BUS 2202 – E-Commerce

University of the People

Business Net Types

The digital age has introduced several business models, each with its unique attributes and

benefits. According to Kutz, (2016), there are five business Net types: Business Web Agora,

Business Web Aggregator, Business Web Integrator, Business Web Alliance, and Business Web

Distributor. This paper focuses on the Business Web Agora and the Business Web Aggregator,

providing a detailed comparative analysis of each using real-world examples: eBay and Amazon,

respectively.

Business Web Agora and Business Web Aggregator:

A Business Web Agora, such as eBay, is a platform that hosts auctions for products and items

sold by companies or individuals privately. Prices for these items can fluctuate in real-time,

dependent on demand and interest (Kutz, 2016). On the other hand, a Business Web Aggregator

like Amazon hosts aggregated information from many brands, companies, and labels. It allows

customers to view many options and make choices based on their preferences (Kutz, 2016).

Comparative Analysis of eBay and Amazon:

Commonalities between eBay and Amazon include their online nature, their provision of a vast

selection of products, their shipping services to desired locations, and their fundamental role in e-

commerce. Despite these commonalities, their strategic approach and operation as different types

of business nets have led to significant differences in their performance and customer

experiences.

eBay and Amazon, despite being online marketplaces, operate with different strategies and

objectives. eBay, as a Business Web Agora, facilitates an open exchange between buyers and

sellers where the prices of goods and services are determined through real-time negotiations.
This real-time negotiation can be viewed as a dynamic price discovery process, with no fixed

prices, often achieved through bidding or auctions (Lowy et al., 2000).

On the other hand, Amazon, as a Business Web Aggregator, operates as a hierarchical

intermediary between producers and customers. Amazon's role as an intermediary is a significant

part of its business model, especially when compared to traditional retail intermediaries. For

example, Amazon has become a dominant player in the publishing industry by offering digital

book formats, thereby eliminating costs related to printing, distribution, and storage of physical

books. The Internet's properties have allowed Amazon to reduce transaction costs and offer

books at lower prices. This approach has disrupted traditional publishing houses, which used to

play the intermediary role between authors and readers (Cornell University, 2011). Unlike eBay,

the prices on Amazon are not negotiable and are fixed. Amazon takes responsibility for value

selection and fulfillment, pricing, and market segmentation (Cuofano, 2023). Amazon operates

like a digital supermarket offering a range of products at fixed prices, while eBay operates as a

digital marketplace where various goods can be auctioned.

In terms of profitability, eBay generates revenue through commissions and fees applied to each

item sold on the site. eBay is primarily a consumer-to-consumer ecommerce marketplace. It

generates revenue through transaction fees and marketing services. In particular, eBay collects

fees for listings and sales on its platform. It also makes money from its advertising initiatives.

The more transactions take place on eBay's platform (measured as Gross Merchandise Volume),

the more revenue eBay generate (Mcfarlane, 2023). Amazon's profits can increase by selling

more of a certain fixed-price product. Amazon sells a vast range of products at fixed prices, and

the high volume of sales can lead to substantial revenues. The non-negotiable nature of prices on
Amazon means they can save on costs and potentially sell more of a product, thereby increasing

profits (Johnston, 2023).

When it comes to increasing market share, both eBay and Amazon benefit from the global

reach provided by e-commerce. Amazon's strategy revolves around offering a vast variety of

products and services, ranging from books to electronics, clothing, groceries, and more. It also

offers a number of value-added services such as Prime membership, which includes faster

shipping, access to streaming video and music, and other benefits. These strategies have helped

Amazon secure a larger market share compared to eBay. eBay, on the other hand, started as an

online auction site and has continued to focus more on that model, along with facilitating peer-

to-peer sales. It offers a platform for individuals and businesses to sell new and used goods

across a wide variety of categories. This model has attracted a significant user base, but eBay's

market share has traditionally been smaller than Amazon's.

Improving service is crucial for both types of business nets. eBay, despite the challenges faced

due to different sellers operating the process of selling products, works to improve services like

returns, refunds, and package tracking. eBay is focusing on improving the customer experience,

expanding its product catalog, enhancing payments, and repositioning its brand to boost growth

and improve customer experience. This includes a significant branding campaign to attract new

users and evolving the shopping experience for existing customers (Dignan, 2018). Amazon, on

the other hand, has heavily invested in its delivery services, including last-mile delivery and one-

day delivery initiatives, which has caused competitors to respond with similar programs.

However, Amazon's aggressive delivery programs have raised concerns about service quality and

the pressure it puts on its delivery network (Scannell, 2020). Focusing on customer fulfillment,

Amazon strives to provide an excellent experience through various methods such as a range of
product prices, payment methods, gift cards, special subscriptions, returns or refunds, digital

services, device support, and package tracking.

As for the faster delivery of products, Amazon appears to be leading the way, pushing

boundaries with initiatives like same-day delivery and considering the use of drones for delivery.

They are developing autonomous drones designed to deliver packages in less than 60 minutes

and have received FAA authorization to operate as an airline and deliver small packages via

drone (Amazon, 2022). Meanwhile, eBay is introducing Managed Delivery, a fulfillment service

aimed at providing faster and more reliable delivery. This service allows sellers to store

inventory closer to buyers, resulting in faster delivery and lower shipping costs. It will lead to the

delivery of millions of eBay-branded packages across the United States within the next few years

(eBay, 2019). However, Amazon's pace of innovation in the delivery sector appears to be faster.

In the digital age, the distinct business models of Business Web Agora and Business Web

Aggregator, represented by eBay and Amazon respectively, allow companies to enhance their

reach, profitability, and services, albeit differently. eBay leverages real-time auctions and

enhanced customer experiences, but may struggle with faster delivery compared to Amazon.

Meanwhile, Amazon's fixed-price product range allows high-volume sales, quick delivery, and

improved services, though large-scale operations can sometimes strain service quality. Overall,

the digital transformation has significantly influenced the business landscape, providing a wide

range of new opportunities for companies to expand their reach, enhance their services, and

increase profitability.
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