eBay vs. Amazon: The business models.
Fri, January 12, 2007 at 4:57 PM in Business Models, Internet Companies 
Way back in 1999, Business week published an article that pitted A&E against each other. It's an interesting read and surprisingly accurate of the situation as it still exists.
eBay vs. Amazon: Fixed prices or dynamic pricing?
That's one thing Amazon and eBay agree on. There isn't much evidence that consumers want to ''one-stop shop for every single thing in their life at one company,'' says eBay CEO Margaret C. Whitman. And Bezos rejects the widely held notion that a handful of megastores will dominate. ''There's going to be tens of thousands of winners,'' he says...
...eBay has zoomed to prominence with an even more innovative E-commerce model--one that, in a rare feat, is actually profitable. Because eBay doesn't take possession of the goods--it acts as a broker for buyers and sellers and takes 6% off the top--it incurs none of Amazon's hefty distribution costs. It has only 198 employees to Amazon's 3,000. As a result, its gross profit margins are a Microsoft-like 85%--on gross merchandise that ballooned from $95 million in 1997 to $746 million in 1998. ''Dollar for dollar, eBay has a better revenue and bottom-line model,'' says analyst Mitchell Bartlett of Minneapolis investment bank Dain Rauscher Wessels.
And then there's this sentence that turned my head since this is exactly what we're aiming to do.
Moreover, eBay could even turn the nation's 18 million small businesses into a virtual selling force that could rival that of conventional retail. ''It could be the destination for all these businesses to sell online,'' says Steven R. Mitgang, a senior vice-president for Sitematic Corp., a San Diego software company that has helped several dozen small businesses list their inventory on eBay. Beyond auctions, says Mitgang, ''it has a huge opportunity to become the destination for consumers to buy stuff, period.''
Of course I think that Amazon, eBay, Google, and Yahoo are built bass ackwards for accomplishing this as top down search and retail. But what do I know... Shmula has all the charts.
Reader Comments (1)
The worst of which is that eBay's feedback system. The one that is most absurd is that the vednor can harass paying customers through negative feedbacks, and the level of harrasment is not regulated.
Here is what has happened. I bought some trivial stuff using 'Buy Now' button. My linked and bank verified PayPal paid the vendor right away.
After waiting for 10 days without a contact, I have placed a negative feedback to the vendor to get some action.
The vendor then placed a negative feedback with a complete false statement "Liar, scammer..." making all of the bad words.
What is interesting is that when I asked about this on the eBay forum, where mostly the vendors hang around, the basic consenss was that I did something wrong by not observing the eBay etiquette.
I just checked on Amazon store. They had the same thing I wanted with less money and I know I won't be harrassed by the vendor if I placed a negative comment for non performance on the vendor part. And there is a phone number to call. There is a same gurantee and I can use regular credit card without going through PayPal to get a protection.