I consider them a competitor - certainly not on the scale of A***on, but they are definitely a competitor for both buyers and sellers (enough for eBay to have toyed with the idea of buying them out, like they often do with competitors, and enough for the aforementioned A site to try and get in on the action with their attempt at a dedicated handmade section. eBay have stolen a few ideas from them, too, just not the ones I wish they would 
I have buyers in Aus who buy from both here and there, and quite a few who will only buy from there).
The categories are narrower, so you won't find PCs, mobile phones and such there, but vintage (absolutely anything that's 20+ years old), handmade (their definition of, which includes third-party manufacturing if the items were designed by the shop owner) and craft supplies is not as small a drop in the ocean as it may first appear, especially when you see how flexibly the rules are sometimes implemented (that was an idea they stole from eBay 
).
I don't really see online stores as having to serve the same purpose, or have the same target market, in order for them to be considered a competitor, as any place which provides the potential to "score" any buyer's purchase is technically a competitor (JMHO, I know not many people see it that way, but by which I mean I am sure heaps of people have made a decision between two completely different items in two different places, because there are lots of people who will shop anywhere and everywhere).
