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Why eBay Is Suing Amazon

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Oct. 18 2018, Published 2:09 p.m. ET

eBay sues Amazon

On October 17, eBay (EBAY) reportedly filed a lawsuit against online e-commerce retailer Amazon (AMZN), claiming that the Internet giant violated eBay’s user agreement and misused its internal email system to sway sellers. eBay filed the complaint in a state court in San Jose, alleging a violation of California’s policies. eBay wants Amazon to stop poaching its sellers and pay an undisclosed amount in monetary damages. Amazon is investigating eBay’s allegations.

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eBay’s claims

eBay claims that Amazon has been illegally poaching eBay’s high-value sellers to be a part of Amazon’s marketplace. eBay’s lawyers reportedly sent a cease-and-desist letter to Amazon on October 1, alleging that nearly 50 Amazon sales agents have sent thousands of messages through eBay’s internal messaging system to lure sellers to come to its platform. According to the accusation, Amazon representatives signed up for eBay accounts and then asked eBay sellers to sell their goods on Amazon.

eBay and Amazon are rivals, as both generate revenue from third-party merchants who sell on their sites. However, eBay doesn’t compete with its merchants for sales like Amazon.

Therefore, a shift of sellers from the eBay platform to Amazon would lead to huge losses for a company like eBay, which relies entirely on third-party sellers for revenues. Seattle-based Amazon, on the other hand, has more customers, higher sales, and is growing faster than eBay.

Market share of US retailers

According to a report from eMarketer, Amazon dominates the US e-commerce market with nearly a 49.1% share, up from a 43.5% share last year, according to the report, and controls almost 5% of the total US retail market (online and offline).

Amazon is followed by eBay, which holds just 6.6% of the e-commerce market share. Apple stands at 3.9%, while Walmart (WMT) carries a 3.7% share in the online retail marketplace. Home Depot (HD), Best Buy, Macy’s, Costco, and others hold less than 2% in the US e-commerce market.

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