《EBAYamp;AMAZON》.pdf

For the exclusive use of S. LI 9 -712 -405 A P R I L 3 , 2 0 1 2 R A M O N C A S A D E S U S - M A S A N E L L A N A N T T H A K E R eBay, Inc. and A (A) It’s a collision in the making with an impact that could ripple far beyond which pioneer will lead the E- commerce revolution —and which will follow. —BusinessWeek, May 19991 More than a decade after BusinessWeek devoted its cover story to “eBay vs. Amazon,” —a competitive battle it labeled “a defining moment for e-commerce,” —Amazon had established itself as the market leader.2 At the end of 2010, the company’s share price had grown at a compound annual growth rate (CAGR) of 37% since 2001 —more than six times eBay’s 6% growth over the same period (see Exhibit 1). Over the past five years in particular, its revenue, operating income, and net income had, on average, grown at robust rates of 32 %, 27 %, and 26 %, respectively (see Exhibit 2 for Amazon’s summary financial data). On the other hand, eBay had grown these indicators at rates of 15%, 14%, and 21 %. Notably, its core Marketplaces business grew its revenue at a CAGR of 10% per year from 2005 to 2010 (see Exhibit 3 for eBay’s summary financial data). EBay had not always lagged behind its competitor. In 1999, at the time of the BusinessWeek story, eBay offered more than two million items for auction daily, expected its annual gross merchandise volume (GMV) to quadruple to nearly $3 billion, and maintained 3.8 million registered users, which had