Ebay Vs Amazon Essay

3033 Words Feb 19th, 2014 13 Pages
Introduction
Amazon and Ebay are two well-known brands of online shopping sites. They have evolved and grown from small firms to the giants of e-commerce today. In this essay, a comparison would be made between the two firms.
Questioning the types of business models Amazon and Ebay’s have employed and how they have evolved over time, the driving factors of change, and finally the future outlook of each firm help distinguish the trails both firms made to become the two leaders in the market of ecommerce. They are imperative in making a comparison between the two because despite being direct competitors in the same market, Amazon and Ebay’s business models are distinctly different. Both companies have altered business strategies over
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Amazon intended to benefit from cross selling on the basis that it already has a loyal installed base in place. (Krishnamurthy, 2004) Amazon also benefited from economies of scope as its basic infrastructure is already in place and highly scalable.
Three building blocks complement this: Amazon’s feedback system, recommendation system and its buy/sell system. Its recommendation system accounts for 35% of Amazon’s sales as customers are more inclined to buy a product based on the strength of the reviews of other customers. It also brought repeated purchasers that account for 66% of sales. (Salehnejad, 2012)
Also, Amazon has emphasized on building “several distribution centers around the world to hasten deliveries”(Hof and Himelstein, 1999). Coupled with its software it provides a “laser-like focus on the buying experience”(IT Business Edge, 2012). Such a system and service is what draws customers towards Amazon and subsequently retains them.
In 1999, Amazon became a merchant platform by introducing zShop, “a new service that allows anyone to sell merchandise through its website”. (Moore, 1999) It not only creates extra revenue from the $9.99 monthly subscription fee from sellers but also “60 cents per transaction for payments made with 1-Click, as well as 4.75 percent of the final sale”. (Moore, 1999)
The draw for small to medium business to subscribe to Amazon’s zShops would be Amazon’s huge customer
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