informa
/
3 MIN READ
News

eBay Looks To Partners, ISVs To Drive Sales

The online auction giant wasn't always so eager to create a channel, but today one-quarter of its listings come through third-party tools.
By Stacy Cowley

Roughly 2 billion items a year pass through eBay, and the company is looking to outside partners and ISVs to help push that number even higher.

The Internet auction Goliath now counts 30,000 members in its developer program, and one-quarter of its listings come through third-party tools tapping into its Web services interfaces.

But eBay wasn't always so eager to open its platform and build a channel. Just ask Vendio. The first time that the eBay Certified Solution Provider tried to build tools to tap into the eBay marketplace, it nearly got sued.

"There was a fair amount of saber-rattling," said Vendio CEO and co-founder Rodrigo Sales, reflecting on Vendio's early days in 1999. Vendio, doing business then as AuctionWatch, created a site that scraped listings from a number of auction Web sites and offered a universal search. EBay called the service an illegal infringement on its platform and ordered AuctionWatch to stay away from its listings. The two companies swapped heated legal threats.

Two years later, Vendio signed on as eBay's first partner in its "preferred solution" program. The about-face came as eBay realized that outside partners would generate more business for its auctions than they pulled away.

"Anything that helps accelerate trading is good for our users and good for our market," said Greg Isaacs, who joined eBay in 2001 and now serves as director of its developer program.

EBay operates like a gravity well in the world of e-commerce. The total value of items sold through its Web site reached $44.3 billion last year, a 30 percent increase over the previous year's total.

"The ability to turn your infrastructure on and plug into that marketplacethat's a siren song," said Eric Smith, founder and president of UnWired Buyer, an Austin, Texas-based mobile bidding software maker. "To date, 100 percent of our focus is on eBay."

UnWired Buyer is privately held and doesn't disclose its revenue, but the company recently closed a $6 million venture capital round on the strength of its eBay business.

Vendio, too, has built its entire business around eBay. Employing 75 people, the San Mateo, Calif.-based company offers image hosting, inventory management and other services for eBay sellers. The fees from those services have made Vendio profitable for the past 13 consecutive quarters, according to Sales. The private company declined to comment on its annual sales.

Partners say eBay is generally responsive to their needs. When fledgling shopping search site FatLens.com realized that eBay's APIs weren't easily scaled to support third-party calls on the site's entire inventory, FatLens developers were able to escalate the issue and set up a meeting with Isaacs' team to discuss solutions. "They've been very easy to work with and enthusiastic about our application," said FatLens CEO Siva Kumar.

One major change to eBay's developer program was made in November, when the San Jose, Calif.-based company eliminated the fees it had charged for access to its APIs. Vendio's Sales pointed to that change as an illustration of both the positive and challenging aspects of building a business around eBay. While the API fee elimination immediately spared Vendio a significant annual expense, it also brought a swarm of new ISVs to eBay, increasing competition, Sales said. "We've seen some impact on our margins," he said.

EBay now counts 2,300 partner-built applications, twice the number it had a year ago, and its ecosystem keeps growing. Isaacs expects 40 billion calls to eBay's APIs this year, up from 1 billion calls in 2002.

EBay's partners said the key to staying afloat is flexibility. Both Vendio and UnWired Buyer began with different business modelsthe former as AuctionWatch, the latter as a mobile-phone firewall developer. Both adapted on the fly to shifting customer needs.

" 'Roll with the punches' sounds too reactive, but our strategy certainly places a great deal of emphasis on evolving with the market," Sales said.

Editor's Choice
Brian T. Horowitz, Contributing Reporter
Samuel Greengard, Contributing Reporter
Nathan Eddy, Freelance Writer
Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
Cynthia Harvey, Freelance Journalist, InformationWeek
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing