Ebay vs Amazon
EBay vs. Amazon
Introduction:
In a world where trade is increasingly becoming digitalized online, there are new and challenging strategies emerging. This essay aims to analyze and determine these strategies. Considering the example of eBay and Amazon, their business models and their multi-sided platforms, we can compare them to decide which strategies work in this market and how, in the future, they can keep a competitive edge as the market continuously changes. However, as Amazon and eBay have eventually crossed paths in an attempt to expand in the ecommerce market, the question persists whether the market is big enough for both. This essay will look at how eBay and Amazon have evolved their business structure and how changes in the market have caused both firms to reconsider their core strategies and growth strategies. EBay Vs. Amazon: The Market
EBay and Amazon both operate in the used goods and collectibles market however, they operate in completely different ways. EBay and Amazon currently operate in an oligopolistic market, meaning that the e-commerce market shows some, if not all of the characteristics of an oligopoly market. In 1995 Pierre Omidyar stated the aim of eBay was to ‘give the market power back to the consumers, rather than large corporations.’ (R.Salehnejad, 2012) This caused eBay’s decentralized approach to emerge. The high barriers to entry and exit, large sunk costs and a few large dominant firms operating the market, has made it challenging for any potential competition. Therefore, this has meant that eBay and Amazon do in fact hold large market power as consumers have little in the way of substitutes that can compare to the large consumer base that they offer.
Multi-Sided Platform Competition
Andrei Hagiu (2009) explains that multi-sided platforms bring together two or more independent groups of customers, especially in the ecommerce market. At a basic level the purpose of a multi-sided platform is to reduce search
Introduction:
In a world where trade is increasingly becoming digitalized online, there are new and challenging strategies emerging. This essay aims to analyze and determine these strategies. Considering the example of eBay and Amazon, their business models and their multi-sided platforms, we can compare them to decide which strategies work in this market and how, in the future, they can keep a competitive edge as the market continuously changes. However, as Amazon and eBay have eventually crossed paths in an attempt to expand in the ecommerce market, the question persists whether the market is big enough for both. This essay will look at how eBay and Amazon have evolved their business structure and how changes in the market have caused both firms to reconsider their core strategies and growth strategies. EBay Vs. Amazon: The Market
EBay and Amazon both operate in the used goods and collectibles market however, they operate in completely different ways. EBay and Amazon currently operate in an oligopolistic market, meaning that the e-commerce market shows some, if not all of the characteristics of an oligopoly market. In 1995 Pierre Omidyar stated the aim of eBay was to ‘give the market power back to the consumers, rather than large corporations.’ (R.Salehnejad, 2012) This caused eBay’s decentralized approach to emerge. The high barriers to entry and exit, large sunk costs and a few large dominant firms operating the market, has made it challenging for any potential competition. Therefore, this has meant that eBay and Amazon do in fact hold large market power as consumers have little in the way of substitutes that can compare to the large consumer base that they offer.
Multi-Sided Platform Competition
Andrei Hagiu (2009) explains that multi-sided platforms bring together two or more independent groups of customers, especially in the ecommerce market. At a basic level the purpose of a multi-sided platform is to reduce search
Bibliography: 1. Andrei Hagui. (2009), “Multi-sided Platforms: From Micro-foundations to Design and Expansion Strategies.” Harvard Business School. 2. David Lucking-Reiley. (2000), “Auctions on the internet: What’s being auctioned and How?”, Journal of Industrial Economics, Vol XLIII, No.3. 3. Joshua Gans. (2012) “Amazon Diversifies on the Business Model”, Harvard Business Review, Digitopoly. 4 5. Mike Molesworth, Janice Denegi-knott. (2008) “Journal of Macro Marketing, the Playfulness of eBay and the Implications for Businesses as a Game Maker.” 6 7. Reza Salehnejad. (2012) Note 4, Available on Blackboard 8 9. Reza Salehnejad. (2012) Note 6, Available on Blackboard 10