Shri Vile Parle College: Amazon and eBay Comparison in Virtual Orgs

This project, submitted by Shridhar Maheshwari of Narsee Monjee College of Commerce and Economics, compares Amazon and eBay as virtual organizations. The project delves into various aspects, including organizational structures (matrix for Amazon, functional for eBay), revenue, shipment processes, market size, and profitability. Amazon is found to have advantages in organizational structure, revenue, and market size, while eBay excels in payment times to sellers and caters better to buyers of second-hand goods. The project highlights the core differences in their business models, market positions, and customer preferences. The project concludes that Amazon is generally the better platform for both buyers and sellers, although eBay still holds a place in the e-commerce market, especially for used goods. The assignment also provides insights into the learnings and the bibliography used for the project.

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Shri Vile Parle Kelavani Mandal’s
Narsee Monjee College of Commerce and Economics
(Autonomous)
Department of Commerce
2020-21
Business and Entrepreneurship
FYBCOM
Semester II
VIRTUAL ORGANISATION - COMPARISON BETWEEN
AMAZON AND EBAY
Submitted by:
Shridhar Maheshwari
45208200774
8269899000
Roll No:
D 01

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Table of Contents
Sr. No. Subjects Page no.
1 Declaration 3
2 Plagiarism Test Report 4
3 Introduction of Virtual Organisation 5
4 Amazon 6
5 EBay Inc. 7
6 Core Content- Comparison 8-10
7 Conclusion 11
8 Learnings 12
9 Bibliography 13

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Declaration
I _Shridhar Maheshwari_ declare that this project/assignment titled ‘Virtual
Organisation – Comparison between Amazon and EBay’ is entirely my own
work and any additional sources of information have been duly cited. All the internet
sources published or unpublished from which I have quoted or drawn reference have
been referenced fully in the webliography and bibliography list. I understand that
failure to do so will lead to plagiarism and any similarity found with other
work elsewhere will result in severe disciplinary action. I also understand that I
will be called for viva/presentation (Online/Offline), which I must Compulsorily
attend as per schedule, failing which I will lose claim on the marks allotted for Poster
Presentation & Viva. I acknowledge it is my responsibility to keep myself
updated with the schedule of viva and I will make myself available for the same.
Shridhar Maheshwari

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Plagiarism Test

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Introduction
This new form of organisation, i.e., ‘virtual organisation’ emerged in 1990 and is
also known as digital organisation, network organisation or modular
organisation. Simply speaking, a virtual organisation is a network of cooperation
made possible by, what is called ICT, i.e. Information and Communication
Technology, which is flexible and comes to meet the dynamics of the market.
A virtual organization operates its business mostly through telecommunication and
electronic media. It has a lower physical presence and member of them usually work
by information technology such as internet and e-mail then a physical presence and
interaction in office. In recent times, organizations are looking at virtual
organizational model to reduce resources, personnel and logistical issues.Customers
use virtual organizations for almost every day to purchase products and services on
the internet.
Alternatively speaking, the virtual organisation is a social network in which all the
horizontal and vertical boundaries are removed. In this sense, it is a boundary less
organisation. It consists of individual’s working out of physically dispersed work
places, or even individuals working from mobile devices and not tied to any
particular workspace. The ICT is the backbone of virtual organisation.
It is the ICT that coordinates the activities, combines the workers’ skills and
resources. Managers in these organisations coordinate and control external relations
with the help of computer network links. The virtual form of organisation is
increasing in India also. Nike, Reebok, Puma, Dell Computers, EBay, Amazon, etc.,
are the prominent companies working virtually. This assignment is a comparison
between Amazon and EBay.

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Amazon.com
Amazon.com is an American multinational technology company based in Seattle,
Washington, which focuses on e-commerce, cloud computing, digital streaming, and
artificial intelligence. It is one of the Big Five companies in the U.S. information
technology industry, along with Google, Apple, Microsoft, and Facebook. The
company has been referred to as "one of the most influential economic and cultural
forces in the world", as well as the world's most valuable brand. It was founded by
Jeff Bezos in his garage in Bellevue, Washington on July 5, 1994.
The company along with its subsidiaries belong to the following industries - Cloud
computing, e-commerce, artificial intelligence, consumer electronics, digital
distribution, and self-driving cars.
Amazon serves the customers Worldwide. Services provided by amazon are-
Amazon.com, Amazon Alexa, Amazon Appstore, Amazon Music, Amazon
Prime, Amazon Prime Video, and Amazon Web Services.

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EBay Inc.
EBay Inc. is also an American multinational e-commerce corporation which is based
in San Jose, California, that facilitates consumer-to-consumer (C2C) and business-
to-consumer (B2C) sales through its website. EBay was founded by Pierre Omidyar
in 1995, and became a notable success story of the dot-com bubble. EBay is a
multibillion-dollar business with operations in about 32 countries, as of 2019. It has
the following subsidiaries - Auction Co., eBayClassifieds, Kijiji, iBazar,
GittiGidiyor, Gumtree, G-Market, StubHub, Half.com, Marktplaats.nl.
The company manages the EBay website, an online auction and shopping website
in which people and businesses buy and sell a wide variety of goods and services
worldwide. The website is free to use for buyers but sellers are charged fees for
listing items after a limited number of free listings, and again when those items are
sold. EBay belongs to E-commerce Industry. eBay previously offered online
money transfers as part of its services (via PayPal, which was a wholly owned
subsidiary of eBay from 2002 to 2015). It provides Online Shopping services to
customers.

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Core Content - Comparison
The assignment is based on comparison between two Virtual Companies – Amazon
(including its subsidiaries) and eBay. The 2 companies are compared on the basis of
no. of criterions like Organisational structure, Turnover, Profits, no. of employees,
wide network, market capital, etc.
As discussed above, both the companies are American Multinational companies and
belongs to same Industry E-commerce.
On the basis of organizational structure, Amazon has a matrix organizational
model to ensure that all the processes and production operations within the company
are stabilized and performed effectively. Company uses matrix organizational model
to divide authority both by functional area and by division area. Top management
divides responsibility through function areas such as operations, selling services,
web services, IT, marketing, etc and division area such as China, Europe, India,
North America, etc. EBay uses functional structure to put all the informational
resources for a single activity in one place. It is beneficial for eBay to effectively
utilize and manage the human and informational resources. Amazon.com and eBay
both are virtual organizations those provides online auction facilities to customers
worldwide. Both organizations use different organizational models as Amazon uses
matrix and eBay uses functional structure. Matrix organization model is most
appropriate and effective model for virtual organizations, which provide online
retailer facilities to customers. Matrix structure allows the transformation of
information and resources more smoothly between different functional and
divisional areas. Matrix method is beneficial for large organizations, so it is effective
for Amazon. Functional model is generally used in small size organization, so it is
not effective for eBay, Inc.

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On the basis of revenue, Amazon’s revenue was $282 billion in 2018 compared
to eBay’s revenue $10.75 billion. EBay’s total revenue per year has been essentially
flat for nearly five years while Amazon’s has nearly tripled in this time.
Overall though, all things equal, Amazon is expected to bring in 10x more sales than
eBay.
On the basis of easy shipment of items, Amazon has a boon. Perhaps the biggest
difference between eBay and Amazon is the fact that Amazon has its Fulfilled by
Amazon program, more commonly known as FBA. With Amazon FBA, sellers ship
their items into Amazon and Amazon handles all fulfillment and shipping. This
saves a lot of work. Amazon is easier than eBay to fulfill and ship items with.
Amazon FBA is a huge boon for MOST sellers as it removes the hassle of
shipping.
On the basis of payment time to sellers- Once you start selling products, you want
to actually get paid for them. In terms of payment time, this is one area where eBay
is much better than Amazon. For eBay, you get paid the second a buyer purchases
your item. For Amazon, however, you do not get paid until after the buyer has
purchased the item and Amazon has shipped the item to the buyer. Further, there’s
a holding period of approximately two weeks on your funds.
On the basis of preference of the seller to sell their product amongst 2 of the VO-
Amazon excels in most product categories but eBay still dominates others.

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Generally, if seller is selling a new, commodity item, Amazon is the place to be
preferred. If it’s used, then look to eBay.
On the basis of size of market, EBay, launched in 1995, has become one of the
biggest online marketplaces in the world with around 170 million active users
worldwide, but Amazon is even bigger with 304 million active users. Around half
of all online shopping was done on Amazon last year according to a survey from
eMarketer. On the other hand, poor old eBay rolled in with just a 6.6% share of the
market.
On the basis of Buyer’s Persona, buyers go to eBay and Amazon looking for
relatively different things. EBay has been around since 1995 and has earned itself a
reputation for being the best place to buy second-hand goods. You can buy almost
anything on eBay. In contrast, Amazon is a place buyers go to looking for new and
high-quality items. So, if you’re selling used items eBay might be best.
On the basis of Price of Products offered by the seller- Product pricing also differs
between the two platforms. EBay’s auction model creates a lot of uncertainty for
sellers because you’re not in control of your profit margin. You can choose a fixed
price on eBay, or add a ‘make an offer’ option which allows buyers to negotiate with
you. You could choose whether or not to accept that offer. With Amazon, your
pricing is fixed. If you get your research and pricing right, you can continue selling
this product at a healthy profit year after year after year.
On the basis of profitability, Amazon’s Annual Net Income in 2019 was $11,588
Million. EBay annual net income for 2019 was $1,786. Amazon’s net annual income
was more than 10 times that of EBay in 2019.

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Conclusion
The assignment is made on basis of the facts and figures stated above and some of
the explanations to the comparison between Amazon and EBay. On the basis of
organizational structure, revenue, shipment of items, size of market, and
profitability, Amazon is greater and has an advantage over the EBay. On the
basis of payment time to sellers and buyers and sellers persona for second hand
goods, EBay is found to be a better platform than Amazon. While Amazon does
have higher selling fees, especially if you consider advertising fees, it makes up for
this by having a much larger customer base, easier fulfillment and being easier to
manage.
On paper, it would appear as though Amazon VS eBay is a close race. The reality is
that Amazon is almost always the better platform for both buyers and sellers. EBay
does have a place in e-commerce and many sellers will find value on it. As per the
customer’s preference Amazon has proved to be a better customer service provider.

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Learnings from Assignment
The motivation behind this assignment is to spot light on the Virtual Organisation,
and an introduction to Amazon and EBay. The comparison between the two
companies Amazon and EBay helped me to understand their different organisational
structures, their way of operating, which one has far reaching dimensions of
business, their revenues and profitability, platform more preferred by the seller to
sell products along with the fees charged to them and preference of the buyer to
purchase products from these sites. In virtue of all the findings of the assignment and
weighing up pros and cons of each organization, I was able to conclude that Amazon
has proved to be a better platform than EBay for online products both for buyer as
well as seller.