I’m not a serious eBay user. I’ve bought four or five items on eBay over the years. I’ve never sold anything on it. I once did a sales presentation at eBay; they didn’t buy our software.

I was surprised to read in the newspaper that eBay is making a deal with buy.com to sell stuff at a fixed price, and giving buy.com a better deal than small sellers get. eBay is successful right now because they’re the winner-takes-all auction site. If you want to buy something weird, you look at eBay first because it’s where most of the sellers are. If you want to sell something weird, most of the buyers are looking at eBay, so you need to sell there. This dynamic keeps people using eBay.

But buy.com doesn’t sell weird things. If I want to buy something that buy.com sells, I don’t look at eBay first. I look at buy.com. Or I use one of several product search engines.

If I understand this deal, it suggests that eBay is trying to be a product search engine, with the extra feature that you can buy directly from eBay rather than going to the seller’s web site. Amazon does this too for a lot of things. And, frankly, to me, Amazon’s web experience seems a lot better than eBay’s.

By giving buy.com a special deal, eBay is irritating the small sellers. eBay is gambling that the small sellers can’t go anywhere else. But, of course, they can, provided they act as a group. If a substantial number of small sellers move to a different auction site, the buyers will follow them. I think the most important rule for a site like eBay, which relies on being the free choice of many people who can easily make a different choice, is to keep their customers happy.

So eBay, which is by far #1 in their space, is making a move which gives them a risk of losing their #1 slot while trying to become #2 or #3 in a different space. Why are they doing this?


  1. ncm said,

    July 15, 2008 @ 8:47 pm

    There’s something about Ebay corporate … culture … that can’t leave good alone. Used to be they broke the website about once a week. My guess is too many managers. If they aren’t changing something, they look useless. Since most potential changes in a successful business (as in a successful species) are for the worse, they mostly break things.

  2. Ian Lance Taylor said,

    July 16, 2008 @ 5:07 pm

    A business like eBay kind of gets into a bind since at some point it has to move from being a growth company to a mature company. Maybe the desperation to keep growing is what leads to some of these decisions.

  3. etbe said,

    July 17, 2008 @ 4:53 pm


    Ebay in Australia is forcing the use of PayPal (which many people refuse to use for good reason). The Australian market is ready for a competing auction site. Do you know of a good one?


    There are some OK Australia-only auction sites (I’ve use the dola part of allbids to buy two computers and GraysOnline to buy many computers). Allbids apparently allows individuals to sell stuff (unlike Grays) but I’ve never tried that.

  4. Ian Lance Taylor said,

    July 18, 2008 @ 6:10 am

    I don’t much about auction sites, sorry. I was surprised to see that Yahoo! Auctions has been shut down. When I search for “alternate auction sites” I find various things, but I can’t really rate how god they are.

    Paypal seems better than they used to be, but locking in a payment method certainly seems inappropriate.

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