EBay’s loss is Amazon Marketplace’s gain

Apr 08, 2015

Merchants are leaving eBay for Amazon’s Marketplace. While eBay was the first to create a marketplace for sellers big and small and offers lower rates to participate, the company is losing business to Amazon for a number of reasons, the biggest being that merchants moving to Amazon are increasing their sales.

"We saw sales drop 10 percent on eBay and gain 10 percent on Amazon," Chance Knapp, chief executive officer of Vivo Technology, told Bloomberg. Vivo is a laptop parts seller that moved its business between the two sites. "It was like customers were actually shifting from eBay to Amazon."

In the past, sellers have been wary of participating in the Amazon Marketplace because they saw Amazon as a retailing rival. Last year, a study by Upstream Commerce concluded that Amazon was tracing third-party sales on its site and using the insights gleaned from the data to directly compete with marketplace members.

In the end, however, sales count, and Amazon has used programs such as Prime to attract shoppers and drive revenues for itself and the third-party retailers on its site.

"EBay has lost its sight," David Epstein, e-commerce director for Watchwarehouse.com, which sells on both sites, told Bloomberg. "EBay doesn’t think as a retailer, but Amazon does because so much of its business is retail."

Amazon saw its number of merchants double from one to two million between 2013 and 2014, according to Bloomberg. EBay’s number, which includes many more small sellers, has remained flat at 250,000 over the past two years.

EBay, which plans to spin off its PayPal business this year, saw Marketplace gross merchandise volume in the U.S. grow three percent in the fourth quarter. "Traffic was impacted by both the decline in new users due to SEO changes and the occasional buyer not returning to our site or being met with increased friction due to the password reset when they did come," according to the company’s earnings release.

Amazon’s sales during the fourth quarter were up 15 percent and the company announced that the number of sellers using Fulfillment by Amazon (FBA) grew more than 65 percent year-over-year in 2014. Forty percent of third-party unit shipments were through FBA in the holiday period.

Would you advise sellers to move all or some of their marketplace business from eBay to Amazon? What do you see as the relative strengths/weaknesses of listing with each marketplace? What will it take for eBay to bring more buyers to its site in light of what Amazon is doing?

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9 Comments on "EBay’s loss is Amazon Marketplace’s gain"

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Steve Montgomery
3 years 3 months ago

Sellers would be advised to use both. At this point it would seem that Amazon is winning the battle for even more visitors, but unless there was a compelling reason I would advise against giving up on eBay. The number of customers that use both may be growing but there are still those who are loyal to the eBay experience.

Max Goldberg
3 years 3 months ago

When consumers think about buying online, they think Amazon, not eBay. Amazon is the leading retailer in the U.S. because it is always innovating and because consumers trust it. What other company—with the possible exception of Costco—has millions of consumers paying close to $100 per year for the privilege of shopping? Yet Amazon Prime continues to grow and add benefits.

To get back in the game, eBay needs to aggressively move to attract customers. It needs to create a second-to-none customer service operation. It needs to back every sale. It needs to improve its website and hone its search function to deliver more relevant information to consumers. All of these are tall orders. Is eBay willing to spend the money to implement them?

Onn Manelson
3 years 3 months ago

When it comes to eBay I’m sometimes asked whether they sell new items and whether it’s all auctioned. It seems eBay has never been able to fully shake the old perception it is an auction site.

eBay is losing grounds not only to Amazon but to additional marketplaces as well. The Walmart marketplace is rapidly evolving and so are a few others (such as Groupon) but eBay is still a leading player and sellers should consider selling on both and not necessarily select one over the other.

There are many solutions out there supporting sellers across multiple marketplaces making it almost seamless to manage your store on both.

Gene Detroyer
3 years 3 months ago

In the old brick-and-mortar world it was LOCATION, LOCATION, LOCATION.

In today’s online world, it is LOCATION, LOCATION, LOCATION.

Unless eBay finds a way to increase traffic, it will make no progress. Amazon is on Main Street, eBay is around the corner.

Dan Raftery
3 years 3 months ago

It seems like eBay is having trouble shaking the “America’s garage sale” image that it shares with Craigslist, for example. The Paypal franchise was smart and kept eBay going for awhile, but things change rapidly in digital commerce.

Amazon Prime has created a solid lock on a nice segment and the ability to quickly find a price for an item has given Amazon a strong perception in the mainstream. So how many 800 pound gorillas can co-exist? Retailing history suggests one, but not necessarily the same one over time. What eBay does over the short term will be critical for its future.

Arie Shpanya
3 years 3 months ago

Both marketplaces have unique benefits and challenges and neither should be overlooked by sellers.

  • eBay: Great for priceless items, but not as much traffic as Amazon.
  • Amazon: Incredible reach, but sellers have to watch out for Amazon undercutting them, as well as other competitors.

eBay needs to be a bit more innovative to keep up with Amazon. Amazon has one hour delivery in some cities and a comprehensive Prime program that goes far beyond just delivering products. Not to mention new products like Dash and Echo coming out every few weeks. If eBay really wants to keep up, it’ll have to be more than just a marketplace because in such a competitive market, that simply isn’t enough anymore.

Joan Treistman
3 years 3 months ago

We shoppers go to where we think we’ll find what we’re looking for. Amazon has become the default option for sure. Sellers can identify where their goods best reside. It’s a simple A/B test. And then it’s a little bit of math to determine the sustainability of having two addresses available.

I agree with those other comments that essentially said Amazon has generated a universal appeal for shopping, while eBay has maintained a very narrow definition…much to their chagrin and evidently, their sellers.

Naomi K. Shapiro
Naomi K. Shapiro
3 years 3 months ago

True, we did a news release and a blog post on this subject at Upstream Commerce, even using some comments from the BrainTrust.

*Vendors: If You Have A Product True… Amazon May Go To School On You… And Sell It Too!

*See How Amazon Muscles In On Its Own Marketplace Vendors’ Best Sellers

Now, to answer the question: Retailers working “with” Amazon had better go into the arrangement with their eyes open. They should be prepared to pay the price—no, that’s a bad expression—I mean retailers should be prepared to accept low and lower competitive prices, and have to decide between the exposure and the potential sales—versus none or less exposure.

Unfortunately, it’s the smaller businesses that need the exposure and that have less margin to play with. I don’t think many high fashion retailers would be likely to be “on” Amazon and have their prices lower and lower, although another Amazon ploy has been to get into the high fashion market itself (makeup, for example) by working directly with the manufacturers. Aye, there’s the rub.

Dan Frechtling
3 years 3 months ago

We have reached a virtuous cycle, a tipping point, case closed…call it what you will with regard to the quintessential Amazon vs. eBay debate. Specifically:

1. Amazon merchants in Q4 grew sales 33% year over year and eBay merchants only grew 5%
2. Amazon attracts 50% more unique visitors and nearly double the active buyers of eBay (with a fraction of eBay’s merchant count)
3. ChannelAdvisor, a neutral consultancy, says eBay is “on life support.”

Large retailers have the resources to play on Amazon, eBay, and even Alibaba for that matter.

Smaller online sellers need to concentrate their fire. Focusing on Amazon affords sellers higher sales, better fulfillment, and the simplicity of one marketplace. Plus, they can avoid extra admin of multiple bills and multiple storefronts where stock levels need to be continuously synchronized.


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