Mihaela Condurateanu

Financial Benchmarking Analysis

AMAZON vs. eBay

Profit/Revenue Amazon eBay Win/loss Points

EPS 23.02 2.09 WIN AMZN 1
REV/Share 557.14 12.61 WIN AMZN 1
Cashflow/Share 66.32 2.89 WIN AMZN 1

Stock Amazon eBay Win/loss Points

P/E ratio 88.76 15.81 LOSS AMZN 0
Revenue Growth 20.45 0.5 WIN AMZN 1
Quick Ratio 0.86 0.69 WIN AMAZN 1

Risk Amazon eBay Win/loss Points

ROI 10.01 11.04 LOSS AMZN 0
Peg 1.125 4.18 WIN AMZN 1
ratio=EPS/Revenue
growth TTM
Business risk 0.5 LOSS AMAZN
Economic Risk 0.5 WIN AMZN

Based on stock price both companies were on the same level, no significant up or down
movements over the year.
Final score Amazon 6.5 - eBay 3.5
Qualitative Notes to the Benchmark Statement-
Analyzing the data above it shows that Amazon is very strong in the profit revenue category
dominating eBay at this category. EPS and revenue/share are way bigger than eBay counterpart.
In the Stock category Amazon dominates as well, except in P/E ratio which indicates a strong
demand for the Amazon stock on the markets. This is also an indicator of continuous expansion
of the Amazon business.
In the risk category it is a tie. It does seem that eBay has solid profit margins, better geographical
exposure, which can be an advantage but overall, Amazon is in a better position than eBay,
conclusion reflected by the final score.
Based on the indexes listed above it seems that Amazon is a company growing to a faster pace
compared with eBay. This is reflected by the P/E ratio which is much higher for amazon. eBay is
not growing as fast as Amazon however has a larger exposure to international markets. From the
buyer perspective, Amazon is quite popular with the prime delivery, assuring next day free
delivery. eBay is offering free two or three day delivery. From this perspective Amazon is a
winner. From the seller perspective, it seems that eBay is better equipped and offers a better deal.
It seems that selling on eBay is cheaper than selling on Amazon. This is because Amazon
charges more fees (the standard Amazon fee is 15% with 0.99 fee per item, while eBay fees for a
standard account are often less than 9.15%).
These graphs show clearly that eBay is more versatile in providing more tools to sellers
compared with Amazon.
In terms of profit margins, eBay also is better positioned than Amazon on most categories sold
online, however the difference in profit margins is about 1-3% and this small difference is offset
by Amazon higher sale volume.
Economic risk
Traditionally speaking in a crisis situation, with a possible recession looming all over the world,
online retailers will suffer as well. A common principle applies to all corporations, and the less
leverage they have the better they can navigate a possible recession. A viral pandemic and a
weakened economy will incite significant behavioral change.
Economic stagnation, oil prices collapsing, the travel and leisure sector grinding to a halt and
corporate liquidity putting the fabric of our economy on the line all risk contagion through
financial markets — without concerted efforts in monetary and fiscal stimulus, things could get
worse.
Despite the economy contracting, massive layoffs and decreased consumer spending, there is an
incredible opportunity for online retailers:
1. Easier to compare and find the lowest price.
2. The convenience of shopping anytime anywhere.
3. Free shipping and return policies.
4. Avoid stressful crowds and parking.
5. Online retailers are always open
6. 87% of retail shopping starts online today

The last point is almost certainly higher this time around. As the SARS outbreak of 2003
demonstrated, the outlook for online shopping is actually incredibly bright.

Even during a weak economy or public health crisis, people continue to use the internet to shop.
The emerging trend of avoiding going in-store is here. As Governments around the world
attempt to contain the spread, choices become limited. It is going to get worse before it gets
better.

Retail behemoth, Amazon, reported they have already seen significant spikes in activity on their
site. Scrambling to hire an extra 100,000 team members to meet warehouse and delivery capacity
requirements. They are even being accused of putting profit before safety by warehouse workers
in the UK as they are asked to work overtime.

Based on this, the economic risk for Amazon and eBay in a crisis situation, related to COVID
pandemic is low.

Business risk: to calculate this risk I will use the leverage of both companies. It is a known fact
that more debt will impede the ability to pay it during recession. Debt/equity ratio for Amazon is
0.48 while for eBay is 2.52. Also, the quick ratio is more favorable to Amazon than eBay. Quick
ratio also shows the ability to pay short term liabilities.

Conclusion: Amazon is a rapidly growing company compared with eBay. eBay is a more mature
company. better positioned internationally than Amazon. From the investment perspective, both
companies are solid, however due to rapid growth Amazon attracts more investors. In a crisis
situation eBay and Amazon are going to be affected probably on the same way.

In this COVID crisis both companies capitalized on the opportunity that appeared and
consolidated their position.

https://www.wheretosellonline.com/amazon-vs-
ebay/https://www.emarketer.com/content/coronavirus-china-us-covid-19-impact-retail-travel
https://www.rte.ie/news/business/2020/0407/1129150-covid-19-prompts-hundreds-of-businesses-to-
move-online/