The recent announcement by Ebay that it is acquiring Internet telephony provider Skype (my considered assessment of this deal: indescribably dumb) prompted me to take a fresh look at another Ebay initiative that pops up on our radar from time to time: Ebay Business.

Launched in 2003, Ebay Business was intended to extend Ebay's transactional platform to business-to-business purchasing. Just like the consumer version of Ebay, businesses can either auction specific items or sell merchandise at a fixed price. Buyers can find items by browsing within a category or through keyword searching. What was particularly interesting, and a bit frightening, about Ebay Business was its ambitions. Backed by a budget of over a hundred million dollars, Ebay Business wanted to become a significant player in business and industrial purchasing.

As a transaction service where users could both source and directly purchase merchandise, Ebay Business has strong infocommerce characteristics. If it achieved any scale, it could become a real threat to traditional buying guides that typically only introduced buyer and seller then stepped out of the picture. This distinction spotlights the blurry boundaries between buying guides, catalogs and marketplaces.

It is not as if buying guide publishers hadn't seen the opportunity to evolve into marketplaces, where they could generate potentially huge transactional revenues. Rather, the problem has always been in the execution. We're all aware of the large number of industry marketplaces that have been launched with great fanfare and huge investment, only to fail miserably, or at best limp along. The problem isn't lack of value or lack of need. Rather, the problem is with the model. In short, the better a job the marketplace does for buyers, the less attractive it is to sellers. That's because you can't sell merchandise without stating prices. And when you list prices, users almost invariably compare and buy on price. That's a rational thing to do, but it strips away the more emotional elements of buying such as service, quality, brand, reputation and other critical, but soft, differentiators. Buying guide publishers have wisely decided to continue to focus on the middle ground, introducing buyers to sellers and letting the two parties complete the purchase directly.

So has Ebay Business "cracked the code" of the marketplace model? After test driving the site today, I must admit that it's vastly improved over what it offered at launch. In its early days, Ebay Business wouldn't or couldn't separate its business and consumer listings, so a search for "bags" would yield both padding shipping bags and Prada handbags. When I searched for "bags" again today, the results were all business-oriented, though there was a prominent cross-reference link to women's handbags and one seller was offering biohazard nuclear waste bags "for entertainment purposes." Overall, however, it's all business.

Ebay Business claims it sold over $3.3 billion in business equipment and supplies last year, and provides the factoid that it sells on average a forklift every four hours. There's clearly something going on here, but I am not sure it qualifies as a breakthrough approach.

A key weakness of the Ebay Business model is its scope. By trying to sell pretty much everything, it suffers from discoverability problems. There's a basic keyword search capability that will take you only so far in finding what you need, and categories tend to be overly broad. Indeed, in a published interview just a few months ago, Ebay Business was patting itself on the back for having determined that business buyers don't like to browse for merchandise, and instead want to go immediately to the item of interest. To address this, Ebay Business is rolling out what it calls -- are you sitting down for this -- "item specific categories" which are being introduced at the blistering rate of about five per month. This gets them in synch with concepts familiar to buying guide publishers since about 1900.

It's not that Ebay Business is unaware of the data publishing industry. Right out of the gate, it struck a potentially ground-breaking deal with GlobalSpec that some thought would ultimately link Ebay merchandise to the powerful GlobalSpec parametric search engine to provide seamless discovery and purchasing. In fact, the deal really was oriented more towards building visibility and traffic for both parties.

When we saw the recent announcement that Reed Construction Data had struck a deal with Ebay Business, we again had visions of infocommerce integration dancing in our heads. On closer inspection however, the deal looks like simply a new spin on traditional subscription promotion programs.

Just as data publishers rarely produce good software from scratch, and software producers rarely produce good data content, I think we've got a similar issue with Ebay Business. The back-end is there, but to succeed, it needs a proper front-end, and that could be the basis for many fruitful partnerships with buying guide publishers. Having only discovered "item specific categories" in 2005, Ebay Business will clearly never get there on its own.

InfoCommerce 2005 is proud to announce that Asad Haroon, Chief Marketing Officer of Liquidity Services Inc., has been confirmed as a speaker.