ebay-vs-amazon

eBay vs. Amazon

In 2022, eBay generated almost $9.8 billion in revenue, compared to nearly $514 billion from Amazon in the same period. Whereas in 2021, Amazon generated nearly $470 billion in revenue, vs. eBay’s over $10.4 billion. In comparison, looking at revenues, Amazon was 52x times larger than eBay in 2022.

ElementseBayAmazonSimilaritiesDifferencesCompetitive Advantage
Customer SegmentsIndividual sellers, small businesses, collectorsIndividual consumers, businesses, sellersBoth serve individual consumers and sellers, with a focus on e-commerce.eBay primarily connects individual sellers, small businesses, and collectors to buyers. Amazon serves individual consumers, businesses, and sellers while also offering a broader range of services.Broad customer base and seller network (Both).
Value PropositionOnline marketplace, auction format, variety of itemsE-commerce platform, convenience, vast product selectionBoth provide online marketplaces with the convenience of e-commerce. eBay offers an auction format and a wide variety of items. Amazon emphasizes vast product selection and convenience.eBay’s value proposition revolves around its auction-style platform, which allows buyers to bid on items. Amazon offers a retail-focused value proposition with features like Prime membership, fast shipping, and additional services like AWS.Auction format and variety (eBay). Convenience and selection (Amazon).
ChannelsWebsite, mobile app, partnershipsWebsite, mobile app, partnershipsBoth operate through websites and mobile apps, and they establish partnerships to expand their reach.eBay’s primary focus is on connecting buyers and sellers through its platform. Amazon extends its services to include retail, cloud computing, and more.Diversified service offerings (Amazon).
Customer RelationshipsOnline platform, customer supportOnline platform, customer serviceBoth maintain customer relationships through their online platforms and offer customer support.eBay’s primary customer relationships revolve around facilitating transactions between buyers and sellers. Amazon emphasizes customer service and support across various product and service categories.Customer service and support (Amazon).
Key ActivitiesOnline marketplace management, payment processingE-commerce operations, fulfillment, cloud computingBoth engage in online marketplace management. eBay focuses on payment processing. Amazon operates e-commerce, fulfillment centers, and cloud computing services.eBay primarily manages its online marketplace and payment processing. Amazon has a broader range of key activities that include e-commerce, fulfillment operations, and AWS cloud services.Diversified business operations (Amazon).
Key ResourcesOnline platform, user dataE-commerce platform, fulfillment centers, cloud servicesBoth rely on key resources such as their online platforms and user data.eBay’s key resources are focused on its online marketplace and user data. Amazon’s resources extend to e-commerce, fulfillment centers, cloud services (AWS), and digital content distribution.Cloud computing resources (Amazon).
Key PartnershipsPayment processors, shipping companiesThird-party sellers, publishers, logistics partnersBoth collaborate with payment processors and shipping companies to facilitate transactions. eBay partners with payment processors and shipping companies. Amazon collaborates with third-party sellers, publishers for Kindle content, and logistics partners for fulfillment.eBay’s primary partnerships are with payment processors and shipping companies to support its transactions. Amazon has an extensive network of third-party sellers, publishers, and logistics partners to enhance its e-commerce and services ecosystem.Extensive third-party seller network (Amazon).
Revenue StreamsTransaction fees, advertisingProduct sales, subscription services, AWS, advertisingBoth generate revenue from transaction fees and advertising. eBay also earns revenue from advertising. Amazon’s revenue streams include product sales, subscription services (Prime), AWS cloud services, and advertising.eBay primarily earns revenue from transaction fees and advertising. Amazon has a diversified revenue model that encompasses product sales, subscription services, cloud computing through AWS, and advertising.Diversified revenue streams (Amazon).
Cost StructurePlatform maintenance, customer supportE-commerce operations, fulfillment, cloud infrastructureBoth incur costs related to platform maintenance and customer support. eBay’s cost structure is focused on maintaining its online platform and providing customer support. Amazon’s cost structure includes e-commerce operations, fulfillment, and the maintenance of cloud infrastructure (AWS).eBay’s cost structure is simpler, focused on online platform maintenance. Amazon’s cost structure is more complex due to its diversified business operations, including e-commerce, fulfillment, and cloud services.Simplified cost structure (eBay).

ebay-business-modelamazon-business-model

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eBay Business Model

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eBay’s core business is a platform business model that makes money from transaction fees through its marketplaces. In short, eBay primarily makes money by charging fees on successfully closed transactions. For instance, in 2021, on an $87 billion worth of gross merchandise value sold on eBay, the company generated $9.77 billion in transaction revenues at an 11.19% take rate (fee).

eBay Revenue

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In 2022, eBay generated $9.79 billion, compared to $10.42 billion in 2021. A 6% decrease year-over-year.

Is eBay Profitable?

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In 2022, eBay reported a net loss of $1.27 billion, compared to a net profit of $13.6 billion in 2021.

eBay Revenue Breakdown

ebay-revenue-breakdown
In 2022, eBay generated $9.77 billion in transaction revenue and $650 million in marketing services revenue.

How Much Does eBay Take?

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In 2021, eBay’s take rate was 11.19%. It means that eBay takes a cut of over 11% for each transaction happening through the platform. For instance, in 2021, on a total of over $87 billion in gross merchandise value on top of the platform, the company generated almost ten billion in transaction revenues.

eBay Bidding System

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eBay bidding is a way for buyers to bid on a product whose sale price is decided by auction. The bidding process itself is automated, with eBay acting on the buyer’s behalf.

eBay Organizational Structure

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eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

Etsy vs. Ebay

etsy-vs-ebay

eBay vs. Amazon

ebay-vs-amazon
In 2021, Amazon generated almost $470 billion in revenue, vs. eBay’s over $10.4 billion. In comparison, looking at revenues, Amazon was 45x times larger than eBay.

Amazon Business Model

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Amazon has a diversified business model. In 2022 Amazon posted over $514 billion in revenues, while it posted a net loss of over $2.7 billion. Online stores contributed almost 43% of Amazon revenues. The remaining was generated by Third-party Seller Services, and Physical Stores. While  Amazon AWS, Subscription Services, and Advertising revenues play a significant role within Amazon as fast-growing segments.

Amazon Revenue By Country

Amazon Revenue By Country
In 2022, most of Amazon’s revenue came from the US, with over $356 billion in revenue, followed by Germany with $33.6 billion, the UK with $30 billion, Japan with $24.4 billion, and the rest of the world generated almost $70 billion in net sales.

Amazon Cost Structure

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Both the North American and International segment of Amazon are running at negative margins. Indeed, in 2022, for the North American segments, of almost $316 billion in revenue, Amazon spent almost $319 billion in operating costs to run it, thus it generated $2 billion in operating losses in 2022. For its International segment, of $118 billion in revenue, Amazon spent almost $126 billion to operate it. Thus, it reported a $7.7 billion operating loss. While for AWS, with $80 billion in revenue, Amazon spent $57 billion to operate it, thus generating almost $23 billion in operating income. The high operating costs are primarily due to the high cost of running Amazon’s inventory and fulfillment infrastructure behind its e-commerce operations. Indeed, Amazon is as much as a physical player as a digital one.

Is Amazon Profitable Without AWS?

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Amazon was not profitable once AWS was removed in 2022. In fact, Amazon, without AWS generated $10.6 billion in operating losses. While Amazon, without AWS, generated $12.2. billion operating income.

Amazon Profit Breakdown

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Amazon is subdivided into three operating profit segments: North America, International, and AWS. Amazon AWS is the most profitable segment, with almost $23 billion in operating profit in 2022. While Both the North American and International segments run at negative operating losses, with $2 billion and $7.74 billion in operating losses, respectively, in 2022.

Amazon Revenue Breakdown

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Amazon Revenue Per Employee

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Amazon Mission Statement

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Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.” 

Customer Obsession

customer-obsession
In the Amazon Shareholders’ Letter for 2018, Jeff Bezos analyzed the Amazon business model, and it also focused on a few key lessons that Amazon as a company has learned over the years. These lessons are fundamental for any entrepreneur, of small or large organization to understand the pitfalls to avoid to run a successful company!

Amazon Revenues

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Amazon has a business model with many moving parts. The e-commerce platform generated $220 billion in 2022, followed by third-party stores services which generated over $117 billion; Amazon AWS, which generated over $80 billion; Amazon advertising which generated almost $38 billion and Amazon Prime, which generated over $35 billion, and physical stores which generated almost $19 billion.

Amazon Cash Conversion

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Working Backwards

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The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”

Amazon Flywheel

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The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.

Jeff Bezos Day One

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In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

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