Amazon (NASDAQ:AMZN) is an exceptional business, playing a large role in the demise of powerhouse retailers Circuit City and Borders. But there's a price for everything -- priced for perfection, Amazon's stock is inherently risky. If the company's iconic CEO Jeff Bezos makes one major move that turns out less than outstanding, the stock could get hit hard. Fortunately, there's an alternative e-commerce investment that presents similar growth opportunities, better business economics, and -- most importantly -- a better price: eBay (NASDAQ:EBAY) stock.

Price matters
Kudos to any business that can beat Wal-Mart (NYSE:WMT) on price; there's nothing worse than facing an opponent who has mastered your primary strategy better than you have. This is exactly what Amazon has managed to do, beating Wal-Mart where it hurts the most -- on price tags.

In fact, Amazon's primary advantage is its low-cost operations. Since e-commerce is far more efficient than brick-and-mortar businesses, Amazon is able to not only undercut Wal-Mart on price but also generate excess economic returns while it's at it.

Despite continued success, Amazon has significantly underperformed the Dow Jones year to date, with the Dow Jones up about 11.4% and Amazon trailing far behind at 6.7%. Amazon certainly hasn't slowed down -- fourth-quarter year-over-year sales and operating income were up 22% and 56%, respectively -- so why is Amazon underperforming the Dow? It's simple: investors have priced the stock for perfection. Taking the company's highest free cash flow year of the previous five, Amazon trades at about 95 times free cash flow.

eBay's partnership mind-set could pay huge dividends
When comparing Amazon stock to eBay stock as potential investments, the first notable difference between the two is their valuations. Despite eBay's similar growth prospects, the company trades at a reasonable 28 times free cash flow. Also, the company is growing at a similar pace to Amazon, with revenue up 18% and operating income up 28.5%, year over year, in the fourth quarter.

While its marketplaces business segment saw gross merchandise volume increase 19%, the real opportunity lies in PayPal and the company's partnerships.

eBay's PayPal, a leading online payment standard, made up 40% of 2012 revenue. Over the past five years, PayPal's payment volume has grown at 24% per year, according to research from Forrester. The trend should continue as developing countries continue to gain access to the Internet in droves -- especially with the proliferation of smartphones and tablets.

Another unique opportunity for eBay lies in its partnerships. Unlike Amazon, eBay takes on a strategy of aggressively pursuing merchant partnerships as opposed to competing. The strategy opens doors for faster expansion in the many countries that often limit foreign e-commerce. eBay's recent investment in India's, for instance, gives the company access to India's fast-growing e-commerce segment. Market potential is enormous. Snapdeal's CEO, Kunal Bahl, says smartphone purchases on the company's platform (currently 15% of sales) are on pace to double in 18 months, according to Businessweek.

eBay stock beats Amazon stock
Though Amazon's significant lead in e-commerce could make its future more certainthan eBay's, the market has definitely already priced this benefit into the stock. eBay, on the other hand, offers benefits that do not seem to be recognized by the market -- at least not to the extent that they have been for Amazon.

In my mind, eBay stock is ultimately a better pick than Amazon stock. What do you think? Which stock is better?

Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends and eBay. The Motley Fool owns shares of and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.