Posted: March 22nd, 2023

Evaluating and Comparing Between Amazon and eBay

Abstract

Businesses have capitalized on the advent of computers and the Internet to transact online. Various global companies use technology to market and sell their products. Two such companies are Amazon and eBay, which are leaders in the e-commerce sector. Although the two firms use online capacities to achieve their business goals, they differ in terms of their business model. eBay uses technology to match sellers to clients through an auction model, while Amazon sells to customers directly. However, the use of cloud computing is quite comparable. Although eBay uses a third-party service provider to source for cloud computing, Amazon develops the service internally and even outsources to other users. The two firms use artificial intelligence, but differs in their application. While eBay uses the data analytics capability to match sellers to the right buyers, Amazon uses the concept to collect information for decision-making to improve the quality of products and services offered to customers.

Evaluating and Comparing Between Amazon and eBay

Introduction and Background

At the click of a button, a seller and a buyer can interact through electronic commerce (e-commerce) platform. The development is made possible by the advent of the Internet. The e-commerce movement has grown significantly in the past and continues to advance. Many companies are creating platforms to market and sell their products online. Such businesses reach millions of local and international customers based on their diverse approaches. The purview of e-commerce has allowed firms, such as Amazon and eBay, to become huge players in the market. Such companies rarely operate using the traditional model of business. On the contrary, they use online platforms for their operations to achieve their business goals. Although eBay and Amazon are the major players in the e-commerce platform, their approaches are comparable in many aspects; however, some similarities are evident, including use of an online platform to market their products, as well as differences, such as the application of business models to maintain an online presence.

Comparison of the two Companies

eBay

Pierre Omidyar founded eBay company in 1995. His motivation to begin the business was inspired by his wife’s need to have a more effective means to look up and sell collectibles. He took advantage of his computer science skills to start the company that would later become a multi-billion-dollar online corporation. He established a platform that would allow users to bid for products online, and the highest bidder would take the product. The owners usually earn transaction fees for listings (regardless of whether the goods are sold) and extra payment for Premium Action features, such as ButItNow, Premium Seller membership, additional photos, FeatureIt, among other aspects (Cohen, 2003). The platform allows sellers and consumers to interact. Customers view information regarding listed items. The platform enables the customer to display listings on other sites. They can also leave feedback on the website after the transaction. Sellers submit products’ information and wait for the highest bidder, who they transact with. However, eBay’s business model differs from Amazon’s approaches.

Amazon

Jeff Bezos founded the company the same year as eBay but adopted a divergent E-business model. The founder had computer science skills that enabled him to create a successful online business. The business model differed from eBay’s because Amazon created an online market where customers could buy anything. It is also a customer-centric company that makes shopping convenient. Amazon offers several E-commerce services since the platform has a search catalog that customers use to retrieve product information and customer reviews (Brandt, 2011). It has a retrieve wish list and a mechanism to search what other sellers have to offer. The site provides various benefits that might not be available on eBay, such as instant scalability, pay-per-use model, simple REST/SOAP API, and Superior Technical Support (Furth, 2018). The company has emerged as one of the leading online platforms, although it competes with others, including eBay.

Literature Review

Business Models

eBay and Amazon exhibit some similarities in the entry to the E-commerce business model. They operate online shopping sites, which provide an opportunity for buyers to browse through products and select whichever they want to buy. Each of the companies has an online storefront with a display of the different products that the business offers. In addition, they also support online payment options, which provide a high level of convenience to their customers (Einav, Levin, Popov, & Sundaresan, 2014). Both companies have adopted a business model that supports effective customer service. They are online shops that evoke the physical similarity of purchasing goods as a brick-and-mortar-shopping center, but without the customer visiting the shop. Laudon and Traver (2016) confirm that they use the business-to-consumer (B2C) online shopping method. eBay and Amazon are the leading online retail corporations, which has proven that online success is no longer about the physical space but a platform, which customers can browse products to purchase.

Online corporations have revealed the importance of having an efficient infrastructure to support customer service. Bunnell (2001) observed that customers seek the online experience that offers convenience; therefore, the most crucial step for the companies entering into the E-commerce business is to ensure that they have a friendly interface through which their customers can interact with the company and its products or services. Besides, they have taken advantage of the unique market footprint coverage opportunity provided by the online interface. They also target offshore consumers using their convenient interface (Laudon & Traver, 2016). When entering the E-commerce environment, the companies ensure that their customers can easily browse through and identify the product or service they require to meet their needs.

Although eBay and Amazon have a similar developmental pattern in terms of entering the E-commerce arena, they design and develop their online platforms differently, as well as the way they use such platforms for marketing. According to Kasana and Chaudhary (2014), the two companies differ in the way they operate their business in an online environment through business models. The primary difference between the two companies entails their business models and pricing strategies for their online services. Kasana and Chaudhary (2014) observed that eBay is an online auction house, which facilitates the marketing of products between third-party sellers and buyers. Potential buyers search from the site for goods they can purchase from various sellers. However, instead of buying them directly, they place a bid through individual auctions. On the other hand, Amazon’s business model focuses on direct sales of products to customers (Stone, 2013). Potential customers visit the site to view the company’s inventory and can purchase them directly. The company has an extensive network of warehouses from where products are delivered to customers. The company allows some third-party sellers to market their products to clients. However, it maintains most of the goods in-house to sell to customers directly. Both companies operate under an exceptional business model that provides a competitive advantage

Technologies that Support E-commerce

Furthermore, the two companies differ in terms of the technology that they use to support their E-commerce activities. eBay’s technology supports the wholesale pricing model. The company adopts a superior revenue-sharing model with an Affiliate program (Bunnell, 2001). The technology enables small and big sellers or affiliates to learn and earn at almost the same rate. The company has, over the years, supported individuals and other businesses to market their products online quickly and conveniently. In contrast, Amazon uses a more superior technology compared to eBay through AWS, EC2, S3, and catalog (Brandt, 2011). Such techniques have enabled both companies to support reliable chains of distribution for their products.

Cloud Computing

Besides the business model, the two companies compare in terms of their adoption of cloud computing. eBay, in 2008, announced its bid to join other leading online consumers in their investment in cloud computing. The company had taken longer to invest in the cloud computing model, which enables companies to enjoy networking services. Hence, eBay remained oblivious of the underlying infrastructure. The responsibility of managing the network is left to third-party service providers. EBay’s “Cloud Computing initiative” improved service provision through the use of superior technological capabilities. With the implementation of cloud computing in the company, the management enhanced its user interface and software development kit. Other related changes, included adapter development for CMDB and “Cloud Computing Command and Control and Fluid Capacity Frameworks.” (Wang et al., 2015, p. 155). The company uses cloud computing to improve the interactions between sellers and marketers in the online platform.

Amazon has been using cloud computing longer than eBay. The company adopted cloud computing through Amazon Web Services (AWS). The model is more founded in the online business world compared to eBay’s “Cloud Computing initiative.” According to Ritala, Golnam, and Wegmann (2014), the model is a comprehensive, evolving cloud computing platform that the company provides. The model works for the company on two fronts. Firstly, it supports the company’s computing capabilities. Secondly, the company offers cloud computing to its customers as a service. Therefore, it differs from eBay, which only benefits from cloud computing to support its services to customers and sellers. Amazon, unlike eBay, provides a blend of PaaS, IaaS, and SaaS offerings (Newcombe et al., 2015). The company has been using the model since 2006, while eBay announced its intentions to adopt cloud computing in 2008. Hence, Amazon’s cloud computing model is more comprehensive and effective compared to eBay.

In terms of cloud computing, while eBay uses an external model, Amazon uses an internal approach. Amazon created an inside infrastructure that could be used by its customers to support its online retail operations. Amazon Web Service was one of the original cloud computing models in E-commerce. The company created it as a pay-as-you-go cloud computing strategies scaling the provision of services to users. Unlike the eBay model, Amazon Web Service provides users with required computing, storage, or throughput; thus, improving their user experience (Ritala, Golnam, & Wegmann, 2014). The system offers services from numerous data centers. The centers are spread across availability zones (AZs) globally. Notably, the availability zones represent locations, which contain many physical data centers. Amazon Web Service customers can spin up virtual machines (VMs) as well as duplicate data in diverse availability zones to create a stable structure that protects users from failures (Newcombe et al., 2015). Generally, the company has one of the most effective cloud computing among leading E-commerce companies.

Artificial intelligence

Though in different ways, the two companies have capitalized on artificial intelligence to optimize their capabilities and services. According to Greenstein-Messica and Rokach (2018), eBay uses AI and machine learning technologies to improve the services. The multinational e-commerce site has been capitalizing on the techniques since the first decade of the 21^st century. One of the ways the company has been using the approach is to match buyers with suitable clients. The service is critical for the company because it generates revenue from sellers who post their goods on the site for customers to bid and purchase. The technologies also play an essential role in enhancing the buying and selling experience. AI has become increasingly important in businesses that depend on big data to achieve their objectives. eBay is competing effectively with other online companies, such as Amazon, for the leading position as the primary user of AI to support business operations. However, whether the corporation has achieved its objectives remain questionable because Amazon is also increasingly using similar technologies.

Amazon has also embraced artificial intelligence and machine-learning technologies to support operations. However, unlike eBay, Amazon’s is not limited to a single business segment. AI and machine learning capabilities are everywhere and are used across the business. Some of the applications include the Amazon Go stores, the Alexa suite of voice-activated devices, and the recommendation engine, which lead to the population of the “Frequently Bought Together” or “Customers Who Bought This Item Also Bought” purchase recommendations (Smith & Linden, 2017, p. 14). Unlike the use of AI and deep learning capability at eBay, which focused on matching sellers to the right buyers, the primary application at Amazon is to support the most vital element of its operations, which is delivery. The process depends mainly on a fluid warehouse system. The technologies improve the company’s one-day shipping model, which leads to its competitive advantage. The online platform capitalizes on information systems to receive and process customer requests to facilitate immediate delivery. Castelli, Manzoni, Vanneschi, and Popovič (2017) established that the company also used the technologies to generate critical information from user reviews. The management will continue to adapt, evolve, streamline, automate, and sophisticate the end-to-end fulfillment model. Therefore, the use of AI and machine learning at Amazon to support E-commerce is more sophisticated compared to eBay.

Methodology

Secondary data informed the study about the comparison between Amazon and eBay in terms of their entry into E-commerce. The first step to obtaining the information was creating a search strategy, which is a clear plan to search and locate relevant information from online sources. The approach involved developing a question and keywords to generate key into online databases and obtain a list of potential sources. The question from which the keywords were obtained focused on these groups of words: “Evaluate and compare Amazon and eBay in terms of their E-Commerce, cloud computing and their Artificial intelligence.” Therefore, the key terms used were Amazon, eBay, E-Commerce, cloud computing, Artificial intelligence. The search used the keywords to obtain essential sources of information from online databases and websites. The study used various types of information sources, including books, journal articles, company websites, and reports. Overall, the search provided 15 sources with relevant information for the research project. The highest percentage of the references were peer-reviewed journals with pertinent information on the topic.

Results and Main finding

The results of the search were organized into three sections, which include the evaluation and comparison of the E-commerce models, assessment and comparison of the cloud computing models, and evaluation and comparison of the artificial intelligence.

Evaluation and Comparison of the E-business Models

Both Amazon and eBay adopted E-commerce business models since their inception. The approaches are similar in terms of their mode of entry into the business. Information from the sources indicates that the two companies started around the same time and were created by computer science experts. Pierre Omidyar established eBay company in 1995 to attract online customers (Cohen, 2003). Similarly, Jeff Bezos created Amazon the same year and used an E-commerce model to sell a variety of products online (Brandt, 2011). The two companies have online shopping sites where they post products and allow customers to browse through and order. However, they differ in terms of the way they market their products to customers. eBay provides the online opportunity to other vendors to sell their products on the site through auction, while Amazon markets its different products to customers directly. The firms also differ in the type of technologies they use to support their e-commerce activities because their underlying business models vary. While eBay’s technology supports the wholesale pricing model, Amazon uses a more superior technology through the AWS, EC2, S3, and catalog (Brandt, 2011). Therefore, the two companies have entered the E-commerce arena differently.

Evaluation and Comparison of Cloud Computing Models

Cloud computing models play an essential role in providing technology services to companies in all sectors. Both Amazon and eBay have embraced the benefits of cloud computing in their businesses. The two firms use the model to obtain computing as a service while they remain oblivious of the underlying infrastructure. Nonetheless, they differ in the way they have adopted cloud computing. For eBay, cloud computing is another technology that supports its business activities, while Amazon has taken an active role in providing and using cloud computing services. eBay’s “Cloud Computing initiative” enables the company to use superior technology for computing and networking purposes. The company’s cloud computing models include CMDB and “Cloud Computing Command and Control and Fluid Capacity Frameworks.” (Wang et al., 2015, p. 155).             In contrast, the Amazon Web Services (AWS) provides a more superior cloud computing model compared to eBay’s. The model benefits the company in two ways; for instance, supporting its computing capabilities and enabling the company to be a service provider (Ritala, Golnam, & Wegmann, 2014). The research reveals that Amazon’s cloud computing model is more comprehensive compared to eBay.

Evaluation and Comparison of Artificial intelligence

Artificial intelligence is another business innovation technology that the two companies capitalize on to improve their services to customers. eBay uses artificial intelligence and machine learning to improve its data collection and use (Greenstein-Messica & Rokach, 2018). Similarly, Amazon uses the two technologies to understand the market and improve its services. However, the review indicates differences in the way the two companies capitalize on artificial intelligence and machine learning. eBay uses technologies to match buyers with the right clients. The use of big data by the company is important because it depends on the sellers’ ability to attract customers who bid and purchase (Milgrom, & Tadelis, 2018). Amazon uses Artificial intelligence differently compared to eBay. For instance, the firm adopts applications, such as Go stores, the Alexa suite of voice-activated devices, and the recommendation engine. Artificial intelligence and deep learning in Amazon differ from eBay because its objective is to convince buyers directly to browse through and purchase its products. Therefore, they collect information from customers directly, such as through customer reviews (Castelli, Manzoni, Vanneschi, & Popovič (2017). The two companies, although differently, invest in artificial intelligence to support their e-business activities.

Discussion

The discussion addresses the different methodologies that Amazon and eBay use in their entry into the e-commerce environment. The research affirms that both companies have entered the E-commerce environment and have succeeded in capturing a considerable proportion of online customers around the world. The global giants in online businesses have operated in the environment since their conception. Their founders realized the opportunity available in the E-commerce arena, which led to decisions to establish online businesses. The online corporations avail a variety of products to customers around the world conveniently. They use modern technologies to enable customers to shop conveniently. They avoided the brick-and-mortar business models, which use catalogs to allow customers to order and buy products. With the E-commerce model, customers can buy at the comfort of their home or office. The consumers request for delivery of their products as they continue with their daily activities. Both Amazon and eBay have embraced the E-commerce model during operations.

Although Amazon and eBay are E-commerce businesses, they differ in terms of the ways they have embraced the online technologies to market their products to customers. The analysis reveals that eBay is an auction site where sellers post their products and allow customers to bid. Once the products receive the attention of the customers, the firm sells to the highest bidder. Conversely, Amazon uses the online platform to sell to their customers directly. The company has a variety of products in its online catalog, which allows customers to view and make the decision to buy. In a comparative analysis, the two companies have succeeded in their different E-commerce models, which are online hubs that generate billions of dollars in revenue every year. However, while eBay earns mostly from listings, Amazon earns from selling to customers.

The two online giants use technology to maximize the revenue they generate from their different business models. eBay and Amazon have invested in modern, state-of-the-art technology to remain competitive in the online market. The management of both companies recognizes the importance of innovation to remain relevant and attract a high number of online customers. Although the companies use cloud computing differently, they appreciate the need to capitalize on computing services to reach more customers and maximize their revenue. From the analysis, Amazon has a more superior cloud computing capability to support its operations. The firm develops its cloud computing services and provides the facility to other companies. The Amazon Web Service creates an excellent E-business platform for Amazon. However, eBay also uses cloud computing to capitalize on online business capabilities. Generally, the two companies understand the importance of technological developments to improve their business operations and generate revenue continually.

The two online firms understand the importance of Artificial intelligence and machine learning to capitalize on big data for decision-making. The capabilities enable them to collect relevant data from the market to improve their services to their customers. The technologies support their E-commerce models.  However, the two use Artificial intelligence and machine learning differently to achieve their business objectives. For example, eBay uses technology to match sellers to the right buyers. The company uses the E-commerce model to assist sellers in auctioning their products. Thus, big data support the objective by helping sellers to reach out to the most suitable client base. In contrast, Amazon uses big data capabilities to understand the target market. Customer reviews are the most important sources of information, which are collected and analyzed using the artificial intelligence capabilities to understand the market and make relevant decisions to attract more customers. Therefore, artificial intelligence supports the E-commerce operations of the two companies.

Conclusions

eBay and Amazon are international online corporations, which have capitalized on technology to reach a significant customer base around the world with a reliable E-commerce platform. Although they are comparable in their use of the online environment to conduct business, they both differ in their business model and the application of technology. The two firms operate through digital capabilities to market to different types of clients. eBay was founded in 1995 to market products online, but developed into an auction platform that allows sellers to post their goods for customers to bid and purchase. Conversely, Amazon was created the same year, but with a different objective, which is to market various products to online customers. Therefore, the two companies use different e-commerce models to achieve their business objectives.

Amazon and eBay use technology to reach their customers. They have embraced the cloud computing capability to support computing and networking services but differ in the adoption of the technology. eBay uses third-party service providers for cloud computing services. On the other hand, Amazon develops cloud computing services in-house. The firm uses the services and also outsources to other companies at a cost. Both companies apply Artificial intelligence and machine learning for superior data analytics. They collect data from the market to make critical decisions. However, Amazon and eBay differ in their use of the data because they pursue different objectives. eBay uses the technology to collect data from the market to match sellers to the right customers. Amazon uses the innovation to collect data from customers, through product and service reviews, to improve quality.