Corporate Eye

Amazon Soars, eBay Tanks – Which Brand Will Win in the End?

ebayA year or so ago, eBay made the decision to change the fee structure it charges sellers as well as a few other aspects of its business model that ultimately hurt both sellers and buyers looking for bargains on the top auction site. 

Remember, eBay began as a second-hand merchandise auction site where anyone could try to make a few bucks and get rid of clutter in their homes while buyers benefited from great prices that left more money in their wallets.  When eBay made significant changes, the brand was tarnished and neither sellers nor buyers felt like they were benefiting anymore.  Suddenly, a site where anyone could compete on semi-even footing now became a site that featured primarily new products sold by retailers and eBay stores — and not through auctions!

That still doesn’t explain why Amazon is reporting a nearly 25% increase in revenue during the first quarter of 2009 over the same period a year earlier and eBay continues to report losses.  Naturally, eBay blames their decline on the economy, but is that really the case?  Have you tried to buy or sell anything on eBay lately?  From the seller’s perspective, it’s very difficult for individual seller’s to compete, and from the buyer’s perspective, it’s harder to find good deals than it used to be.  However, I argue that you can’t compare Amazon and eBay for one very simple reason (and this is coming from the consumer side, because I shop at both sites although I always check and prefer Amazon first).  Shipping costs!

eBay sellers have to make money or they don’t have a business, so they often bundle high shipping charges to make up that money.  If you spend $25 on an Amazon purchase (not always but typically), you get free shipping.  You can’t beat easy checkout, dependable service, and free shipping.  In other words, eBay can’t compete.

How can eBay save itself?  I don’t have an answer to that question, but the business model certainly doesn’t seem to be thriving regardless of the economy.  Heck, sales should be up on eBay during a recession (at least one would think sales would have been if the original eBay business model was still in place).

I was asked to provide a jacket endorsement for a book about the options for online sellers to actually make money and move away from eBay called Selling Online 2.0.  It’s an interesting read even if you don’t sell items on eBay.  I learned a lot about the complaints buyers and sellers have with eBay and that there are alternatives to ebay.  According to author Michael Miller, it looks like eBay has more competition to worry about than just Amazon.

What do you think?  Can eBay regain its brand relevancy or is it too late?

Image: Flickr

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Susan Gunelius is the author of 10 marketing, social media, branding, copywriting, and technology books, and she is President & CEO of KeySplash Creative, Inc., a marketing communications company. She also owns Women on Business, an award-wining blog for business women. She is a featured columnist for Entrepreneur.com and Forbes.com, and her marketing-related articles have appeared on websites such as MSNBC.com, BusinessWeek.com, TodayShow.com, and more. She has over 20 years of experience in the marketing field having spent the first decade of her career directing marketing programs for some of the largest companies in the world, including divisions of AT&T and HSBC. Today, her clients include large and small companies around the world and household brands like Citigroup, Cox Communications, Intuit, and more. Susan is frequently interviewed about marketing and branding by television, radio, print, and online media organizations, and she speaks about these topics at events around the world. You can connect with her on Twitter, Facebook, LinkedIn, or Google+.
 
Comments

I completely agree about the shipping costs! I might find something unique on eBay, but if I have to pay two times the purchase price of the item in shipping, I’ll forgo the purchase. I don’t know how they can compete against Amazon, but at least I’ve still got CraigsList for some aftermarket things and while I can’t bid, I can still negotiate there.

Amazon is a rip off to many of its sellers. If they generate to much income, Amazon simply freezes their funds and calls it, “Protecting their clients”, in the meantime they have frozen your account yet they encourage you to keep selling. Well that makes sense. It is like working when your boss says, I am going to hold your wages for 30 days, but keep coming in and working.

then try to talk to someone, and even harder, try to talk with someone who has a clue. that’s next to impossible. As they freeze your account, they continue to make money.

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