It is difficult to do an Apples-to-Apples comparison of eBay and Amazon, because they are so different, eBay is in 39 countries, has auctions, sells cars and tickets, has a payments business (PayPal) a communications business (Skype) and a classifieds business (Kijiji, et al) while Amazon really is a retailer with a small (30% of units sold) but growing 3P merchant business.
They are also different because they use different terminology. Amazon uses "Revenue" because they actually own the inventory and sell things and they include GMV from 3P merchants in their revenue because they handle the entire payment transaction. eBay uses GMV to discuss the amount of product sold in their marketplace business; eBay's "Revenue" is really the money they get from fees and other business segments. While these two metrics are different, they are similar enough for my comparison. For this purpose I will call Amazon's Revenue, GMV (Gross Merchandise Value).
I will also compare growth rate Y/Y once I've made the 2007 comparison.
Well, right off the bat, it appears we have a problem. eBay had 2007 GMV of $59.35 billion (13% Growth Y/Y) while Amazon had GMV (revenue) of $14.84 billion in 2007 39% Growth Y/Y. eBay certainly is a bigger business, so the only real point of comparison, in my mind, is a comparison of each companies North American Fixed Price business. That's about as Apples-to-Apples as we are going to get with these two companies.
If we back out all of eBay's businesses, that do not compete directly with Amazon (Auctions, StubHub, Automobile Sales, Classifieds, Non-GMV business, PayPal and Skype) and concentrate solely on the North American Fixed Price business, we have a point of comparison that will give us a snapshot of each business to draw some conclusions. Because, eBay does not separate out each of their businesses, I do have to make a few assumptions, but at the most I won't be off by more than a couple $100 million either way.
So here we go: For ease of explanation I've changed North American, which includes Canada to US. Apologies to my friends in the Great White North.
- Amazon's 2007 number is easy. US GMV (revenue) was $8.1 billion. Since all of their GMV is Fixed Price (their Auctions business was minuscule in 2007) we will compare this number to eBay's US Fixed Price business. BTW, Amazon's US GMV (revenue) grew by 38% Y/Y.
We have to do more work on eBay's numbers, to get to their US Fixed Price GMV.
- First we need to identify eBay's US GMV, which for 2007 was 46% of Worldwide GMV or $27.04 billion. 8% growth Y/Y.
- Because eBay Motors is such a huge part of the eBay Marketplace business and Amazon only recently began competing in the Parts and Accessories category and doesn't sell cars (the vast majority of eBay Motors GMV ) I've just backed out eBay Motors completely. eBay Motors contributed an estimated $10.5 billion in US GMV in 2007, so after removing Motors from eBay's US GMV, I come up with $16.54 billion US GMV in 2007
- Next we have to remove GMV derived from Auctions and here is where I make my biggest assumption, because eBay doesn't report this.
John Donahoe mentioned in the Q1 2007 Earnings call; "Our global fixed price business already accounts for more than 40% of our GMV..." Now, I believe Fixed price is a greater share of eBay's US GMV than 40% and could be anywhere from 42 to 50% of US GMV so I will use 45% as an estimate -- remember this is a snapshot of the business.
If 45% of eBay's US GMV is Fixed Price that would put their 2007 Fixed price GMV at $7.44 billion. Fixed Price Y/Y growth is difficult to determine accurately, but we can assume Fixed Price GMV grew faster than Auction GMV, because in Q1 of 2007 eBay stated Fixed Price was 39% of Global GMV and Donahoe just mentioned it was more than 40% in Q4 of 2007. Now, I'm starting to get a headache over my right eye trying to calculate the growth rate of Fixed Price Y/Y, so for arguments sake lets just say it was greater than the 8% Y/Y growth in US GMV.
- One more metric to back out of the calculation: Since Amazon does not sell Tickets, I will back out StubHub's $650 million in 2007 GMV from the US GMV numbers, to give us an estimated $6.79 billion in comparable US GMV
Drum roll please!
In 2007, it looks like eBay did $6.79 billion in comparable Fixed Price GMV to Amazon's $8.1 billion and Amazon's Fixed Price business grew 38% Y/Y while eBay's US Fixed Price business grew 20% Y/Y.
When you do an Apples-to-Apples comparison of the two businesses, Amazon clearly comes out the winner in US GMV and in Y/Y growth.
Of course if we continued this exercise on the profit side of the story, the results would be much different, but that is for another day... for now, I need to take a nap.