eBay Inc (EBAY): The Time to Buy the Largest Internet Auction Company Has Come

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Competition is not a big problem for eBay

First, notice that eBay Inc (NASDAQ:EBAY) has strategically invested in some competitors who offer both substitutes and complementary goods, including Mercadolibre Inc (NASDAQ:MELI), Tradeshift, Magento (shopping cart), BillFloat, and FreshBooks (e-invoicing). MercadoLibre is an e-commerce site with a strong position in Latin American markets (according to Nielsen, about 52,000 people generate all of their revenue from Mercadolibre Inc (NASDAQ:MELI)) which operates in the same way as eBay.com does. But, eBay Inc (NASDAQ:EBAY) has a 19.5% ownership interest in the firm and couldn’t be more happier about MercadoLibre’s success in Latin America. As a matter of fact, both companies have had excellent relations since 2001, and I doubt this will change.

It seems that the real competitor is not a regional e-commerce site, but actually Amazon.com, Inc. (NASDAQ:AMZN), because Amazon too has excellent relationship with top retail stores, and the scalability and trust needed to be a top player in this industry. Just like eBay, Amazon.com, Inc. (NASDAQ:AMZN) also knows the importance of international expansion, diversifying revenue by entering new markets constantly (the recent emphasis on Amazon Prime and Amazon.com, Inc. (NASDAQ:AMZN) Web Services are a couple of examples), and having good relations with top retail stores and merchants.

But, I believe this market is to become big enough for two giants to coexist. Most merchants have both eBay Inc (NASDAQ:EBAY) and Amazon accounts. The same thing applies for users. And everybody is using PayPal. Finally, users looking for auctions will always go for eBay.

The article The Time to Buy the Largest Internet Auction Company Has Come originally appeared on Fool.com and is written by Adrian Campos.

Adrian Campos has no position in any stocks mentioned. The Motley Fool recommends Amazon, eBay, and MercadoLibre. The Motley Fool owns shares of Amazon.com, eBay, and Mercadolibre. Adrian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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