Randy Smythe

Amazon Prime: Continued Growth All But Guaranteed

Rams MBA,

I agree that Amazon and eBay have significantly different business models and that eBay certainly has the preferable profit model, but Amazon is addressing that by expanding their 3P business, which will allow them to expand margins while maintaining their competitive advantage as an online retailer.

I don’t look at either of these companies from the perspective of the investor. I like the fact that Amazon pushes the envelope and has long-term goals for their business while on the other hand I don’t like that eBay “milks” profits from a supposed mature business and seems to manage their business quarter by quarter.

I believe that eBay should take a longer-term approach to the Marketplace business and get back to growing rather than just managing. Unfortunately this would call for some short-term pain and their margins would be squeezed a little. Recently I’ve seen some signs that eBay’s new management team gets it, but the jury is still out.

I come from the perspective of the online seller so if I seem negative toward eBay it is because I often disagree with the direction they are taking. I think Amazon has issues as well but I like their approach. I can see their vision for the Amazon of the future. I can’t figure out what eBay wants to be “when they grow up”.

I’m an advocate for the online merchant and believe that 3P sellers should have their own website in addition to selling on Amazon and eBay. Call it the “Power of Three” Website, Amazon and eBay. Right now there is too much uncertainty surrounding eBay but hopefully that will change.