Wednesday, January 24, 2007

Auction Fatigue at eBay

At today I came across an article by Vishesh Kumar about the perceived fatigue in eBay's Marketplace business. I agree with Mr. Kumar I see the same signs. Please take the time to read this informative article.

I like "The Power of Three" imagery that eBay has chosen to market their three Internet brands but I choose to tweak that image a little by mentioning that in my view these three brands are each a leg in a three-legged stool. The object is to have each leg be as strong as possible because the stool is only strong and stable if all three legs are solid. If any one leg is weak the stool wobbles. Ebay’s stool is wobbly right now.

eBay’s strongest leg is actually PayPal and they are facing some issues going forward that may make them wobble a little (Google Checkout, growth outside of eBay etc.) eBay’s newest leg is Skype. The brand has loads of potential but may be years away from reaching that potential; years in Internet terms can doom you to failure. The third leg is the eBay Marketplace business and this is the leg that is the wobbliest. According to Kumar there is significant fatigue in this leg. I agree with his assessment but believe the leg can be refurbished.

There is still huge growth opportunity in the eBay Marketplace business. Online commerce represents only 8% of retail and is growing every year so in my estimation eBay should still be growing at least as fast as ecommerce. EBay’s marketplace business should not be fatigued it should be vibrant and growing. I have hope that management will look at the Marketplace business with fresh eyes. Fix the wobbly leg of the stool and "The Power of Three" will bring back the glory of eBay.