One team is the overwhelming favorite, and few people think it will lose. The other has never been in this arena before, and will have to claw and scratch to survive. No, we're not talking about UConn taking on the mighty Duke Blue Devils, but the e-retailing version of March Madness, with Amazon.com reprising its old underdog role against auction-king eBay.
Onsale's Jerry Kaplan doesn't seem to remember, but in the old days (about 1996), everyone was sceptical that Amazon.com could beat entrenched brick-and-mortar retailers like Barnes & Noble and Borders. Kaplan told the San Jose Mercury News that Amazon.com's "entering a space which has large and entrenched competitors, which they haven't done before." Entrenched retail competitors: Been there. But entrenched e-businesses? Haven't done that (unless you count Reel.com).
Amazon.com said it would leverage its 8 million customers and allow them to buy at auction without re-registering, plus it will offer protection up to US$250 for buyers who don't receive merchandise (on a case-by-case basis). The Seattle e-biz giant also said it was taking a 50% stake in Pets.com to move into hawking pet supplies, an estimated $23-billion business.
The Merc's Stephen Buel had the perfect lead: "Earth's biggest bookstore is taking on earth's biggest flea market." While Amazon.com is touting its ease of use and security over eBay, another auctioneer had words of caution. Mark Lockareff, veep at Excite's Classifieds 2000, told the Merc that "it's a tough business," and "it's not something that just happens overnight because you're a big name on the Web. We know that. eBay knows that. Yahoo knows that." Buel said eBay has a huge 86% market share of e-auctions, and is a credible threat to newspaper classifieds.
The Washington Post's Mark Leibovich said eBay wouldn't comment, but others included a rote statement from the auctioneer touting its experience in consumer-to-consumer transactions. Leibovich said Amazon.com offered stronger protection than eBay by requiring all auctioneers to register with credit-card info. Plus, while eBay offers insurance from a third party, Amazon.com says it will be directly reimbursing people burned by fraud. In fact, customer service has been a strong point for Amazon.com and could be a strong differentiator against eBay, which has had high-profile problems with fraud.