How Amazon beat eBay

From both business and cultural perspectives, one of the lasting innovations of the late-’90s dot-com boom was getting individuals and companies comfortable purchasing items via their computers. On the consumer side, the twin ecommerce giants of the late ’90s were eBay and Amazon. In tomorrow’s New York Times, Brad Stone’s Amid the gloom, an ecommerce war looks at how those two giants are faring nowadays.

The basic observation is obvious: while DIY online auctioneer eBay seemed best-suited for bad times (“eBay is to some extent recession-proof,” former CEO Meg Whitman once said famously), it is Amazon, according to Stone, that “has emerged as one of the most vibrant and reliable retailers in the country.” Why is Amazon thriving? Stone asks CEO Jeff Bezos:

Mr. Bezos credits Amazon’s tolerance for risky, expensive bets like the Kindle electronic reading device.
“Our willingness to be misunderstood, our long-term orientation and our willingness to repeatedly fail are the three parts of our culture that make doing this kind of thing possible,” he said.

It’s that tolerance for risk — and the willingness to take time for a risk to pay off — that closely characterizes Amazon’s innovation. The piece is full of ways in which Amazon innovated and eBay didn’t (most decisively in the area of digitally distributed goods). And the section in which Whitman explains why her company focused on Google rather than Amazon as its prime competitor is a must-read for executives looking for ways to avoid fighting the wrong war. Part of successful innovation is knowing who you’re innovating against.