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Google vs eBAY or Google vs YahooBAY?

Posted on Wednesday, Oct 26th 2005

The media is full of stories and analysis on Google’s announcements today that are taking sure steps towards eBay’s turf. Read this, this and this.

eBay is slowly and surely falling prey to its supremely powerful, but easy to copy and rather narrow core business model of facilitating B:C and C:C e-commerce. Needless to say, Google’s entry into their turf will be a big blow. Google will, no doubt, hit eBay where there is a low-hanging fruit waiting to be picked: eBay’s sordid user interface. In the 10 years of its existence, eBay has not bothered to address this glaring weakness. Google does clean User Experiences very well, and my bet would be that they will cream eBay on this topic. Also interesting is their introduction of a user-generated database, which will enable applications such as Yahoo! Stores easily, too. Potent combination.

I said once before, that Yahoo should acquire eBay. eBay’s market cap is $52 Billion, whereas Yahoo’s is $50 Billion. It would roughly be a merger of equals, but I believe Yahoo’s future is far more promising than eBay’s. Hence, judging by futures, Yahoo ought to acquire eBay.

Product Search and Search Engine Marketing are key areas that, as industries, need to reside together. Amazon realized it, and launched A9, their very own search engine. However, Search is a competitive business, and an overnight search giant will not be created at this stage of the game. I don’t recommend, therefore, that eBay also follows suit.

However, at least 5 different properties that Yahoo has could tremendously leverage eBay: Small Business, Stores, Search, Shopping, and Overture. Finally, as Yahoo unfolds its content and personalization strategies, there will be a tremendous further opportunity to build value on top of their existing framework.

Not the least, but last, Meg Whitman has indicated that she wants out. Terry Semel, however, is dedicated and focused.

Then?

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[…] e Base, should prompt YahooBay
Posted in Asides + Web 2.0

Sramana Mitra: Google will eat eBay’s lunch. Maybe Yahoo should buy eBay.

Pos […]

Om Malik’s Broadband Blog — » Google Base, should prompt YahooBay Wednesday, October 26, 2005 at 4:49 PM PT

If you check history, eBay tried to redo their interface once and there was such an uproar from their users they switched back and have only made slow minor changes over time so that their users could easily adjust.
Amazon has the same problem…it’s really not the best interface but they’re stuck with it.

PXLated Wednesday, October 26, 2005 at 6:25 PM PT

Google doesn’t stand a chance. Ebay has density of buyers and sellers. Why would I put my product up on Google to sell when a signficantly larger population will view it on Ebay? More people means more likelihood for someone to spend more money on my item. If this is what Google has in mind it will fail miserably.

stevo Wednesday, October 26, 2005 at 6:40 PM PT

Honestly, I don’t know where to start. Let me quote you – eBay has a “easy to copy and rather narrow core business model of facilitating B:C and C:C e-commerce”. Let me ask you a question. How many companies have tried to copy eBay’s ‘easy to copy’ business model and how many have succeeded? How many companies have tried emulating Paypal (which according to you has a dim future) and how many have succeeded? (The answer is 0 btw)

Tell me how successful has Froogle been in comparison to Shopping.com? How has eBay grown to 170MM users with our “sordid user interface”? Must not be that sordid…

Your rationale for Yahoo acquiring eBay is “(you) believe Yahoo’s future is far more promising than eBay’s. Hence, judging by futures, Yahoo ought to acquire eBay”. You also infer that Meg is not “dedicated and focused”? Hopefully your consulting practice is based on more thoughtful and data driven recommendations than the above ‘analysis’.

Ro Wednesday, October 26, 2005 at 7:02 PM PT

How A Blogger Can Profit From Ebay

SIDENOTE: This might seem a bit off topic, but read the entire post and it’ll make sense.
There is a lot of talk aright now about Google Base (currently speculated as a classified/auction place) being the killer of eBay and doing a lot of dama…

blogvp Wednesday, October 26, 2005 at 8:49 PM PT

Ro : you seem to have a passionate reaction to this post. Well, let’s check a few facts:

1. UI: Sordid UIs often do not prevent success. Microsoft is a brilliant example of this phenomenon.

2. Meg Whitman: In March this year, she publicly and rather embarrassingly, withdrew her bid for the Disney CEO job, sending jitters through the eBay shareholders and employees.

3. Paypal: I have actually supprted eBay’s Paypal and other Micropayment related strategies in prior writings. You may want to check them out.

You see, I have admired eBay, Whitman, and the success of both. I even own eBay stocks still. However, when a company has reached a certain size, the basis from which it has to grow is so high, that a uni-pronged strategy typically doesn’t work. And in my opinion, eBay has not shown any aptitude in coming up with a breakout strategy that can propel growth.

In addition, eBay is paying a lot of ad $$$ to Yahoo and Google. This is a big negative, and a search+commerce+content+community combined play would have a much higher chance of success, leverage, and continued large-scale growth.

Stevo: I agree that eBay has a critical mass of buyers and sellers, but I have worked with some of them, and they are constantly plagued by the Seller fees and Paypal fees. Google and Yahoo both have a critical mass of users, and if either company wants to launch more involved commerce, by leveraging their Ad Management presence, and by playing with pricing, I submit that they CAN.

Will either Yahoo or Google overtake eBay overnight? No. But if they start taking market share away, eBay’s core will be hurt.

So far, I see no formulated strategy in eBay’s camp. They paid too much for Skype, without adequate synergy. If you are interested in reading more, go back a few posts and do a search on eBAY. I have supported some of their moves (like buying Verisign’s payment business) and crticised others.

Sramana Mitra Wednesday, October 26, 2005 at 8:57 PM PT

Ro,

I saw your post on the other blog, and I was wondering what you think if say, google incorporated their Base (auction/classifieds) into their search results.

So if I’m searching for Red Widgets, it would list search results, but on the right, where currently the ads are, it would also list results from Base.

Wouldn’t that leverage most of the google users and turn them onto Base pretty quickly? Just a thought.

Andy Wednesday, October 26, 2005 at 8:59 PM PT

I think that despite ebay reaching a critical mass, it has also got so many inherent problems that a high profile, well thought out alternative(google anyone?) would encourage a lot of frustrated ebayers to jump ship.
I know for a fact that ebay have been doing market research in order to discover why some of their hardcore customers are using the site less.
I’d say that bargains are hard to come by, people have only so much junk to get rid of and if the hassle of selling stuff on ebay becomes enough of a dissinsentive for enough people, then ebay will have to make some pretty hard choices.

john kelly Thursday, October 27, 2005 at 4:52 AM PT

Also not mentioned – but there would be great international synergy in the auction business between eBay and Yahoo. eBay owns the US and large parts of Europe, Yahoo owns Japan and other asian areas. Would be good in that way.

In terms of Google “eating eBay’s lunch” – a few thoughts:

1. Many companies have tried before – most notably Amazon and Yahoo, to take business away from eBay in the US and have failed, mainly because the cost of an auction service is less important than liquidity. Liquidity is also the hardest thing to create.

2. Google, in contrast with Amazon or Yahoo, may not have the same issue in generating liquidity because of the enormous amount of traffic that goes through them. Having search may turn out to be the key to crack the market liquidity problem.

3. Craigslist seems much more vulnerable than eBay to me. eBay has created an infrastructure for the large sellers – it will take time for Google to replicate it. Craigslist, in contrast, has no such issue. We’ll see – obviously – Google just has so much buzz it may work out differently.

Damian Thursday, October 27, 2005 at 8:55 AM PT

[…] hen there are the ones that are eBay fanatics. I personally think that if a company like Yahoo did buy eBay, it would make it a little user friendly and if Google did compete with eBay, then all of us […]

blogvp » How A Blogger Can Profit From Ebay Thursday, October 27, 2005 at 11:15 AM PT

One way to ease the transition (and help ensure Google’s success) would be a website or application that combined the results of a google auction/classified and ebay search (along the same lines as Oodle skimming Cragislist). That ought to take people about five minutes to create and distribute, at which point eBay’s massive user base would not matter . . .

iamtfc Thursday, October 27, 2005 at 11:56 AM PT

Andy-

I agree that would make it interesting, except that you then start impacting Sramana’s view of a ‘clean’ interface. Every click equals an attrition rate. Why would Google separate users from relevant ads by adding another layer of ‘free’ content when Google is already exposing the most relevant ads right at the top of search? I don’t see GoogleBase content replacing those ads. Potentially tighter integration to natural search results could occur, but in that case, why would I use GoogleBase versus my own site which Google is supposed to be crawling?

Net net, if Google charges headlong into making GoogleBase results more relevant than others, their ‘objectivity’ as a search site would come to serious question…

Sramana, I object to your use of Sordid. While colorful, it makes your opinion less rationale and more emotional. Yahoo, btw, is already trying the free listings/auction site being paid by adds. Again I ask, was that successful? Ultimately by Google going down the path of dozens of features, they need to ‘market’ these features in some fashion. this ends up cluttering their interface (i.e. how successful was Froogle, Google Answers, Google Web Accelerator), which is anti-thetical for users of Google, and to your point.

Ro Thursday, October 27, 2005 at 12:25 PM PT

iamtfc-

hmm. that already exists. it’s called Google. eBay listing integration to Froogle/Google has existed for over a year now. the massive user base still seems intact as far as I can tell. when google starts registering users to USE its search functionality and when that registration process allows for trusted transactions processes (ala eBay/Paypal), then the mass of registered search users may become very competitive. I’m sure Google is game and capable of getting there – but this would have them competing with EVERYONE, every online retailer, service provider, and site (including eBay). I question whether Google would truly benefit from that… time will tell.

Ro Thursday, October 27, 2005 at 12:33 PM PT

The biggest thing that eBay does that the others don’t: transaction processing. It will come. That’s when the real test for eBay begins.

ps. I agree to withdraw “sordid” and replace it simply with “ugly” :-)

Sramana Mitra Thursday, October 27, 2005 at 1:38 PM PT

Sramana – it’s already out there (I don’t see any advantage in working through Google’s credit card payment system vs any of the hundreds that provide this). When Google comes up with a way of registering its user base en masse, THEN the real test begins. They still need to come up with a product that will convince folks Google isn’t out to own them…

thanks for the replacement, btw. Ugly is in the eye of the beholder.

Ro Thursday, October 27, 2005 at 2:13 PM PT

Guys you’re all forgetting the most important factor here for Google with this new project. Google is not a search engine anymore. It is an advertising company. Having worked with search engines directly over the last few years I can tell you that this system is simply another way to amass new advertisers for their AdWords system.

“Hey you got something to sell huh? Well put it up on Google base for just 30 days at $x.xx!”

Or this:

“Place you listing of Google base free and then take the money you would normally speand on eBay or other online systems and advertise your product or service with Google’s AdWords pay per click advertising. Generate higher sales by leveraging our massive publisher network to distribure your ad across the internet and drive more buyers to your listings on Google base.”

Think more outside of the box here gents. It’s not a “killer app” in the making. Sure it could well be huger from an end user perspective but to the majority of sellers and buyers online it is nothing more that an additional outlet to buy and sell stuff.

And hell no Yahoo should not by eBay. Yahoo should in fact start getting some responsible and wise people to market the hell out of it’s own auction and stores system. IMO is is far better than eBay’s but gets little to no recognition because it is buried in the beast that is called, Yahoo content. There is just too much damn stuff on Yahoo.

Joe Holcomb Thursday, October 27, 2005 at 4:18 PM PT

What’s Google’s motivation to enter the eBay business? There are easier externalities to be gained.

From a broad perspective, the Google TAM is enormous, while eBay’s (as currently defined) is smaller and growing at a much, much slower rate. Add to that:

1. eBay (and other related commerce competitors) continue to bid up the upstream CPC product-related leads from Google anyway (theoretically to their economic break-even point). I’d guess eBay takes a smaller % of transactions than Google does already.

2. Google has none of the customer support burden eBay sellers and buyers add to the model–it’s just click, and seeya. Does Google want two legions of CSRs in Salt Lake and Omaha?

3. While Google click fraud is likely insanely rampant beyond most estimates, it can be mitigated economically (lower CPC bids). eBay fraud often requires non-market intervention and remains a much larger target, particularly as payments are involved.

4. Despite Craigslist’s popularity, FREE listings lead to an unmanageable search effort for the focused product searches eBay provides–labels, attributes and Google’s amazing search expertise notwithstanding. Yahoo tried to use “FREE” as the competitive differentiator, only to become the Wild Wild West of commerce. Froogle remains far behind shopping.com/shopzilla/pricegrabber and others in product search given the lack of structure provided. Sellers are too busy to deal with that, and so are buyers. Catalogs and strictly managed categorization (plus attributes) are needed to deal with the search problem here (along with an economic disincentive against providing content that will never meet the query or will otherwise be considered spam (i.e. a listing fee). Absent any listing fee, why not advertise completely unrelated items with attributes and labels borrowed from popular searches? Go ahead. Kick my item off. Didn’t cost me anything….

Finally, Google also has the most to lose by declaring war. At this point, eBay has firmly entrenched their brand in products, communities, and trusted transactions. If it gets sordid;), eBay can easily partner with Yahoo or MSN search (likely not something that requires new development or merger to gain equivalent economic advantage for eBay) and point their huge volume of queries (heck, even those without an eBay result) to swing the balance to either of these properties. Both already have existing eBay relationships and would compete with each other for the opportunity to share the lion’s share of any CPC revenue. Much like AOL has recently positioned itself as the pivotal voter in web communities (and search), eBay sits even more squarely in a position to change the landscape of paid search, Google’s home port. Why taunt them into doing it?

Dirk Thursday, October 27, 2005 at 4:35 PM PT

[…] owards an unchallenged and unhealthy level of market dominance, a viable alliance could be YahooBAY.

This entry was posted

on Thursday, October 27th, 2005 […]

Sramana Mitra on Strategy » Blog Archive » YahooBAY: Epilogue Thursday, October 27, 2005 at 10:08 PM PT

eBay wouldn’t go for it. …
eBay should however “go search”
A quick way would be for eBay to purchase and rebrand http://www.gigablast.com

Brian Cohen Friday, October 28, 2005 at 3:22 PM PT

[…] Yahoo is in a better position comparatively speaking since it has its own advertising system. (Maybe there is room for a big merger in the web-space? Sramana Mitra believes eBay+Yahoo should just get on with it.!) A closer alignment might be necessary if these companies need to create a CPA based advertising model, and thus blunt the Google incursion into their e-commerce sales / reduce their advertising costs (many of which go thru Google). […]

GigaOM : » Why Google Is Doing Checkouts? Thursday, June 29, 2006 at 4:02 PM PT

[…] Overall a great explanation as to why Google is moving in this direction and where it is trying to get to. And Google proves again it can shake the industry and do very innovative things. Om also linked to Sramana Mitra’s YahooBAY as a possible response to Google.              […]

world according to ack ~ adam karas » Google Checkout Friday, June 30, 2006 at 9:47 AM PT

[…] Once again, it is time for YahooBay. […]

Sramana Mitra on Strategy » Blog Archive » eBAY Jitters Thursday, July 6, 2006 at 10:03 PM PT

can anyone tell me how to find out which yahoo employees used to work at ebay or amazon? thanks…

hasbeen Wednesday, July 12, 2006 at 2:36 PM PT

[…] I said, a year back, that Yahoo and eBAY should merge. Since then, both have gone through hiccups, and right now, eBAY is looking up a bit, and gearing up for a good holiday season, while Yahoo is choking. […]

Sramana Mitra on Strategy » Blog Archive » Yahoo, eBAY, Microsoft, AOL Monday, October 30, 2006 at 8:40 PM PT

Google would make its worst mistake in the world teaming up with ebay.

Google Is the Best, compared to ebay/paypal etc. unreal.
For more info just google paypal frozen funds.

Google needs to stand on their own. google checkout services are just great, customer service is just great,

Seller performs customers happy, no questions
asked, No holds on funds credit checks,
a new start for many,

Ebay they don’t say before you join to be a seller.
If your credit is not good, or if your account supposedly is selected to be a random security procedure check you are scre…

Me only a 40– 100% positive. I’m sure they wouldn’t do random quality control on the many of thousands dollar sellers.

I have no plans sending my id, utility bills,
additional bank account numbers to anyone.

Which is great, they shouldn’t do it anyway unless seller has buyer complaints. Me -0-

Sorry all , just letting off some steam.
On to the positive….now, I know I do have better things to do.

Thanks for the thearpy session,
I really needed it.

Happy New Year Everyone,
I Wish whomever you all are
Great Success To You and More 2009

broker1 Wednesday, December 31, 2008 at 5:46 PM PT

Hey again,
I just wondered if anyone has seen video on Google,
One of the #1 best companies to work in the world.

It is absolutely awesome, tennis courts, game rooms even car washing for employees.
All FREE…..
Daycare, pet care, the benefits are unreal.

That is where all of their motivation comes from their employees.(and part owners)

If I find the link again, I will post,
It is the most impressing team work,
I ever viewed

broker1 Wednesday, December 31, 2008 at 5:56 PM PT
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