Ebay vs Amazon

eBay vs. Amazon.com

Fixed prices or dynamic pricing? Whichever wins biggest will shape the future

Daniel J. Boone buys a lot online, and it's not just because he lives in remote Juneau, Alaska. After finding some antique postcards early last year on auctioneer eBay Inc.'s Web site, the 30-year-old lawyer has returned repeatedly for such items as a shower radio and a computer scanner. Growing far beyond its start as a motley flea market for collectors of Pez dispensers and Beanie Babies, eBay EBAY now has more than 2 million items for auction daily. It's expected to quadruple gross merchandise sales this year, to $3 billion, from which it skims a profitable 6%. For many of its 3.8 million registered members, eBay has become a prime online shopping stop. Says Boone: ''I look there first for just about everything.''

Whoa--isn't Amazon.com Inc. AMZN supposed to be the Web's leading store? Yes, indeed: With 16 million items for sale, Amazon has ''Earth's biggest selection,'' says Chief Executive Jeffrey P. Bezos. Amazon has added music, video, gifts, and greeting cards to the books it offers some 8.4 million customers--plus links to drugstore goods, pet supplies, and more. Despite Bezos' recent warning of higher losses, analysts expect Amazon's sales to top $1.4 billion this year. Says Gajen Kandiah, a vice-president at consultant Cambridge Technology Partners: ''They will become the Wal-Mart of the New Economy.''

Or will they? eBay's surprise rise suddenly reopens the bidding for the E-commerce crown. In the blink of a cursor, the Web's two E-titans have gone from being happy little shopping hangouts whose paths never crossed to being in each other's crosshairs. Since late March, Amazon has begun holding daily auctions, while eBay--gasp!--is mulling fixed prices. Says Accel Partners venture capitalist James Breyer, who funds E-commerce companies that have been courted by both eBay and Amazon: ''Competitive intensity between the two companies is rising...