Throwing the eBay Out With the Bath Water


My first job - probably no great surprise - was in the publishing business. I worked for a local shopper's guide called The Pennysaver, and I could not have had a better introduction to the magical business of publishing.

Shopper's guides, in case you are not familiar, combine the best elements of yellow pages (saturation distribution and lots of display advertising from local businesses) with newspapers (high frequency, and lots of classified ads). Recipients of the publications were mildly interested in the display advertising. But they were extremely interested in the classified advertising - individuals selling cars, furniture, household items, notices of yard sales - and the two together were a potent mix. I got a real taste of the power of this medium one day when this little publication was delivered late - so many people called to check on its whereabouts that it not only brought down the company switchboard, but the local telephone company central office as well. This was followed by total gridlock around the office as people jumped in their cars and drove over to pick up a copy.

What was the magic? Readers believed the classified ads held gold in the form of deals, valuable, useful and unusual things being sold for a fraction of their value by lazy or unsuspecting sellers. And since there was generally only one of every item, there was huge benefit in getting your copy of the Pennysaver as early as possible.

eBay had this same magic in its early years. It had taken the classified ads, stripped out those less interesting display ads and harnessed the low-cost reach of the web, creating as they unabashedly called it in those days, "America's flea market." Bolt on the auction component, which created excitement and engagement, while further reinforcing the notion that all sorts of crazy bargains could be found, and eBay was unstoppable.

That's why I was so surprised to read this week that eBay plans to de-emphasize its auctions in favor of fixed price merchandise. This is on top of increasingly loud protests from eBay sellers that eBay is in effect de-emphasizing them, too, in favor of larger merchants. The math for eBay is simple since it gets paid both for listings and transactions. Bigger merchants have more items to sell, and deep inventories, meaning more listings and more transactions. So eBay is morphing from "America's flea market" to the Mall of the Americas.

While the math might be sound, it seems to me that eBay is tossing out the baby with the bath water by tossing out the classified ads in favor of display ads so to speak. Auctions may be a bit tired, but they reek of the opportunity for great bargains, and they make eBay unusual and interesting. This move won't kill eBay; it's got too much momentum. But it will make it more ordinary, less interesting and less of a destination. What made eBay such a success was its quirkiness, the ability to trip across the rare, odd and unexpected - the classified ads. But with eBay now calling itself a "transactional platform," it obviously doesn't think it needs to deliver a shopping experience. Take the "experience" out of "shopping experience" and you're left with "shopping," and with far too many places to go shopping online, that's going to be a tougher sell.

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