Electronic commerce (e-commerce) has been gaining a more central role in the way people have
been conducting their businesses as more customers are choosing to go online to buy their needs.
Leading this new kind of marketplace are the companies, eBay and Amazon. Although both are
online shopping sites, these companies operate in two very different business models.
In terms of their business model, eBay operates as an auction house, where they act as a third
party between the buyers and sellers. Buyers visit the site where they can choose from a wide
array of sellers and then bid on the items through auctions. Whereas Amazon is an online retail
store; it is a direct provider of goods and has its own stocks, inventory and warehouses for their
As a third-party or go-between buyers and sellers, eBay has a more one-on-one operation
because it allows people to buy and sell their stuff. The rule of thumb in eBay is that anyone can
list their stuff on the site and control the prices of their items. The bidding or auction system
means that the customer who can pay the highest gets the item.
eBay generates its income through the fee that it collects from the sellers for them to post their
products on the site. On the other hand, Amazon is a true online marketplace where their items
come from different sellers but site itself would fix the price. Their profit comes from the
percentage that they get on the total sales price of an item, ranging from 6 to 25% and the
services fee that both buyers and sellers pay.
Although both sites offers a wide variety of goods, eBay generally has more products than
Amazon. That is because on eBay, sellers can list almost any kind of item and the products tend
to be unique and one-of-a-kind. On eBay you can buy used items while on Amazon, the products
are mostly new.
In general, Amazon provides more services to its buyers than eBay because it is more focused on
attracting buyers to their site and purchase from it. Amazon has an extensive customer service
program where buyers can return and refund goods. Whereas on eBay were transactions are
made one-on-one between buyer and seller, the company does not have any measures to replace
or refund the products that have been bought.