eBay Turns Up the Heat on Amazon
eBay just raised its bid for the affections of its merchants.
The online marketplace giant is testing out a new perk for sellers that offers them small business loans through PayPal. Shoppers already have access to credit with PayPal, and this move will expand that flexibility to many of the vendors that use eBay's platform to hawk their wares.
The lending announcement follows big changes to the selling experience that eBay rolled out last month. Those tweaks were aimed at making eBay.com a more attractive destination for merchants. And together the two steps are a clear attempt to turn up the heat on Amazon.com .
After all, the stakes are high in these marketplace wars. Last quarter Amazon counted 39% of its product sales as coming from third-party vendors, up from 36% the year before. And since they include a markup -- on everything from logistics to customer service -- those sales are more profitable to Amazon than sales of its own products are. That's a big reason that Amazon was able to book a jump in gross profit over the holiday quarter.
eBay moved more than $6 billion through its marketplace last year, up from the $4.8 billion it managed in 2010. But the company is strictly in the business of connecting buyers to sellers, and doesn't offer any of its own products. That's a fact that it never misses a chance to drive home to vendors. Here's how the company put it in last month's announcement on its blog: "unlike other merchants, eBay doesn't compete with our sellers at the marketplace."
It doesn't take much reading between the lines to see that by "other merchants," eBay means Amazon. And now eBay joins Amazon as another major marketplace giving out loans to vendors. The e-tailer has been doing it since launching the "Amazon Lending" service in late 2011.
For eBay's part, the company hopes to double the number of active users on its platform by 2015. It also aims to boost its selection above the already massive 400 million items that were listed on eBay in 2012. That kind of growth would be impressive. But to get there, eBay needs to have sellers firmly on its side. And my guess is that Amazon will have something to say about that.
More expert advice from The Motley Fool
Everyone knows Amazon is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of competitors'. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.
The article eBay Turns Up the Heat on Amazon originally appeared on Fool.com.Fool contributor Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.