eBay Express: A Threat to Amazon?

If you're located in a major DMA and watch TV, no doubt you've been subjected to the media blitz by eBay promoting their new fixed fee shopping service, eBay Express. eBay first announced
eBay Express in April of this year, and have begun a broad marketing campaign in time for the peak holiday shopping season. eBay Express is a more direct challenge to Amazon that its Auction business, as its model takes a more traditional retail approach with fixed fee pricing and selection.

eBay Express is in part a defensive move by eBay to Amazon's success in growing its Marketplace business. After failing to compete with eBay with Amazon Auctions, Amazon has enjoyed success in attracting third party sellers to its platform, allowing merchants to offer their products on Amazon product pages. According to its Q2 2006 financial report, third party sales now represent 30% of all units sold at Amazon. That's huge. Amazon's courting of third party merchants is a direct threat to eBay, who relies on third party sellers for nearly ALL of its sales. There's an undeclared war going on for third party sellers, and eBay Express is just another battle front for that business.

Of course, merchants benefit no matter the outcome of the battle between Amazon and eBay: after all, its a battle for their business. eBay Express represents just another distribution point for their wares, and sellers can peddle on Amazon, eBay, or any other seller platform without penalty. Merchants will simply devote more of their time growing their business on the platform that generate the most sales, and profit, for them, and eBay and Amazon want to ensure they are the preferred platform. The question is, can eBay do to Amazon's retail business what Amazon could not do to eBay's auction business?

technorati tags: eBay, Amazon