eBay

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?