Monday, June 20, 2005

eBay watch

According to John Naughton, writing in yesterday's Observer newspaper, [,,3858,5219049-102271,00.html]
eBay now has 150 million registered users worldwide who trade about $40 billion worth of goods a year, generating revenues for eBay of about $4 billion.

The main thrust of Naughton's story is that eBay got caught out in its reaction to the auctioning of Live8 concert tickets. When Sir Bob Geldof found out he first asked eBay to ban the auctions, then called on people to subvert the auctions by submitting "impossible bids" - of up to £10 million. When some eBay users did this they found themselves blacklisted by eBay, who said that such actions break eBay's rules.

Naughton also quoted from a leader in last week's Economist newspaper which, commenting on the spectacular success of eBay in the 10 years since it was formed, noted that on the Internet "the pace of change is rapid, and so is the ferocity of the competition."

Which brings me to another news story that I spotted in today's New York Times. Apparently Google is planning an online payments system to compete with eBay's PayPal. Although a Google spokesman declined to comment on the rumours, the New York Times journalist Saul Hansell noted that back in April Google had "filed documents to establish a new corporation in California called the Google Payments Corporation".

As John Naughton also noted, much of the trading on the eBay site now is by small firms selling their (new) products, rather than by people buying and selling used (second-hand) goods. These firms are not big enough to allocate resources to setting up their own web sites - instead they make use of eBay's infrastructure. Using eBay in this way is seen as a method of breaking into e-Commerce. Such firms are unlikely to have the ability to accept payment by credit or debit card, so the PayPal system has provided a valuable alternative mechanism. Google appears to have noticed this and could link its new system to the localised search facility that it has developed.


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