Investment Analysis - Amazon Versus eBay

Investment Analysis - Amazon versus eBay

Introduction

Amazon and eBay are two of the most successful online retailers across the globe. Amazon has received most of the publicity and hype with respect to e-commerce. On the other hand, eBay has quiet efficiently build an innovative business truly suited to the IT world (Krishnamurthy, 2004). Thus, both these business are among the world's leading online businesses and provides tough competition to each other. This paper provides a comparative analysis of Amazon and eBay in order to get a sound investment analysis that will facilitate investment decision.

Amazon - Company Overview

History

Jeffray P. Bezos founded the company in 1994 and came online in 1995. The company was originally come established under the name of Cadabra, Inc. However, this name was often negatively mistaken as 'Cadaver'. Soon the company adopted a name 'Amazon' after the largest river of the world i.e. Amazon River. The company was first incorporated in the state of Washington, and its stock opened for public in 1997 under the NASDAQ symbol AMZN at the price $18.00 per share (Krishnamurthy, 2004).

Products & Services

Amazon is the largest online retailer across the globe. Initially Amazon.com started selling books but eventually it diversified and now sells DVDs, CDs, VHSs, video down streaming, video games, software, apparel, electronics, furniture, toys, and some others (Krishnamurthy, 2004).

Major Customers

Amazon has approximately 200 million active customer accounts across the world. Their major customers include those people who prefer online shopping/buying. Amazon's customers are mainly those who desire an easy and convenient way to shop with great choices, low prices, and comprehensive product information (North, 2013).

Synopsis of Current Performance

Amazon's performance has been quiet efficient since last many years; however, increasing competition demand it to be more and more innovative and competitive. The company buys its products wholesale, stores them in inventory, and then sells them to customers at higher prices. Amazon consists of massive customer base, which makes it still powerful among many other retailers. In addition, the market of Amazon for third-party sellers is also growing quickly (Reuter, 2012). Thus, the company is quiet established in the marketplaces, but the increasing competition in online retailing world is giving a tough rivalry to the business. However, Amazon's huge customer base as well as innovative strategies still makes it among the world's largest online retailers.

eBay - Company Overview

History

Pierre Omidyaer founded eBay in 1995 with the mission of a marketplace for the sale of products and services for individuals. Eventually in 1998 the company culled senior staff from organizations like Disney and PepsiCo and developed an experienced management team with an average of 20 years of work experience. The company then build a strong vision for the business that eBay is a firm that in the business of connecting people, not selling them things. They rapidly shed the image of only auctioning collectibles and moved into an array of upscale markets where the average sell price is higher (Bjornsson, ...