Amazon, eBay, and Craigslist
A Real World Market
E-commerce companies promote and sell their products at the online platform. They use the most advanced systems, techniques, and strategies for doing advertisements for their products, making and receiving payments, and managing customer and stakeholder relationships. This paper presents an analysis of the strategies and policies of three top companies from e-commerce industry, eBay, Amazon, and Craigslist.
The paper starts with a brief introduction to these companies by discussing their origin, scale of operations, location, product and service portfolio, and core operational strategies. Amazon.com is an American multinational e-commerce corporation that mainly deals in new and branded products. eBay is an auction website that provides a platform to the buyers and sellers to interact and do transaction in a safe and convenient way. Craigslist is also an e-commerce website where buyers and sellers negotiate for their transactions. If a buyer has to make a choice from these three retailers, he should first look at his need and resources and the availability of the required product or service at the websites of these retailers.
The online retail channel has completely changed the traditional shopping style. This modern style has great implications for the sellers: e.g. they can save heavy advertising and promotional costs, target customers in international locations, provide customized search to the website visitors (buyers) and understand their purchase decision parameters and preferences. In order to win the confidence of its sellers and buyers and enhance its reputation in the local and international community, eBay has taken few steps in the recent past. It has introduced buyer protection policy which provides full coverage to the buyers from online frauds, misrepresentations, and scam from the sellers’ side.
In order to avoid criticism and negative response from the sellers, eBay also provides them coverage against any undue advantage which buyers can take from this policy. By introducing this new market, eBay has also contributed in market equilibrium in the United States and other potential locations in the world. Moreover, eBay and Amazon have implemented feedback systems which enable them to get suggestion for improvements from their customers. These steps have largely contributed in strengthening the brand image of these companies among their key stakeholders.
Introduction: Amazon, Craigslist, and eBay:
Amazon.com, Inc. is an American multinational electronic commerce corporation that promotes and sells a large variety of electronics, household, and consumer products. Headquarters in Seattle, Washington, Amazon is the world’s largest online retailer. It was founded in 1994 by Jeff Bezos (the current CEO, President, & Chairman) under the name ‘Cadabra’. The company went online in 1995 as Amazon.com. The new name was chosen after the world’s largest river, Amazon which depicts that Amazon.com sells a huge variety of consumer and electronic goods that are essential to meet the individual and household requirements of the general public (Amazon).
Amazon.com commenced its operations as an online books store, but soon started selling music, videos, furniture, consumer electronics, toys, jewelry, apparel, computer software, food items, and video games. Amazon runs totally separate and independent websites for the home country and some other potential markets like Canada, Germany, Italy, France, China, United Kingdom, Brazil, etc. It also provides international shipping services in all other countries of the world. Amazon posts prices and sells only new and branded items in each product category (Amazon).
Craigslist is a classified advertisement website that posts jobs, personals, houses and office buildings on sale or rent, services, gigs, resumes, discussion forums, and community activities. Craigslist was founded by Craig Newmark in 1995 as a simple email distribution service for community events and soon diversified in other classified categories. With the passage of time, Craigslist became popular in the local community with the help of word-of-mouth by website visitors and personal recommendations by the existing subscribers. Headquartered in San Francisco, United States, Craigslist started expanding its operations in all other U.S. cities before going international. At present, Craigslist serves 570 cities in 50 countries around the globe. It does not expend any amount on advertising and promotion — the only source of community awareness is the word-of-mouth and personal recommendations (Craigslist).
eBay Inc. is an American multinational corporation engaged in providing consumer to consumer buying and selling services. It is basically an auction website where buyers and sellers meet and do transactions on posted items. Founded in 1995 by Pierre Omidyar, eBay is currently operative in 30 countries around the globe. It is headquartered in San Jose, California. The company’s online incarnation, eBay.com is a platform where buyers and sellers from all over the world can interact with each other at no cost. The company is currently providing standard shopping services in auction style, online classified advertising, online money transfers, and online event ticketing sales services at its website. Millions of items are posted and purchased on eBay everyday; which include home appliances, computers, cell phones, furnishes, collectibles, household and office equipments, automobiles, etc. (eBay).
Implications for Sellers:
By comparing and contrasting each of these websites, the biggest notable difference lies in their selling styles: Amazon.com posts prices of new products offered by all types of small, medium, and large scale manufacturers from all over the world. In addition to the price, the website visitors can also find a product’s complete description, features, and necessary information about its manufacturer. On the other hand, Craigslist provides a platform where community members from a particular area or territory can interact with each other for various other purposes in addition to just buying and selling. However, the major function of Craigslist is to bring the buyer and seller together so that they can do transaction at a price which is acceptable for both the parties. Therefore, most of the prices on Craigslist are negotiable.
eBay is quite similar website to Craigslist except the major focus of its services on auction style selling. The sellers can post their items for sale at a specific price on eBay.com and ask the interested individuals or businesses to bid on the ask price. The party which makes the highest bid can get that product or item from the seller. eBay has become popular in the international market due to its auction style selling which entails a big purchase decision factor, called ‘affordability’ (eBay).
i. Cost-less Advertising:
All these electronic commerce corporations are facilitating individuals and businesses all over the Globe. Due to globalization and rapid advancements in the mediums of communication and transportation, the selling and buying process has become quite easier than ever before. Now consumers can find product specifications, prices, manufacturer details, and other necessary information by sitting at their home and compare with similar products by other manufacturers. Similarly, the sellers do not have to expend money to advertise their ‘for sale’ items in newspapers or through printed broachers in the local community. Therefore, these e-commerce websites have become a cost-effective way of advertising and promotion for business corporations and individuals all over the world (Schneider, 20).
ii. Larger Customer Exposure:
Due to these multinational e-commerce platforms, the sellers are able to create awareness about their new products and services to all the potential markets of the world. Similarly, all those individuals and businesses that want to sell their used or non-famous items at a reasonable price can post on eBay and Craigslist. Therefore, these websites have largely increased the exposure of available and ready-for-sale products, services, and properties to the potential buyers.
iii. Eliminating Geographical Limitations:
Due to these huge online platforms, the sellers can easily advertise their products and services outside their distribution reach. They can not only communicate with the local community members, but are also able to advertise in the whole country, or even the entire world. However, sellers can only advertise their products at the international level if the respective online retailer or website (Amazon, eBay, or Craigslist) provides international shipping services for that particular product (Amazon).
iv. Knowing Customer Preferences:
By advertising their products and services on Amazon.com, eBay.com, and Craigslist, the sellers can easily know the preferences of the website visitors due to the customized search options. These options enable the consumers to look for their favorite products by entering keywords in the search bars. With this option, the sellers can place related items in one product category and increase the exposure of these items to the website visitors (Schneider, 17).
The Best Choice among Amazon.com, Craigslist, and eBay:
All these e-commerce websites have their own advantages and disadvantages. Amazon.com is the largest and the most valuable online retailer in the world. It has a well-established brand image and the largest diversified product portfolio as compared to all other retailers. However, its shipping charges are comparatively higher than eBay. On the other hand, eBay provides an auction selling and buying option which is more convenient and cost-effective way to advertise or buy products, services, and properties at the online platform. Craigslist is also a cost-effective e-commerce channel where buyers meet sellers and find their favorite products at a very reasonable and negotiated price.
Purchase Decision Parameters:
Keeping in view these different business strategies of Amazon, eBay, and Craigslist, a buyer can make choice among them depending upon his need, product availability, and his own available resources. For example, if he has to buy a new product which has just been offered by the manufacturer, he is more likely to find it on Amazon.com and eBay.com. On the other hand, if he wants to purchase second-hand items, Craigslist is the best choice among all. Another purchase decision parameter is the variety of products available at each of these websites. If a buyer has to compare and contrast the specifications, price, and other details of a particular product, the most preferred choice is eBay and Amazon. These two websites have largely diversified product portfolio where a large number of manufacturers post their products along with their prices and specifications (Karp, 52).
How eBay is the best choice?
Among these three websites, eBay can be regarded as the best choice due to its auction style selling. At this website, the buyers meet sellers and bid on the prices of their favorite products. Therefore, there is a strong factor of negotiability and affordability at eBay.com which is missing at Amazon.com. Secondly, eBay provides customized search as well as an option to deal in local currencies which makes the buying process more convenient for the buyers. It also provides an option to the buyers to choose shipping channel for their products from regular mail, courier service, or express mail at very reasonable charges. Moreover, eBay has the safest auction selling style which protects the rights of the sellers and the buyers in a very effective and efficient way.
eBay — protecting rights of buyers more than sellers:
eBay has implemented a strict buyer protection policy which safeguards the buyers from all types of online frauds, misrepresentations, and scams. The policy covers original purchase price as well as full shipping. If a buyer does not get the product of his required specifications, he can file a case with the company against the seller. The buyer can contact the ‘eBay Resolution Center’ for making claim against seller that has done fraud or misrepresentation in any phase of the transaction.
Why does eBay design this kind of market?
eBay is one of the world’s leading online retailers that promote and sell a huge variety of products and services for personal and professional needs. It has expanded its business operations in almost 30 countries around the Globe. Its services have completely changed the traditional shopping style in which consumers had to visit to the markets to find their required products. Convenience and ease of shopping have made it a valuable brand among individual and businesses. These changes in the shopping style and online dealings have also raised a number of risks and uncertainties for the buyers and sellers. Generally, it is assumed that buyers are at a greater risk than sellers in an online transaction. Reason being, buyers have to make payment for their chosen products or services through online channels which are largely exposed to spam, fraudulent activities, and cyber crimes (Baye, 175). In order to protect the rights of the buyers, eBay has introduced this ‘Buyer Protection Policy’. The basic purpose of this policy is to safeguard the buyers from all the aforementioned threats (Collier, 297).
eBay has chosen this kind of market in order to win the trust of its buyers who have to expend their money on the Internet which is the riskiest platform for making any kind of transaction. Through this policy, eBay protects the rights of its buyers and gives them surety that they will get their products with the required specifications and features. This new market has also brought some challenges for eBay at the International level. It is quite easier to detect fraud and catch the guilty party in the home country as compared to foreign countries. Therefore, eBay has to give extra attention while sellers and buyers from two different territories, countries, or regions meet each other at its website.
Sellers’ Reaction to the Buyer Protection Policy:
Apparently, the sellers have found the buyer protection policy completely biased towards buyers. Therefore, they are doing criticism and showing negative response to this online retailer. In order to tackle this issue, eBay has introduced new policy for its sellers in order to protect their rights against buyers. eBay has made it compulsory for its sellers to use PayPal payment channel to do transaction with their buyers. PayPal is a safe, secure, and reliable method of making and receiving payments over the Internet (eBay).
The international communities have also criticized eBay on recommending PayPal which is also under its own ownership. However, this step largely helped the company in satisfying its sellers that were annoyed by the buyer protection policy (Holden, 134). Moreover, eBay promises that sellers are also under complete coverage against any fraud or misrepresentation by the buyers. The new buyer protection policy states that a buyer can be suspended from eBay or sued for online criminal activity if he tries to take an undue advantage from this policy.
Impact on the Market Equilibrium:
The strategies and actions of large scale e-commerce companies like eBay, Amazon, Craigslist, etc. have a significant impact on the market conditions. With the introduction of buyer protection policy, the online retail industry observed positive growth from both the demand and supply sides. Especially, the online retail industry in the United States achieved a good balance between the products supplied by the retailers and the local demand by the general household and business consumers. This positive change was the result of the confidence which sellers and buyers put on eBay after it introduced this new policy (Collier, 298).
Enforceability and Trust:
By implementing the buyer protection policy, eBay has put some restriction for the buyers and sellers in order to make their dealings safe and secure. In order to claim any fraud or misrepresentation, the buyer must have to do transaction according to the set roadmap. Similarly, the sellers have to choose the online payment channels (like PayPal) to receive their money from the buyers. In this way, both these parties get coverage from the company for credit and financial risks from either side. The purpose behind introducing this policy was not just to protect rights of the buyers and sellers: the company also wanted to enhance the loyalty and trust of its key stakeholders, which include customers, manufacturers or suppliers, distributors, transportation firms, regulatory authorities, employees, and investors or stock owners.
Seller and Buyer’s Confidence:
The buyer protection policy has largely helped the company in winning the trust and confidence of buyers on online retailers. Now consumers feel more secure and confident while doing transaction and making payment over the Internet. Similarly, the sellers are also ensured that they will get payment for their goods once the buyer releases them from his end. The new market which eBay has created is also helpful in developing and strengthening its brand image in the international community. The transactions done on eBay are considered genuine and safer as buyers can directly contact the large scale and renowned manufacturers and suppliers from their home country and the outside world (eBay).
Willingness to Pay:
When buyers get full coverage under Buyer Protection program, they do not hesitate in paying for their required goods or services at the eBay.com. Similarly, the sellers get surety that they are dealing with a genuine buyer who will release his payment through a reliable online channel. If either of the parties has any type of ambiguity towards the second party or finds delay in the performance of transaction at any phase, it is advised to immediately contact the eBay representatives in the ‘Resolution Center’. This coverage policy increases the willingness of buyers and sellers to enter into a transaction at the ebay.com (eBay).
Both eBay and Amazon have maintained a customer feedback section at their websites which enable them to get suggestions from their visitors (including buyers and sellers) on how they can improve their customer services, website layout, company policies, product portfolio, etc. The feedback system is also helpful in increasing the satisfaction of buyers and sellers towards these e-commerce giants. eBay and Amazon have successfully built a strong brand image in the local and international markets by implementing various kinds of customer facilitation systems and rendering excellent customer services at their websites (Amazon). Now sellers and buyers feel confident and secure while doing transactions with unknown manufacturers, suppliers, distributors, and promoters (Holden, 133).
The feedback systems have improved the reputation of these companies among their key stakeholders. The buyers do not hesitate to pay for their products while sellers feel confident when they use online payment systems. Similarly, the investors feel satisfied with the performance of these companies in the stock markets where they are continuously showing superior performance than their competitors.
Amazon. About Amazon, 2013. Web. June, 1st, 2013.
Baye, Michael. The economics of the Internet and e-commerce, 1st Edition. Amsterdam: JAI Press, 2005. Print.
Collier, Marsha. EBay for dummies, 7th Edition. Hoboken, N.J: John Wiley, 2012. Print.
Craigslist. About Craigslist, 2013. Web. June 1st, 2013.
eBay. About Our Buyer Protection Programs, 2013. Web. June 1st, 2013.
eBay. Company Overview, 2013. Web. June 1st, 2013.
eBay. eBay Buyer Protection, 2013. Web. June 1st, 2013.
Holden, Greg. 1000 Best eBay Success Secrets: Secrets from a Powerseller, eBook. Naperville: Sourcebooks, Inc., 2006. Electronic.
Karp, David. EBay hacks, 2nd Edition. Beijing: O’Reilly, 2005. Print.
Schneider, Gary. Electronic commerce, 8th Edition. Boston, Ma: Course Technology, 2009. Print.
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