Electronic commercialism is an emerging industry born with the broad spread of cyberspace. Goods and services can be supplied and traded through electronic ways. The Electronic commercialism enables consumers to shop in 24 hours a twenty-four hours from any location, every bit long as he can entree cyberspace. The industry has grown quickly in the United States, every bit good as many developing states, such as, China, India, and so on. Harmonizing to a computation by the U.S. Department of Commerce, the entire sum of e-commerce gross revenues in the US during 2008 were around $ 133.6 billion, an addition of 4.6 % on 2007, which is really immense. For China, the market value of electronic commercialism has grown to about 38 million dollars by 2008 and is maintaining a fast growing rate. The company of Electrical commercialism industry makes net incomes through concern theoretical accounts, for case, B2B, C2C and B2C. Typical companies in this industry are eBay, Amazon, Exostar, Ariba and so on. In this study, we will concentrate on analysing eBay and Amazon, which are the two largest companies in the Electronic commercialism industry.
Both Amazon and eBay are listed in the NASDAQ, as leaders online concern. Amazon opens a web site to sell a batch of merchandises to consumers ; besides, possible Sellerss are besides allowed to do advertizement and sell their merchandises to consumers through Amazon web site. There are assortment of merchandises can be found on Amazon, like, Cadmiums, java machines, books, every bit good as camera. The Amazon provides remarks and ranks, which help possible purchasers to screen and take between merchandises of the same class.
EBay is a small spot different from Amazon in that, eBay was founded by Pierre Omidyar ‘s in his San Jose place in September of 1995, under the name Auction Web. From its early beginnings it was meant to be a market place for the sale of goods and services for a assortment of interested persons. It was incorporated in 1996, and has since grown to go the universe ‘s largest most financially successful on-line auction company. [ 1 ] Both persons and little concern can do order online through eBay to sell 1000000s of sorts of merchandises. It is a global platform, where everybody can do trade on it. On EBay, people can easier to sell any merchandise they want and people can besides look to buy any merchandises they are looking for. it is free for purchasers to subject commands on eBay. EBay is different from its rivals, chiefly, Amazon, through its on-line auction concern theoretical account, where people can bask the exhilaration and competition in the procedure of shopping. Buyers do n’t cognize the cost of a merchandise until he or she wins the command and the command has been posted. It has speedy hunt engine and do a merchandise receives global media coverage and provide advertizements through web site, Television, every bit good as electronic mail. eBay makes money by bear downing dealing fees from Sellerss. They besides make income by on-line measure payment service and selling on-line advertizement infinites.
Amazon, as an online retail merchant, is different from eBay in that, it tries to make a easier shopping environment for people, for illustration, one-click online shopping. Peoples are easier to acquire information about their interested merchandises here. In add-on, people can compare benefits, monetary values, every bit good as many other things in Amazon and aid users to salvage money online. For illustration, for a purchaser of books, Amazon offer free chapters or contents from the books for one to compare. So, Amazon differs itself from its rivals, chiefly, ebay, through supplying the same merchandises with as lower monetary value as possible and sells merchandises that are more day-to-day related. It is more like a fixed-price platform, which is different from eBay, where more auctions take topographic point. Amazon makes net incomes through trough dealing fees charged from Sellerss, supplying advertisement topographic points, every bit good as its on-line payment system.
In this paper, I will utilize three sort of ratio to compare the two similar companies. They are liquidity ratio, purchase ratio and profitableness ratio.
Based on the income statement, gross revenues gross in last twelvemonth growed around 30 % , at the same period, eBay increased merely 2 % , these informations show that both Amazon and eBay has continued to turn in entire gross in 2009, from informations, we can cognize generatly that both Amazon and eBay sucessful do money in last financial twelvemonth.
I use current ratio to compare two companies liquidness, it shows eBay and Amazon are 2.5 and 1.5, from current ratio, both of them are able to pay off their liabilities. The ratio of eBay is much higher than Amazon in the last financial twelvemonth, means it has more hard currency and hard currency equivalents to cover its short-run liability than Amazon has. On the other manus, it besides shows that eBay might non put plenty to enlarge its assets such as labour and merge and acquisition. In eBay, there is no stock list, we can non utilize Quick ratio to compare between the two companies.
In purchase ratio, I choose debt ratio, eBay is 24.6 % while Amazon is 54.8 % . In this ratio, eBay is lower than Amazon which means eBay has less debt should to pay than Amazon. EBay ‘s assets are financed more through equity than debt comparison to Amazon, illustrated that eBay has a lower hazard in operation. In add-on, eBay may hold more borrowing capacity and fiscal flexible to enlarge its concern than Amazon.
Let ‘s see some profitableness ratio to hold some in-depth treatment.
On ROA, eBay and Amazon are 7.63 % and 8.61 % , individually, Amazon earned net income more efficaciously than eBay, from the informations. On ROE, eBay is 18.69 % and Amazon is 22.44 % , it shows direction in Amazon is more effectual in utilizing investors ‘ money than in eBay. Compare eBay and Amazon gross net income border and net net income border, which is 71.96 % , 22.71 % and27.37 % , 3.7 % , individually, they have important different between two houses, eBay is much higher than Amazon. it demonstrated that eBay earned a higher net income in each dollar from gross revenues than Amazon. It may because of the merchandising format different, in eBay, Sellerss are really involved with eBay purchasers due to Sellerss sell their trade goods straight to possible purchasers, they must be really synergistic during the dealing. When they make a trade, Sellerss send their merchandises straight to purchasers, the web site do non necessitate to take stock any of goods in dealing, that ‘s can salvage a batch of operating disbursals. Furthermore, eBay charge money to both Sellerss and purchasers, two major gross come from naming fees and concluding value fees. For eBay, they can gain money if any dealing or show merchandises on eBay ‘s web site, they do non necessitate to put much to acquire this gross and less maintains expenses.Compare to negociate between Sellerss and purchasers in eBay, Amazon purchasers is easier to hold an online shopping, everything on the web site have fixed monetary value, the same cargo and payment methods. More of import, consumers do non necessitate to pay any excess fee for shopping from Amazon. For Amazon, they are direct on-line sale while eBay is a on-line auction system, the different between the shopping manner may be an ground why eBay has high net income border.
Cash flow of eBay: the statement illustrated that operations ( 2908.1M ) can bring forth adequate hard currency to fund the company ‘s investment activities ( 1149.4M ) , the difference was financed in borrowed money under recognition understanding ( 100M ) and other hard currency funding activities ( 945.6M ) and hard currency and hard currency equibalents ( 810M ) during the period.
Cash flow of Amazon: the hard currency flow statement demonstrated that operations ( 3292M ) can paid to puting activities ( 2337M ) , and the remainder of hard currency can pay for the long term debt and capital rental duties ( 472M ) and net hard currency used in funding activities ( 280M ) . Both eBay and Amazon are use their Operating hard currency flow and borrowed money to spread out their house.