Emerging in the 1990s, both Amazon.com (AMZN) and eBay Inc (EBAY) facilitated the expansion of the global electronic commerce sector. Although Amazon and eBay are both multinational e-commerce corporations, eBay is solely a marketplace to conduct business, whereas Amazon is both a marketplace and a retailer.
Formerly just an online bookstore, Amazon expanded into a superstore selling digital media and physical products. On the other hand, eBay transformed online marketplace auctioning from what was just collectibles to a significantly larger array of products. Additionally, through its acquisition of PayPal, 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 higher margin?
- Valuation Metrics: 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
Valuation metrics such as the price-to-sales (P/S) ratio and price-to-earnings (P/E) ratio essentially 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.