Emerging in the 1990s, both Amazon.com (AMZN) and eBay Inc (EBAY) facilitated the expansion of the globalelectronic commercesector. Although Amazon and eBay are both multinational e-commerce corporations, eBay is solely a marketplace to conduct business, whereas Amazon is both amarketplace and a retailer.
Formerly just an online bookstore, Amazonexpanded into a superstoreselling digital media and physical products.On the other hand, eBay transformed online marketplace auctioning from what was justcollectiblesto a significantly larger array of products. Additionally, through its acquisition ofPayPal, eBay revolutionized the profile of digital payments, spinning off the business in 2015, further supporting the growth of e-commerce payment platforms. In this article, we compare Amazon and eBay using various sales, profitability, and valuation indicators.
Key Takeaways
- Investors can evaluate companies like Amazon and eBay using key performance indicators such as sales, revenue, profitability, and valuation.
- For FY 2022, Amazon significantly outpaced eBay in sales, posting a trailing 12-month (TTM) revenue of nearly $514 billion in contrast to eBay's revenue of about $10 billion.
- Amazon had a loss of $2.7 billion in net income for the trailing 12 months vs. eBay's loss of $1.4 billion.
- Amazon's forward P/E ratio was also much higher at 41.32 vs. 9.87 for eBay.
Key Performance Indicators
The success of either Amazon or eBay is evaluated by looking at both companies'key performance indicators (KPIs), which can be broken down into four categories:
- Sales and Revenue: Which company has a higher increase rate?
- Profitability: Which company has a highermargin?
- ValuationMetrics: Which company is worth more?
- Active User Base: Which company has many new vs. existing customers?
Sales and Revenue
For fiscal year 2022, Amazon had a trailing 12-month (TTM) revenue of $514 billion—an increase of 9.3% from $470 billion in 2021. In contrast, eBay's revenue totaled just $9.8 billion, less than in 2021 but an increase from 2020. Over the past three years, Amazon has significantly outpaced eBay in revenue growth, with an average annual revenue growth of 33.1% vs. 10.1%.
Profitability
In 2022, Amazon experienced a net loss of $2.7 billion, while eBay reported a $1.3 billion loss. Both companies experienced decreases in net income in 2022. Amazon reported a three-year gross margin average of 41.8% compared to 75.7% for eBay.
Gross margin was calculated using cost of revenues (eBay) and cost of sales (Amazon), which is more accurate for service-based companies than cost of goods sold.
Meanwhile, three-year average operating margin levels are 2.2% and 27.2%, respectively, for Amazon and eBay. While both companies experienced shrinkage in 2022, eBay's was less than Amazon's in terms of net income growth (shrinkage)—Amazon's rate was -108.6%, and eBay's was -55.9%.
Valuation Metrics
Valuationmetrics such as theprice-to-sales (P/S) ratioandprice-to-earnings (P/E) ratioessentially show which company's stock has earned a greater value for investors. At the end of 2022, Amazon's P/S ratio stood at 1.71, with eBay's at 2.42. Amazon's forward P/E ratio was much higher than eBay's at 41.32x versus 9.87x for eBay.
Amazon's debt-to-equity ratio for 2022 was 2.17, up from 2.04 in 2021. eBay is less leveraged, with a ratio of 1.72, down from 3.05 in 2021. Lower debt-to-equity ratios may or may not be significant; however, comparing the two company's ratios over 2021 and 2022 reveals that Amazon increased its debt level significantly while experiencing a net income loss, while eBay decreased its total debts while experiencing a loss of net income.
Active User Base
Amazon was the most popular e-commerce marketplace in mid-2023, with over 2.8 billion unique monthly visits. eBay was well behind Amazon in terms of visits, with 624.2 million.
Is It Better to Buy on Amazon or eBay?
eBay offers you a direct connection to the seller and allows sellers to auction their items. This caters to consumers who enjoy these features. Amazon makes transactions feel as if you're buying from it rather than from sellers. Protection levels vary, so it's best to make sure you know how each company guarantees your purchases.
Is It Safer to Buy on Amazon or eBay?
Both companies have safeguards in place to protect customers. Because they each have different models, it's best to become familiar with each one and decide which is safer for you.
What Is the Main Difference Between Amazon and eBay?
eBay is more of an auction house and marketplace, while Amazon functions more like a marketplace and retailer.
The Bottom Line
Amazon is by far the bigger corporation, dwarfing eBay in sales, income, and user activity. It has a significantly higher forward P/E, showing greater room for growth. On Aug. 28, 2023, Amazon traded $133.26 versus $43.59 for eBay.
Amazon has a definite lead over eBay regarding sales and revenues, but eBay leads in margins. The valuation metrics paint an interesting story for the two giants, with the ratios reflecting that Amazon's shares are projected to earn more, but eBay's shares led over 2022. Debt levels might be problematic if the companies continue to generate income losses, but quarterly reports for Q1 and Q2 for both indicated two-quarters of positive net income—a reflection of their financial strengths during tumultuous times.
FAQs
Amazon operates like a traditional retail store, attracting buyers to its site to purchase its listed inventory, while eBay attracts sellers to list their personal goods, operating as an auction house or a garage sale.
Is eBay more profitable than Amazon? ›
Both Amazon and eBay are leading online marketplaces, with 4.79B and 1.21B monthly visitors, respectively. In 2023, Amazon's annual revenue was $554.02B, while eBay made a mere (in comparison) $10.06B.
Which is more secure, Amazon or eBay? ›
E-commerce can be a risky business, but overall, Amazon may have more safeguards in place because you don't have to interact with your customers. Amazon handles the payments to the seller. However, both Amazon and eBay have many safeguards in place to protect their sellers and customers.
What is Amazon and eBay? ›
Both eBay and Amazon are eCommerce powerhouses whose reputations go before them. They both rank among the top online shopping sites in the world, and between them make billions each year from millions of members.
Who is eBay's biggest competitor? ›
Amazon. For a good reason, Amazon is one of the most popular eBay alternatives. It's the largest e-commerce platform in the world and offers a wide selection of goods. Amazon also has some of the lowest fees in the industry, and its seller tools are robust and easy to use.
Who is Amazon's biggest competitor? ›
It's a great way for small businesses to increase their reach and tap into new customer segments. Who are Amazon's biggest competitors? Amazon's biggest direct competitors include Walmart, eBay, the Alibaba Group, Target, as well as more localized eCommerce marketplaces (such as Otto or Rakuten).
What is Amazon's biggest source of profit? ›
Key Takeaways
- Amazon makes money through retail, subscriptions, and web services, among other channels.
- Retail remains Amazon's primary source of revenue, with online and physical stores together accounting for the biggest share.
What are the most profitable items to sell on eBay? While there isn't one golden product that will guarantee profits, selling products such as vintage clothing, legos, musical instruments, broken electronics, and antiques will put you on the path to success.
Is it better to invest in Amazon or eBay? ›
Investors can evaluate companies like Amazon and eBay using key performance indicators such as sales, revenue, profitability, and valuation. For FY 2022, Amazon significantly outpaced eBay in sales, posting a trailing 12-month (TTM) revenue of nearly $514 billion in contrast to eBay's revenue of about $10 billion.
How risky is buying from eBay? ›
But this is also why we're glad to report that eBay is a safe service to use for all of your buying and selling needs. eBay keeps your payment information secure, using high-level encryption; ensures secure transactions; and takes many steps to prevent unauthorized access.
3 Best eBay Fulfillment Centers in the USA
Note one thing that eBay does offer fulfillment service, but it doesn't own fulfillment centers or warehouses like that of Amazon. It works by partnering with multiple logistics companies like USPS, FedEx, UPS, DHL, and 3PL logistics companies.
Is eBay still a good place to sell items? ›
While eBay has changed over time, it remains a well-liked choice selling various goods. The platform operates in a user-friendly manner, and provides seller protections and a large user base, making it a good option for e-sellers. However, there are some reviews that show that selling on eBay is no longer worth it.
Is it illegal to buy from Amazon and sell on eBay? ›
There are no rules against it, but if you intend to sell it, remember that you not only need to pay for the item itself, but for shipping, too. Do you really think you're going to find people who are willing to pay that much more than if they just bought it themselves from Walmart or Target?
Do more people use Amazon or eBay? ›
According to recent data, Amazon has over 300 million active customers worldwide, while eBay has around 185 million active buyers. Are buyers loyal to eBay or Amazon, or Do they buy from both? Many buyers are loyal to both eBay and Amazon and shop on both platforms.
What is so special about eBay? ›
The platform supports a wide range of products, so you can sell almost anything. It's also user-friendly, making it easy to list items and manage sales. Plus, eBay's strong reputation can help build trust with customers. Overall, eBay is a great option for reaching a large audience and growing your business.
Does eBay have a competitive advantage? ›
eBay's competitive advantage comes from its ability to provide an easy way for people to buy and sell goods online without having any experience doing so beforehand; anyone can sign up for an account within minutes, list items for sale (or look at what others are selling) with just a few clicks of the mouse button, ...
What is eBay known for? ›
eBay is a global online auctions and trading company launched by American entrepreneur Pierre Omidyar in 1995. eBay was one of the first companies to create and market an Internet website to match buyers and sellers of goods and services.
How does eBay create value? ›
The sellers feed details regarding their products, including product photos, minimum bid limits, and payments. eBay charges sellers for each product listing. By pooling buyers and sellers on the same digital platform, eBay creates value for sellers and buyers.
Is eBay owned by Amazon? ›
eBay is a publicly traded company, which means its shareholders own it. The largest shareholders of eBay Inc. by May 2023 were institutional investors like State Street Corporation, The Vanguard Group, and BlackRock. eBay's co-founder, Pierre Omidyar, still holds a massive chunk of the company.
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