Please ensure Javascript is enabled for purposes of website accessibility

eBay Turns Up the Heat on Amazon

By Demitri Kalogeropoulos - Apr 3, 2013 at 6:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The latest battle in the marketplace wars.

eBay (EBAY 5.06%) just raised its bid for the affections of its merchants.

The online marketplace giant is testing out a new perk for sellers that offers them small business loans through PayPal. Shoppers already have access to credit with PayPal, and this move will expand that flexibility to many of the vendors that use eBay's platform to hawk their wares.

The lending announcement follows big changes to the selling experience that eBay rolled out last month. Those tweaks were aimed at making eBay.com a more attractive destination for merchants. And together the two steps are a clear attempt to turn up the heat on Amazon.com (AMZN 3.66%).

After all, the stakes are high in these marketplace wars. Last quarter Amazon counted 39% of its product sales as coming from third-party vendors, up from 36% the year before. And since they include a markup -- on everything from logistics to customer service -- those sales are more profitable to Amazon than sales of its own products are. That's a big reason that Amazon was able to book a jump in gross profit over the holiday quarter.

eBay moved more than $6 billion through its marketplace last year, up from the $4.8 billion it managed in 2010. But the company is strictly in the business of connecting buyers to sellers, and doesn't offer any of its own products. That's a fact that it never misses a chance to drive home to vendors. Here's how the company put it in last month's announcement on its blog: "unlike other merchants, eBay doesn't compete with our sellers at the marketplace."

It doesn't take much reading between the lines to see that by "other merchants," eBay means Amazon. And now eBay joins Amazon as another major marketplace giving out loans to vendors. The e-tailer has been doing it since launching the "Amazon Lending" service in late 2011.

For eBay's part, the company hopes to double the number of active users on its platform by 2015. It also aims to boost its selection above the already massive 400 million items that were listed on eBay in 2012. That kind of growth would be impressive. But to get there, eBay needs to have sellers firmly on its side. And my guess is that Amazon will have something to say about that.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,302.93 (3.66%) $81.38
eBay Inc. Stock Quote
eBay Inc.
EBAY
$48.82 (5.06%) $2.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.