eBay’s ready to be turn over a new leaf,. While the company, as of late, has had a few flip flops over incidents such as their lackluster Skype acqusition, the company still deserves the recognition as being a foundation of our internet through payment processing and auctioning alike. However, all companies look for their big changes, and eBay is planning to phase out auctioning in favor of the “marketplace” atmosphere that companies like Amazon, Newegg, Alibaba, and CraigsList offer. Where this will go is anyone’s guess, but based on history and the current state of the market, it’s ambitious, bold, and likely Pyrrhic.
For years eBay has been the internet’s very foundation for a once immense need in shopping: auctioning. As a founder to the atmosphere of our internet among giants like Yahoo and Google, eBay had a strong start up until around 2006 or so, when the company began to fade in and out of a state of obscurity. Sure, it was, is, and will probably be (for a long time) our go-to auction site of the internet, but aside from a Paypal & Skype acquisition as of late the company remained relatively quiet as the age of social media continues to rapidly expand. Sure, they’re engaged in social media, and even have a daily deal system, but it’s apparent eBay has been looking for something new beyond tiny steps as their website seems to enter obscurity. Ironically, this feeling of absence within Ebay is coming at the crux of with a 5-year high in the company, a peak the company hasn’t seen since 2002.
It’s far from strange to see why a company with so much invested in payment processing now pushing for an entire 180 toward marketplace services, and it’s likely in an attempt to abandon a wilting auction platform in favor of stronger sales and reliance on their PayPal honeypot. It’s also likely in some (perhaps vain) attempt to “be cool” with hip web 3.0 users that eBay’s aging, at times frustrating atmosphere can encourage. In terms of competition, there will certainly be plenty for eBay to take on in an ever-growing market of online shopping. Perhaps the biggest caveat for eBay is that this event will be seen as an attack on its community of veterans, who’ve relied and showed loyalty to eBay’s platform for many years. At best, eBay will replace this base with new marketplace users, at worst the company will take a huge hit and return to the platform it is now heavily reliant on.
In the end, we get the connection. Ebay is trying to encourage more sales on their sites, as Auctions likely are being tossed out in favor of customers purchasing through other outlets. Auctioning is also historically a very high class affair for most people, and Ebay has proven it can’t handle that, and the only way to go is to follow how the consumer prefers to buy items. The only advantage Ebay has is that it owns perhaps the largest payment gateway on the internet: Paypal, and that means they have a lot of control over the “nickle and dime” pricing that can make it or break it for a customer to do business, and likely encourage more storefronts. Amazon, on the other hand, does have its own payment processing service, but is also restrained by being both a provider and a competitor. Ebay doesn’t compete with its users in serving products, it merely encourages more companies to come and do business on their site. As a result, they don’t force users to compete with their own provider and subsequently deter sales. eBay is also more “Grass-roots”, in that they focus on small businesses over large-scale distributors in their setup process.
If eBay can perhaps encourage more sales without abandoning the auction platform, this may prove profitable for the company. Then again, ever since the Skype fiasco, we’ve been uncertain of the company’s legitimate intentions or ability to maintain its status as a big player in the world of online shopping. To add, the biggest market for eBay is from china, and now that Alibaba is getting aggressive, this is a market that eBay will have to adjust itself to as their ability to bring products from China exclusively continues to dim. A likely guess here is that the company will overinvest, encourage too much competition among an already massive vertical, and shoot itself in the foot with auctioning. eBay will survive, with thanks to Paypal’s honey pot, but i wouldn’t doubt the site will never be the same in the coming years.