Monday, July 09, 2007

Kijiji meet Craig!

I went through my normal morning routine today, surfing the net for tidbits, stories, gossip involving ecommerce, eBay and whatnot and the big story seems to be the eBay announcement of the launch of Kijiji classifieds in the States.

Most articles are very similar, saying that eBay is challenging Craig's list and the consensus seems to be that eBay will lose in this challenge. I'm not so sure.

Craig's list might have the mind share right now but as a business, it is a bare bones operation with a cheesy site that appeals to a small segment of the web (60's radicals). Okay, it actually appeals to a wider group then that but it would not be able to withstand even a small push from eBay's marketing machine without taking on investment, which is contrary to the goals of owner Craig Newmark. If eBay chose to, it could flex its muscle and marginalize Craig's List's in short order.

Now, why would eBay do this? They own 25% of Craig's List, wouldn't it be better for their investment if they didn't rock the boat? Unfortunately, they are a Public Company and management doesn't have the luxury of waiting until Craig decides he wants to cash out. So a little old fashioned pressure is in order. By announcing that Kijji will launch in the US eBay has put their foot down and given Craig notice. Either sell us the rest of the company or we will go after you. Of course this isn't the message coming from eBay and true to "eBay Speak" they are saying all the right things.

"EBay spokesman Hani Durzy said the company didn't launch the site with much fanfare and has no plans for mass marketing or advertising. Instead, eBay — one of the biggest online advertisers — will try to drive traffic to the site through keyword searches on Google, Yahoo and other huge sites.

Durzy emphasized that Kijiji in the United States will likely remain free for most users — but eventually the company may charge for display ads or premium services."

Source USA Today

Of course eBay launched the site without much fanfare but make no mistake it was a shot across the bow of the Craig's List ship. eBay doesn't have much patience and they won't wait too long before they "Pump it up" with the marketing. eBay wants to rule each market that they enter and that has been the operating mantra for managers ever since Meg Whitman came on board. Second place is not an option. In the not too distant future, I would look for Craig to relent and sell out (not likely because he has principals that he lives by) or most likely eBay to ramp up their marketing efforts and try to take over the classifieds business. Investors seem to think this is what's happening as they began bidding up the companies stock shortly after the announcement.

Just My 5 Cents!


Anonymous said...

I don't see Craig selling anytime soon. He really doesn't seem to care about money. See:

I could only see this changing if he decides to cash in and then donate to charity or something

Anonymous said...

Oh ignore that last line, he specifically mentioned he wasn't interested in doing that either in the article I linked :P

Randy Smythe said...

I agree, I think that's why eBay decided to do this now. They know Craig isn't going to sell so they just decided not to wait and just compete.