eBay versus Amazon

The end of an era. Meg Whitman has guided eBay for the last 10 years. While other promising dot com startups failed to live up to expectations, Meg has led eBay beyond the most optimistic projections. Along the way she added a big hit - PayPal, and a big miss - Skype.

Despite strong profits and sales, eBay's stock has not been stuck in reverse as eBay has gone from a growth to value stock. The pressure to meet Wall Street's expectations has resulted in painful rate hikes for eBay and PayPal merchants. All the while, Google has entered the payments space, and Amazon is courting small to mid-size e-tail merchants.

As Meg rides into the sunset, new eBay CEO John Donahoe has to deal with the new competitive landscape. Amazon has made strong investments in their search and recommendations engine. The inherent nature of Amazon's buy on demand approach versus eBay's auction concept provides a clean transaction experience. Looking for a toner cartridge? You find the unit you are looking for and then can determine which Amazon partner to go with. Try that on eBay and you have to scroll through pages of auctions and determine if you want to go through the auction process of try and determine which "Buy it Now" option provides the best value.

Besides superior search and listings, Amazon also handles the checkout process for 3rd party vendors. This saves a customer from having to deal directly with the sellers for payment transactions.

No doubt that for person to person to transactions, eBay is a more natural solution than Amazon. Craig's List would be a more serious competitor to eBay for those tranactions.

The fact that John Donahoe did not waste any time to announce changes to eBay's merchant pricing policies is telling. eBay power sellers are getting feed up with eBay's merchant unfriendly policies. Amazon has developed a robust marketplace for 3rd party vendors, and offers a compelling alternative to eBay. Donahoe will have to work fast to improve eBay's merchant relations and keep eBay Power Sellers from moving over to Amazon.

Hats off to Meg for turning eBay into one of the brightest Internet stars. Good luck to Donahoe in revitalizing the eBay community.