services by developing extra value to their present consumers whereas similarly leveraging on

the acquisition of GSI Commerce. For Amazon, it does a good job in making a buyer feel like

he/she is purchasing directly from Amazon. Besides, buyers can finalize their payments without

evacuating the Amazon site and sellers can have their products stored and shipped from

Amazon’s numerous warehouses spread across the globe. Similarly, Amazon is better placed at

offering third-party sellers a huge distribution and warehousing network that numerous

corporations and persons would not otherwise be capable of affording. That is to say that

Amazon provides the consumers with a lesser barrier to entry into the market, factored with low

initial capital costs, linked to warehousing and distribution.

Owing to eBay’s large installed customer base, they should gain from economies of scale

in warehousing and distribution. Essentially, eBay can leverage the GSI Commerce capabilities

with their top of the class warehouse management systems to offer customized direct-to-

customer fulfillment solutions, encompassing, real-time order status updates, reverse logistics

services and order management” (Varambally, 2020). In addition, GSI Commerce has

proficiencies in merchant services that could be employed by eBay to offer customer care,
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transaction capabilities and interactive marketing and. Consequently, eBay and Amazon’s

performance from their annual reports indicates that both corporations can function on the

different aspects of timeliness of the order, condition of the order and accuracy of the order to

ensure successful customer satisfaction between buyer and seller.

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References

Bezos, J. (2017). Amazon Annual Report,” Amazon.

Comberg, C., & Velamuri, V. K. (2017). The introduction of a competing business model: the

case of eBay. International Journal of Technology Management, 73(1-3), 39-64.

Varambally, K. V. M. (2020). “Sustainability and Amazon”–A Case Study on Amazon

Company. Our Heritage, 68(1), 12094-12100.