Comparative Characteristic of eBay & Amazon.com Online Shopping Companies - Assignment Example

Analysis Between eBay & Amazon.com Introduction During the last ten years, the rise of Internet has altered the lives of people in numerous ways. Today, Internet is not only being used for the exchange of business information across the globe but has become part of the routine of a common man. Considering the current situation, it is safe to say that Internet is presently the largest medium for trade. Nowadays, a person sitting in the comfort of his home may easily purchase and receive goods sold even on the other side of the world, at a reasonable price 24 hours a day. The more interesting fact is that these goods not only include books, clothes, electronics, machinery, tickets or vehicles but also the daily groceries almost completely erasing the need to go to a superstore (Borade, 2008). The massive development of the ecommerce sector owes full credit to the two giants, eBay Inc. and Amazon.com; two of the first Internet shopping companies. These websites sell all kinds of products including vehicles, equipment, machinery, clothing, toys, gadgets, computers, and books. They not only sell products directly to customers but also act as intermediates for companies such as IBM or Bed Bath & Beyond, and third parties who sell their products through these websites. Moreover, they are also affiliated with other companies; for instance, eBay is affiliated with PayPal, a global money transfer organization (History of Ecommerce, 2004). Business Model & Value Proposition Although both eBay and Amazon are online shopping companies, their business models are quite different from each other. This is due to the fact that they were based on entirely different concepts. At the time Amazon was created, it was simply an online bookstore. Precisely speaking, the company used to sell books owned by itself. And with the passage of time, Amazon increased the variety of products sold on the website, which initially included CDs, mp3 players, and other electronic gadgets. On the other hand, eBay was initiated as an online auction company as well as a shopping website for all kinds of goods, ranging from clothes to electronics. EBay did not auction or sell products owned by itself but rather acted as an intermediary for various companies or random sellers to sell their products through the eBay website (Online Auction, 2005). However, due to the current financial crisis both companies have changed their course of action in order to survive in the Internet shopping industry. Amazon has started inviting small-scale sellers to list their products in the website, just like eBay. Meanwhile, eBay has started fixed price sales of both new and used goods, same as the business model of Amazon (Stone, 2008). Regarding the customer value proposition of these companies, eBay and Amazon again stand different. Amazon holds a very strong value proposition as compared to eBay. A customer of eBay has to rely completely on user reviews. This is due to the fact that eBay is an intermediary and will not efficiently cooperate with the customer if a transaction goes wrong. However, Amazon itself is the seller in its transactions and therefore will hand its full cooperation to the client, ruling out any doubt of a scam. It exceeds way over eBay in this department as it offers its buyers a reasonable discount, a convenient ordering via state-of-the-art technology, and an easy process of shipment. In fact, Amazon continuously creates new value propositions in order to provide its customers the maximum benefits possible (Karnbil, Ginsberg &Bloch, 1996). Competitions The main rivals of these shopping websites are supermarkets and shopping malls. No matter how convenient shopping from home may sound, large numbers of people still find it more suitable to go out and shop. What Internet companies lack is the inability to show the products to the customers for real. There are a lot of people who are not satisfied by simply reading the given description and seeing a two-dimensional figure of the product. they are obliged to see the product with their own eyes before they actually spend money on it. hence, the war to attract more customers, between online shopping and shopping malls is still going on. Other Channels Both eBay and Amazon are affiliated to different kinds of Internet companies. For instance, apart from the eBay website, eBay Inc. owns PayPal, Skype and StubHub. Now, a lot of categories at eBay require payment only through PayPal. As a result, PayPal achieved quite a reputation as a global money transfer company, and is now used widely for money transfers by numerous Internet companies (“EBay”, 2005). On the other hand, Amazon has recently infiltrated into the cinema industry and is presently sponsoring the movie “The Stolen Child”. This way, apart from generating extra revenue, Amazon would be able to attract movie viewers to their shopping website (History of Ecommerce, 2004). Intended Customers Although it may be assumed that people having low incomes or no high speed or broadband connections at their homes are the chief non-buyers of goods online, demographics state a different story. According to a survey done by Pew Internet & American Life Project, the attitude of people plays a significant role in their drive towards online shopping. Their survey states that 75% of Internet users are not comfortable with giving out their confidential information for online payments, while 58% of them are not satisfied with the amount information provided regarding the product (Horrigan, 2008, p. 2). It is these kinds of people that Internet shopping companies intend to serve, as many of them do not take the risk of shopping online at all. Moreover, low-income Internet users tend to note the drawbacks of online shopping rather than its benefits. Therefore, companies like Amazon continuously alter their customer value propositions in order to provide the above-mentioned people a safer and more comfortable shopping opportunity (Horrigan, 2008). Marketing & Advertising During their early years, both Amazon and eBay invested huge amounts of capital into advertising, while they generated revenue from the shipping charges. Later on, in order to accelerate the growing number of online shoppers, they cut back their costs on advertising investing it into shipment, providing their customers with a free shipping benefit. This proved to be a strong force to drive people towards online shopping (Johnson, 2005). It has also been noted that eBay and Amazon TV commercials reach an unusually high number just before an upcoming gift-exchanging holiday, such as Christmas. People are constantly reminded that the holiday shopping could be done easily in the convenience of their homes. This tactic has also resulted in the annually growing number of online holiday shoppers (Howard, 2005). Moreover, whenever an online search of a product is carried, an option to buy the product either through eBay or Amazon pops up most of the time, boasting of no shipping charges and other benefits. This action also has proved to be an effective marketing tool. Product Quality, Availability & Information EBay and Amazon contain both new as well as used products for sale. As these companies often collaborate with the source company of the product, it is safe to say that the quality of any brand new product on these websites is perfect. However, this statement may not be applied on the used goods. Only the user knows the true condition of the used product he sells. As eBay acts as an intermediary between a buyer and his customer, it has incomplete knowledge regarding the product and hence do not take full responsibility for the integrity of the product. Amazon on the other hand is itself the merchant, and therefore it does not hide any negative detail regarding the product, as it would directly affect its reputation. Regarding the availability of products, Amazon and eBay are the oldest and largest Internet shopping companies. Hence, it is highly unlikely that a reasonable product searched for is not available at any of these two websites. Tools for Advice Regarding any advice provided by the website for the product in question, Amazon is way more ahead than eBay. For instance, the details provided with the sale of a brand new TV would only be a list of its technical specifications together with the website’s policies, whereas the sale of the same TV at Amazon is made quite attractive in such a way that most of the technicalities are described along with figurative examples to provide a better understanding of the particular feature, and advice is even given on whether what kind of the product would suit the customer. Lastly, Amazon also provides a very helpful rating scale, from one to five stars, that is filled as a review by the users of the product. Order Placement & Payment In order to purchase any product from eBay or Amazon, it is necessary to first get registered on the websites. At eBay, the selected product may either be an auction or a fixed-price product. If it is an auction product, the person who bids the highest till the specified time gets to buy the product; whereas if it is a fixed-price product, the customer is able to buy the product at the given rate, instantly. Payment at eBay is done mostly via PayPal accounts. However, other channels such as credit cards and wire transfers are also accepted (“Accepting Payments”, 2008). Amazon contains only fixed-price items; therefore, a buyer does not have to wait around for the bidding to take over but can instantly buy the product. Presently, it accepts payment via all kinds of credit and Amazon gift cards, and transfer from bank accounts, but refuses to accept PayPal, global wire transfers or Smart Cards (“Payment Methods”, n.d). Delivery, Shipping & Return After the buyer has made the payment, it takes a couple of days for the shipment depending on the location of the receiver. Amazon offers shipment anywhere in the US but has restrictions internationally. It ships goods to only a few big countries in each continent, and charges accordingly. Regarding returns, the customer has to obtain a shipping label at the online Returns Center and then take the package to either a post office or a shipping center. He is charged for the shipment if Amazon is not responsible for the return. At eBay, sellers are in direct contact with shipment companies, as eBay is not the merchant; and eBay is not liable if there is any shipment error. In addition, the sellers also handle the return conditions at eBay. Customer Services Although eBay does not hold itself responsible for the dealings that take place between the buyers and sellers, it does not deny any kind of help needed by the customers. It offers few services to its clients, but whatever it offers is efficient and reliable. On the other hand, as Amazon is the sole merchant, it provides all kinds of services needed by the buyers. Moreover, the help services of both eBay and Amazon provide quick and accurate information, as stakes are high concerning their public reputation. Website Interface & Usage The interface of a shopping website plays a crucial role in encouraging people to make purchases from it. On the homepages of both eBay and Amazon, the content is arranged in such a way that a viewer would never turn away after having a first glance at it. Both websites display newly released items as well as items that are in great demand and excessively searched for, on the website. Moreover, the unique interface of each site is quite easy to use, as every little aspect, from the search engine to the category section is open and just a click away. Summary Considering the overall situation, Amazon has done a much better job at gaining the trust of buyers and sellers alike. For sellers, Amazon is suitable, as it does not cost a dime until the object is sold, and provides the seller with a chance to open his own store. It is appropriate for buyers too as, feedback is not necessary, shipment is more reliable, and an approximate delivery time is provided. And now that both websites hold almost the same business model, Amazon can be safely regarded as a much more preferred shopping website. Works Cited Accepting Payments on eBay. (2008). AllBusiness.com Inc. Retrieved October 19, 2008, from http://www.allbusiness.com/sales/internet-ebay-selling/3235-1.html Borade, Gaynor. (2008, March 14). Internet Shopping. Retrieved October 19, 2008, from http://www.buzzle.com/articles/internet-shopping.html EBay. (2005). NationMaster. Retrieved October 19, 2008, from http://www.nationmaster.com/encyclopedia/Ebay#Customer_support History of Ecommerce. (2004). Ecommerce-Land. Retrieved October 19, 2008, from http://www.ecommerce-land.com/history_ecommerce.html Horrigan, John B. (2008, February 13). Online Shopping. Pew Internet & American Life Project. Retrieved October 19, 2008, from http://www.pewinternet.org/pdfs/PIP_online%20shopping.pdf Howard, Theresa. (2005, January 3). EBay Spends Bigger on Advertising. USA Today. Retrieved October 19, 2008, from http://www.usatoday.com/money/advertising/adtrack/2005-01-02-track-ebay_x.htm Johnson, Bradley. (2005, August). AdWatch.(Amazon.com spent on Advertising)(Marriott International’s Stock has risen)(Brief Article). Advertising Age. BNET Business Network. Retrieved October 19, 2008, from http://findarticles.com/p/articles/mi_hb6398/is_200508/ai_n25575562 Karnbil, Ajit, Ginsberg, Ari, &Bloch, Michael. (1996). Re-inventing Value Propositions. Retrieved October 19, 2008, from http://archive.nyu.edu/bitstream/2451/14205/1/IS-96-21.pdf Online Auction Business Model. (2005). NationMaster. Retrieved October 19, 2008, from http://www.nationmaster.com/encyclopedia/Online-auction-business-model Payment Methods. (n.d). Amazon.com. Retrieved October 19, 2008, from http://www.amazon.com/gp/help/customer/display.html?nodeId=513058 Stone, Brad. (2008, October 12). Amazon and eBay Battle for the Top. International Herald Tribune. Retrieved October 19, 2008, from http://www.iht.com/articles/2008/10/12/business/ecom13.php Read More