Opinion: What would happen if Amazon bought eBay?

What if Amazon bought eBay?

Let's be clear for a moment. If Amazon wanted to buy eBay, it would have not one, not two, but three fights on its hands before even contemplating the purchase.

The first would be with the US Federal Trade Commission's own Bureau of Competition to clear the path for an acquisition.

Amazon and eBay are two of the biggest online retailers in the country, although the surge of Walmart and the expansionist ambitions of Alibaba could change this in the long term.

Then there's the likely challenge involving its own shareholders (although Bezos, with a sixth of the share, would be pulling the strings).

eBay won't come cheap - expect the tab to reach tens of billions of dollars - and it's a time where Amazon's growth engine, Web Services, is on its way to become a sustainable multi billion dollar business with a fat 30% margin.

Finally, there's the potential of a bidding war with an entity boasting very deep pockets. It would suit someone like arch-rival Alibaba or even Saudi Arabia's newly-launched national investment fund.

Still, Amazon's market capitalisation stands at almost 10 times that of eBay at the time of writing, having seen its share price grown by more than 23 times over the past decade.

We asked three industry experts about their views on the potentiality of such a deal and its impact.

Winner takes all

"Without a doubt, Amazon is in every conversation in today's retail world," said Rob Taylor, CEO and co-founder of online fulfillment specialist, Convey.

"Retailers are closely keeping an eye on Amazon's every move and looking for a way to differentiate themselves against Amazon's unique model – case in point, Wal-Mart's recent acquisition of Jet.com.

"From an intelligent fulfillment point of view, if Amazon were to acquire eBay, it would bring Amazon one step closer to providing and delivering their customers a complete selection of products.

"At this point in time, eBay has the product offering to compete against Amazon, but has no equivalent of Amazon's fulfillment capabilities, through an Amazon acquisition, eBay would fold into Amazon's growing fulfillment fleet.

"For merchants, the unification of Amazon and eBay would lead to a connected experience, which would consequently lead to more consistent delivery experiences for consumers."

Too risky for both parties?

Adrien Nussenbaum, co-founder of online marketplace startup Mirakl, says that such a deal would never happen.

"Amazon started trying out auctions and moved away from it to create the marketplace concept [while] eBay started with auctions and progressively moved to fixed price and some kind of integrated unified shopping cart," he said.

"These opposite paths lead to Amazon being way more successful than eBay. Besides eBay being very profitable on its historical business and Amazon being able to cut costs a lot, it is difficult to see an opportunity for synergy.

"In addition, if Amazon bought eBay, the FTC would likely block the transaction due to monopoly concerns. Beyond that, it's an acquisition that does not make sense. It is not a win for Amazon customers, who have come to expect the high quality of service that Amazon delivers.

"eBay has more trouble with seller performance. It is not a win for sellers, who would lose a channel and become even more dependent on Amazon. And it is not a win for Amazon, which already has a hugely profitable Marketplace.

"That said, if it did happen, the challenge for Amazon would be continuing its reputation of great service by maintaining a high quality of service from its sellers. Amazon would certainly be opening up the door to even more competition as other retailers create Marketplaces to fill the void created by the loss of eBay. Wal-Mart would certainly up its efforts (as it is already doing with the acquisition of Jet.com), but so would many others."

Plenty to SWOT about

Nussenbaum's point of view was not shared by Andy Richley from ERP specialist Khaos Cloud, who sees plenty of opportunities in what could one day become the biggest tech deal ever.

"Well, the internet would self-implode," he said. "But, more seriously, there are already plenty of synergies between the two companies. Just compare Amazon Vehicles and Ebay Motors, or the fact that both corporations are investing heavily in AI and Machine Learning."

The biggest potential benefit could come from Amazon and Ebay being able to share best-practice and the latest technologies when it comes to integration. Amazon has brought cloud computing to a whole range of businesses, but its API that allows retailers to integrate with their Marketplace, FbA and other services is clunky.

Ebay's API is flexible and modern and allows retailers to integrate quickly and easily, but the company doesn't have the cloud-computing solutions that Amazon can offer.

The downside is that these companies currently learn from, and push, each other. Bringing them together could see that disappear and, eventually, lead to the organisation being overtaken by the next Amazon.