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Question of the Day: Amazon or eBay?

By JLP | March 29, 2011

Which website to prefer to do your internet shopping:

Amazon or eBay?

Personally, I like Amazon 1,000 times better than eBay. I spend lots of money with Amazon but nearly nothing with eBay. The eBay site seems cumbersome, and gimmicky. And I don’t like feedback system, which seems like a joke.

I’m asking this question today because the WSJ reported that eBay is buying GSI Commerce in an attempt to compete with Amazon. I found this interesting:

GSI has a service called ShopRunner that could have helped level the playing field. Similar to Amazon’s Prime program, ShopRunner charges a flat $79 annual fee in exchange for free two-day shipping from dozens of retailers. Unfortunately, eBay has decided to sell most of ShopRunner. The thinking is that eBay doesn’t want to upset its existing sellers who would be in competition with retailers in the ShopRunner network. In contrast, Amazon offers free shipping even though it puts some third-party sellers that use its site at a disadvantage.

I have a suspicion that the reason eBay sold ShopRunner is because sellers would be angry over not being able to charge what they wanted for shipping. It’s pretty well known that eBay sellers use shipping as a way to make money.

Topics: Business News, Question of the Day | 34 Comments »


34 Responses to “Question of the Day: Amazon or eBay?”

  1. tom Says:
    March 29th, 2011 at 9:46 am

    Amazon, Amazon, Amazon!

    Especially since I have Amazon Prime (you get it for free for 2 years with a student email address).

    If you buy the Amazon iPhone app, it has a barcode scanner that will give you the Amazon price of the item you are looking at. I’ve used that many times on books, small appliances, and other stuff at Target/Walmart. Sometimes Amazon is not cheaper, but the tax savings is significant enough to go with them.

  2. JLP Says:
    March 29th, 2011 at 9:47 am

    Yeah, I have to wonder how long that tax savings is going to last. I love it but states are starting to get ticked off.

  3. Dawn Says:
    March 29th, 2011 at 9:48 am

    Coming soon to eBay….a dynamic shift in selling fees. No longer will sellers be able to circumvent ebay fees by charing exorbinant amounts for shipping. Starting in April 2011 eBay will be charging final value fees based on the total selling amount, including shipping. Sellers will no longer be able to charge whatever they want for shipping because they will pay 10% to ebay with final value fees. This is going to encourage sellers to lower their shipping charges because there will no longer be a profit margin in shipping fees.

  4. JLP Says:
    March 29th, 2011 at 9:49 am

    I have the BlackBerry Amazon app. I was in Best Buy looking at keyboard and mouse combos. I went on Amazon while in Best Buy, saw that they were $20 cheaper on the keyboard AND no sales tax. I ordered it from Amazon while I stood in Best Buy.

  5. Seth Says:
    March 29th, 2011 at 9:54 am

    I’m definitely a heavy Amazon user – even have the rewards credit card from Chase (paid off monthly of course)… but, I love Ebay for those hard to find items, or various used items that are a much better deal than when purchased new. I simply stay away from the users that I know are being greedy with shipping costs.

  6. Jerry Smith Says:
    March 29th, 2011 at 10:06 am

    Amazon….
    Fast, simple and accurate information.

  7. MsDrPepper Says:
    March 29th, 2011 at 10:39 am

    Oh Amazon, absolutely, right?! For one thing, as a tired mommy in Kansas, I was frustrated going shopping for stuff I really wanted or needed, and would get to a store only to find out they didn’t have the exact thing/size/color/whatever I wanted. Calling ahead didn’t always work. But I felt “guilty” about shopping online instead of shopping locally. At some point I realized that Amazon already had a Kansas presence, and so we were shopping “local” – even got billed the sales tax for the state. But with the free shipping on orders over $25, can’t hardly beat that with a stick, at the current prices of gas!!

    And I have bought quite a bit of stuff from eBay – but you are so right, the “shipping” is such a joke. I have noticed many times the bids on eBay are ridiculously higher than it would be to just drive to the local Walmart, because the shipping costs buried in their descriptions more than drive up the total cost to above what is available locally! I just don’t get in a big hurry to buy stuff on eBay. When I wanted the Wii Balance Board, I kept running into that shipping thing, where total cost would then be well above the $99 (at the time, now $89) usual price at Walmart or Target) just to buy it locally! Finally found someone selling a duplicate and their shipping was a bit strange, but the combined costs of the shipping and my maximum highest bid was still around $80 so was a little cheaper by the time the auction closed.

  8. 20 and Engaged Says:
    March 29th, 2011 at 12:01 pm

    I prefer Amazon over Ebay, although I use both. Amazon seems to have less hassle with one click buying options and quick shipping. Ebay is great if I want something more in the novelty category, but I hate having to bid for items and risk losing.

  9. BG Says:
    March 29th, 2011 at 12:10 pm

    The only thing I order online are prescription medications (required by my ins. company) — everything else is purchased 100% locally. The only time I make an exception to this is when it is a hard-to-find item locally (like an electronics/appliance part).

    I have used ebay once, and amazon twice (both around 5 years ago). When I built computers, I used newegg.com solely — but I don’t build computers anymore (not worth it).

    Buying locally means my money is helping support jobs in my town, sales taxes ensure services are supported in my state.

    Standing in a best-buy, in a building they built (with local labor), employing people who are your neighbors, paying property taxes to fund your kids education, and collect sales taxes for you local and state needs — and then subvert all that buy ordering on amazon. That hurts.

  10. JLP Says:
    March 29th, 2011 at 12:22 pm

    BG,

    I have purchased lots of stuff from Best Buy over the years. Six computers, an expensive Samsung flat screen with surround sound system, a stereo, a refrigerator, dishwasher, vacuum cleaners, and tons of CDs.

    I don’t feel bad saving myself $30 on a purchase just like Best Buy wouldn’t hesitate to drop me as a supplier if they found someone cheaper.

  11. BG Says:
    March 29th, 2011 at 12:47 pm

    JLP) I don’t blame you — you are just doing what you are financially incentivized to do.

    I blame the incentives: allowing online retailers to get away with not paying sales taxes.

  12. philip Says:
    March 29th, 2011 at 12:57 pm

    I generally do my online orders at amazon, almost first stop when pricing an item. I try to the compare to other places. However just yesterday I had a product and for it the first thing came to mind was check e-bay for some reason. I ended up ordering this morning on e-bay without even checking amazon. Just now checked and would have been comparable and probably would have ended up on amazon.

    I have personally thought some about the “green” aspect of ordering from online retailer instead of the local store. They have to ship that single item all the way from some warehouse and then a delivery truck for that one item to my house. However UPS chooses more efficient means of driving than I would if I were to have to run to a couple of stores. I think it comes out in a wash.

  13. James Says:
    March 29th, 2011 at 1:05 pm

    Although I use both, I definitely buy more from Amazon. I guess it depends what you’re after. eBay is still one of the best places to go for collectible and hard-to-find items.

  14. Mark Says:
    March 29th, 2011 at 2:01 pm

    Regardless of sales tax, Best Buy and other brick and mortar stores are not competitive with Amazon.

    I wanted to buy headphones from Best Buy, went to the store, and found out I could only buy them from Bestbuy.com. So I went home and ordered them from Amazon, because their website is easier to use.

    Eventually Best Buy will figure out that they are a showroom for Amazon, and will have to do something about it. Or Amazon will figure out that BB is a crappy showroom and open their own.

  15. BG Says:
    March 29th, 2011 at 2:22 pm

    Mark) If Amazon collected the sales-taxes, their competitive advantage would fade very quickly. Amazon would be slightly cheaper (instead of much-cheaper), and you’d have to wait 5-8 days for the item (shipping). If its damaged, you have to ship it back and wait another week, etc.

    How much money do you want to save (over brink-n-mortar) for that hassle?

    Funny thing, in TX last month, there was a huge stink over Amazon and TX sales taxes. Amazon has a distribution center in Dallas (has for years), and never collected TX sales taxes. TX wants the ~$300 million Amazon owes in sales taxes for sales to TX residents.

    Amazon claimed the distribution-center was a third-party, so rightfully they weren’t required to pay the taxes. Then, ironically, Amazon said that if TX pursued the matter, they would move the distribution center to another state (Oklahoma?).

    If Amazon has no control of the warehouse (third-party), then how can they move it to another state? That right there is admittance that the distribution center is under Amazon control, hence is a physical presence in TX — so they should pay the taxes.

    Basically Amazon’s business model is to profit off of states lost sales taxes. I’m sure they do the most business in states with high sales taxes (TX is 8.25% usually), and do the least amount of sales in states with no sales taxes.

  16. Mark Says:
    March 29th, 2011 at 5:09 pm

    @BG: What is your evidence that sales tax is a significant component of Amazon’s success? There are dozens of other web-based stores, often with evn lower prices. Why are they less successful than Amazon?

    Price is not the only reason people buy from Amazon. Amazon is seldom the cheapest site to buy, but I often buy there rather than at other online stores OR physical stores.

    As you said, if you can’t wait for an item you have to buy it locally. Which involves going to a store, finding the item, standing in line, carrying it out (if it is large), and then unloading at home.

    When I buy from Amazon, I quickly find what I am looking for due to the quality of their website, click the button and I am done until it shows up on my doorstep.

    The sales staff in stores such as Best Buy usually cannot answer anything other than the most basic question, so I end up doing my research on the Web. Reviews by other buyers at sites such as Amazon are part of that research.

    Regarding returns, I know items can be defective wherever you buy them. Personally, I have bought 100’s of items from Amazon, starting in 1998. I have never had to return anything. One item was misdelivered by UPS and one e-mail later they shipped me another – free, no-questions asked.

    Bottom line – I doubt I am the only person who would pay a premium to not have to walk into Best Buy or WalMart or many other stores.

  17. BG Says:
    March 29th, 2011 at 6:10 pm

    Mark) And I assume you are filing out the appropriate “Use-Tax” forms, and paying the sales/use taxes for your state when you make all of these online purchases?

    For those who don’t know: Legally, you are required to pay the use-tax (sames as the sales tax) on any items you purchase ‘out-of-state’ and don’t already have your states/local sales taxes applied. Online purchases apply here.

    Now, I know that 99.99% of the people don’t pay their use-tax — but if your state were someone able to ferret you out and enforce the ‘use-tax’ — would you still make purchases on Amazon?

    If the answer is NO — then my point is valid: Amazon’s business model is nothing more than profiting by avoiding state sales taxes. Just as if I sold cartons of cigarettes through the mail to people in New York — and profited off off the non-collection of crazy high cigarette taxes that New Yorkers pay their local/state.

  18. Mark Says:
    March 29th, 2011 at 7:27 pm

    @BG: As a matter of fact, I DO pay my use-tax. And you’re right, many people don’t know they are required to.

    Some states ask for it on their state income tax return.

  19. Yana Says:
    March 29th, 2011 at 8:39 pm

    Amazon all the way – I even buy food there. They have very good customer service, which a customer can contact at will – unlike eBay. There are items I buy at eBay, but I shop there as little as possible because I know that one can have no recourse after making a bad purchase. I feel I have to be very careful there. At Amazon, I am probably too relaxed and too safe ;)

  20. Jack Says:
    March 29th, 2011 at 10:06 pm

    For the stuff you can’t get on Ebay or Amazon, there’s http://www.gunbroker.com!

  21. Beeg Says:
    March 30th, 2011 at 2:08 pm

    BG, don’t take this the wrong way, but you are living in the 20th century. You are giving tons of money away to “help” your local community.

    The internet helps to more efficiently utilize the division of labor. Why would I go pay for a physical store at 300 to 400% of the cost as a distibution center and have an e-store! This is just simple economics.

    I bet you don’t think netflix and red box are a good idea and would rather shop at Blockbuster. These kind of business models (like printed newspapers) are dinosaurs waiting for extinction. (BTW, so are typical classroom teachers, notice that the student/teacher ratio is going from under 20/1 to probably 30+/1, especially in TX)

    This is healthy in a free market. It help to supply the consumer with a product at a cheaper price.

    Online shoppers save so much more than the tax. I found a camera that was 40% cheaper on line than my local best-buy. I also can by software about 30 to 40% cheaper. I use pricegrabber.com. And I do still pay sales tax.

    Anyone that pays for electronic merchandise in a store like best buy, better need it fast b/c in most cases you can do better online.

    Heavy items (like furniture) might be tougher to circumvent, but craigslist is a wonderful tool. And the beauty of that one is no tax either! I love it!!!

  22. Mark Says:
    March 30th, 2011 at 3:01 pm

    @Beeg: I forgot to mention I bought my entertainment stand on Amazon. Paid over $400 at a local store, and they promised delivery “tomorrow”. I went home and saw it online for $200, but figured I would stick to the local because I was trying to set it up before guests arrived. Next day I asked the local store where it was – “tomorrow”. After hearing that again the next day, I cancelled and ordered it online. Paid 50% less and delivered when promised. The guests didn’t benefit, but the local guys wouldn’t have delivered on time either.

  23. Sam Says:
    March 30th, 2011 at 3:25 pm

    My wife and I are Amazon fanatics. Pretty much anything we can get on Amazon we do. And it isn’t the sales tax – I think that issue is a red herring, as is the shipping enviro impact canard. A couple of examples:
    I went to the Macy’s about 5 blocks away looking for Dockers. It took me half an hour of stooping looking through the stacks of Dockers to find one pair in my size, and I didn’t care for the color. On Amazon, I could have – and since then have found exactly what I wanted in my size in the same time it would take me to drive 5 blocks to macys. The fact that Amazon is cheaper when they go on sale is just gravy.

    Second example: I have an older Makita cordless drill and the battery went bad. I went to the local Home Depot looking for a replacement. They didn’t have it -only batteries for the current models. I found it on amazon in five minutes and had it in two days.

    Good prices are nice, but the huge selection is better. Finding exactly what you want without calling around, driving around, roaming through stores, dealing with moronic salespersons, and so on is the real advantage of Amazon and other e-retailers.

    I agree with Beeg above, brick and mortar stores are soooo last century.

  24. BG Says:
    March 30th, 2011 at 4:30 pm

    Beeg, Sam and others) If the sales-tax is supposedly not an issue, then why is Amazon aggressively avoiding states that dare try to collect it? Amazon has repeatedly moved distribution centers, cut off affiliates, and has threatened to do the same to other states when confronted with the sales tax issue. TX is just the most recent example.

    It is obvious that their profits are primarily from tax avoidance. This is simply a beggar-thy-neighbor attack where online retailers profit, at almost exactly the same rate of local/state governments loses.

    Spend money where you want, but know that illegally avoiding these sales-taxes is only hurting your own state/local government. Enjoy the race to the bottom.

  25. BG Says:
    March 30th, 2011 at 4:43 pm

    #21 Beeg said: “…BTW, so are typical classroom teachers, notice that the student/teacher ratio is going from under 20/1 to probably 30+/1, especially in TX…”

    The thousands of teacher layoffs in TX is because the state’s sales-tax revenues are so low. TX is toying with the idea of increasing the sales tax rate another 2%, which will just drive more people to these online retailers that allow them to avoid paying the sales/use taxes.

    Enjoy the race to the bottom.

  26. Beeg Says:
    March 31st, 2011 at 1:59 pm

    No it’s from lower property taxes. School districts in TX get their money from property taxes.

    If we behave like you do (as a country), not using the division of labor as the internet and technology has given, we really will be racing toward the bottom.

    I wonder if people clinged to the past when the light bulb, telephone, electricity, etc was invented?

    I am not arguing that people shouldn’t pay the taxes that are legally required. I know I pay sales tax on my stuff. There is a structural cheapness from ordering on-line that avoids over price commercial real estate.

    You enjoy your bank account’s race to the bottom with this mentality!

  27. Stacey Says:
    April 1st, 2011 at 7:36 pm

    Sam, you hit the nail on the head about Dockers. I hate sifting thru piles to find my husband’s cherished “pleats in the front/ 36/30.” Thank God he finally gave up cuffs. It was becoming impossible to find them in the store and I finally told him to buy his own damn pants. I was sick of spending my precious free time on it. (I’ve been buying his clothes for 20+ years. I can count on 1 hand the number of items he has selected for me!). Yes, I have finally become the angry white woman…

    I’m not a fanatic, but Amazon is what I have have used in the past when shopping/comparing/trying to located items b/c it saves so much TIME. (BG, I still go to Best Buy for electronics, so we share that sentiment.) My oldest loves his history books, esp naval history, so Amazon’s out of print search engines can be quite useful. I also like the Super Saver shipping. I’ve used Ebay when buying my fav Longaberger dishes when I didn’t want to pay the “new” price. I had to get over the “someone else ate off these/had their dog lick them clean” but after the sanitize cycle in my dishwasher I got over it. Then my dog could eat off of them w/no qualms.

    Anyone want to come over for dinner? ;)

  28. BG Says:
    April 4th, 2011 at 9:47 am

    Beeg) only 49% of funding for school districts in TX come from property taxes. 41% is coming from state funds (presumably state sales taxes — there is no state property tax in TX), and the rest (10%) is federal dollars.

    So when you say: “School districts in TX get their money from property taxes.” — it would be better to say that TX school districts get HALF their funding from property taxes.

  29. Stacey Says:
    April 4th, 2011 at 10:30 am

    BG, didn’t you mean that there is no state INCOME tax in Texas?

  30. BG Says:
    April 4th, 2011 at 12:59 pm

    Stacey) There is neither a state income tax nor state property tax in Texas.

    We have local property taxes (for county, city, school district, roads, community colleges, etc), and a state sales tax (6.25%) & local sales tax (up to 2% — varies by locale).

    State funding (which includes 41% of education funding) is solely done through sales taxes.

  31. Beeg Says:
    April 4th, 2011 at 1:19 pm

    Wow, with all of that money going to education, TX must have the best schools in the counry!

    Maybe we should re-think how children are taught. The current system doesn’t seem to be working.

    But, you keep avoiding the fact that my point was that these businesses on-line are not just cheaper by the sales tax, but are cheaper b/c they are fundamentally smarter and more efficient with their supply chain.

  32. BG Says:
    April 4th, 2011 at 1:43 pm

    Beeg) TX is ranked 40th in spending per student at $10,062. Washington DC is #1 at $21,039 per student, New York is #2 at $19,410 per student.

    TX education spending includes educating illegal-immigrants kids (who only speak Spanish) that non-border states don’t need to deal with.

    Not really sure what your point is. What state do you live in?

  33. BG Says:
    April 4th, 2011 at 1:50 pm

    “But, you keep avoiding the fact that my point was that these businesses on-line are not just cheaper by the sales tax, but are cheaper b/c they are fundamentally smarter and more efficient with their supply chain.”

    No, I’m not avoiding anything — I addressed that way, way above:

    “If Amazon collected the sales-taxes, their competitive advantage would fade very quickly. Amazon would be slightly cheaper (instead of much-cheaper), and you’d have to wait 5-8 days for the item (shipping). If its damaged, you have to ship it back and wait another week, etc.

    How much money do you want to save (over brink-n-mortar) for that hassle?”

  34. Beeg Says:
    April 6th, 2011 at 5:15 pm

    Private School or Home School

    I live in Texas too.

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