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Tech Industry

Commentary: Different models, customers

Amazon.com and eBay may be contesting each other in court, but in Gartner's assessment, they do not really compete head-to-head in the marketplace.

By Adam Sarner and Walter Janowski, Gartner Analysts

Amazon.com and eBay may be contesting each other in court, but in Gartner's assessment, they do not really compete head-to-head in the marketplace.

See news story:
Defection bid highlights Amazon, eBay turf war

It may be tempting to view the legal tensions between the two e-commerce giants as evidence that their business models are converging to the point where they will become direct competitors. However, the truth is that--despite a certain degree of overlap--the two companies are reaching out to very different customers in very different ways.

Amazon's strength lies in its widely admired customer service: its ability to offer customers a sense of trust and a pleasant buying experience. This labor-intensive and expensive approach has made e-commerce enthusiasts of many previously reluctant consumers. Amazon maintains its trusted image by taking control of its customer relationships and most of its inventory, and excels by not handing off customer-service responsibilities to others.

eBay, by contrast, offers a more adventurous type of consumer a more exciting--and somewhat riskier--experience. The need or desire for trust is replaced by the pleasure of the hunt, a feeling of online community among people with similar interests, and even an element of gambling. "Owning" the customer experience is not a primary focus for eBay. In fact, the company largely leaves those responsibilities to the sellers and simply monitors transactions for infractions of its established rules.

The two companies do cross over into each other's markets at times: Amazon has experimented with auctions, and eBay offers some fixed-price goods--especially through its Half.com subsidiary, which will likely be marketed and leveraged heavily in the coming months.

Nonetheless, each of the two e-commerce players fundamentally addresses a different set of consumers. Some people want a solid, secure, information-rich transaction, without the slightest trace of risk; others are drawn to the thrill of the chase, the sense of community and the promise of bargains.

The success of Amazon and eBay--all too rare among pure-play e-commerce sites--shows that there is room for both types of buyers and for both types of sellers.

(For a related commentary on Amazon's co-branding activities, see Gartner.com.)

Entire contents, Copyright ? 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.