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Why eBay Won't Win Its War Against Amazon

What happens when an online auction site tries to get all store-like, and a non-bricks-and-mortar buying destination starts buying into bidding? Apparently, you get Amazon pumped up into a one-stop shop for everything you need, while eBay ends up tilting toward irrelevance. Let me explain.

The apparent battle between the two was the subject of an unusually interesting piece in Sunday's New York Times. (Unusually interesting for The Times, that is, which isn't much known for cutting to the chase.) The article touched upon some threads which have been bubbling up for months. That would be the widespread dissatisfaction among eBay's buyers and sellers, who've been jostled by increased fees and inexplicable changes in the online auction destination's feedback policies.

(Readers of this blog weighed in on this stuff, with nearly 100 comments, when I posted EBay Feedback Cutoff Kicking In, Sellers Angry back in May.)

Anyway, so the gist of The Times piece is that Amazon has been doing better, in part because it's adding third-party vendors. This broadens its appeal as a "Web marketplace," and allows customers to buy stuff like electronics and clothing -- things you didn't used to think of when you thought about Amazon. (There's also Amazon's great MP3 store, which is actually the world's only viable iTunes competitor, but that's really not part of the eBay story, though the Times article criticizes eBay for not doing the kind of forward-looking research and development which would've enabled it to launch an MP3 store. Whatever.)

In contrast, eBay is portrayed as being stuck between the rock of its legacy auction business and the hard place of customers wanting more in the way of "fixed price" (i.e., a regular store-like) buying experiences.

I'm not buying it. (The thinking, that is.) I've heard that criticism before, that customers want more "fixed price" and fewer "auctions." That plaint is kind of like election-season pundits who perennially claim that voters hate "negative campaigning." (Why can't we all just get along?) Sounds good, but probably not true.

Me, I've always liked eBay's auctions. That's why I go to eBay -- it's the auctions, stupid. (Fixed price is best left to phone cases or iPod protectors out of China, where there's an unrealistically low initial ticket and then a whopper of a shipping charge.)

Here are the real reasons eBay has been sagging. One, it has spent the past three years alienating its core customers. (See again, EBay Feedback Cutoff Kicking In, Sellers Angry back in May.) Mainly, though, after a decade of this stuff, people are all auctioned out. They're simply bored with this stuff.

Also, many customers have tired of a site where much of the stuff for sale is -- let's just say it -- junk.

Probably there's only one point in the history of the world where there's enough pent-up garage junk to jump-start an online auction market like eBay. That was the deal circa 1996. That time has passed.

I'm highly amused when I see those "Video Professor" ads on TV, where CEO John Scherer says, "I'm not promising I can make you a millionaire off of a pile of old baseball cards in your attic." Are there any Net newbies around who are so new they'd actually believe this stuff?

I remember a few years ago when I came upon a collection of old Sports Illustrated magazines, from 1974, including covers of Hank Aaron and Muhammad Ali. I figured these things had to be worth some money. They were: about a buck, and $6, respectively. (That's if you can find a buyer. The market is glutted with such garage detritus.)

So anyway, I expect eBay will recover somewhat and will remain good at what it's always been good at, which is auctions. Let's face it, the Times story notwithstanding, Amazon is not an auction site. And its third-party marketplace has some strengths -- used books, DVDs, electronics -- but is pretty much a work in progress at this point.

However, long term, I expect Amazon will win the battle. Amazon, and CEO Jeff Bezos, seem to have a much broader perspective, and are in the business of giving customers what they want. EBay still hasn't made nice with its customers, and apparently doesn't realize it has to do more than just make some conciliatory noises to get back the user loyalty which vaulted it to the front of the online revolution in the first place.

So what garage junk are you selling online? Leave a comment below, or shoot me an e-mail directly at alex@alexwolfe.net.

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