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May 26, 2009

There was a nice piece in the WSJ this morning about Ebay’s recent moves in favor of large merchants moving high volume through the site.  One of the casualities of this move is the decline of the auction format, which in the early years of the company was the lifeblood of the marketplace.

I totally understand the rationale behind these moves (and know many of the people who are probably behind them).  Auctions are an inconvenient way of buying, and as the Ebay marketplace has become more and more efficient, the clearing price of these auctions are pretty darn close to what you would expect to pay at any online retailer for the same item.  So there really isn’t a point to suffering through an auction since there is no jaw-dropping discount on the other end.  Instead of replicating an online flea market where hidden gems could be discovered, it is becoming more about everyday low prices:

“Asked about eBay’s identity, Mr. Donahoe said he wants shopping on the site to offer the same sort of low-price experience as buying at bulk retailer Costco Wholesale Corp. There, “the inventory is somewhat fluid, but everything they’ve got is a great deal,” he says in an interview.”

My view however is that something really special about Ebay has been dying with these changes (and has been dying for quite a while).  One is the entertainment element of the auction format.  There was something addictive about it, and something appealing about potentially getting an item for an extremely low price.  I wish that instead of de-emphasizing auctions, Ebay found a way to create more fun, value, and serendipity by altering some of the rules of the format. The other thing that is lost is the potential to get really great deals off of Ebay.  The econimics just don’t allow for it.

There are some interesting new auction based companies emerging that I think are pretty interesting.  But so far, I’ve found them a little shadey (although I’ve heard that they are very addictive).  As Ebay is moving away from this sort of buying experience, I think it creates another gap in the market for a new ecommerce company.

  • Author robchogo
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