Posts Tagged ‘competition’

Hulk vs Superman

Monday, June 27th, 2005

There is a battle brewing between Google and eBay. Google looks stronger.

Adwords is a significant substitute for eBay. Small vendors can buy customer visits through micropayment advertising, as an alternative to paying eBay an auction fee for access to eBay visitors. Signals have been accumulating for some time:

  1. eBay discovered in January that it no longer has power to raise auction prices, because larger sellers are balking.
  2. eBay announced it is entering the private-label merchant site business, to slow down departures of its major sellers.
  3. Google announced Tuesday it is entering the payments business.
  4. It’s been true since Adwords inception that Google does not accept PayPal as a form of payment.
  5. Meg Whitman was caught angling for Eisner’s job at Disney a couple of months ago.

Taken together, one might infer that Google plans to eat eBay’s lunch, and eBay is scared. Will be interesting to see what happens.

I don’t mean to suggest eBay would cease to exist. Their auction business is still great, still a natural monopoly. However, a big chunk of eBay sales (a third? don’t know for sure) come from professional sellers that aren’t really auctioneers, but rather fixed-price vendors holding auctions to take advantage of eBay’s network. They would probably rather operate their own websites and run their own ads, if they can make just as much that way. Their presence on eBay has never made sense to me — private sites and Adwords are a simpler, better branded, more logical arrangement, if the scale and ROI are similar.