eBay's Broken Feedback System vs the Entire Web - Who Will Win?
Nick Carr, known for provocative titles, recently posted Was eBay a fad?, which highlights how this year eBay may do more fixed price business than auction business.
Many factors led to the demise of their auction income
- increased fees that lowered sales profit margins and drove away legitimate merchants
- improved eBay search features that made buy it now purchases easier than waiting out auctions
- the novelty of auctions wearing off
- a broken user feedback rating system
- a market for lemons effect from shill bidding, high shipping charges, knock off designer products, switching & returning fakes, and listing pollution from $1 e-products chuck full of affiliate links
- improvement of web selection, online ad relevancy, & web search in general - all 3 creating more liquid and better informed markets with lower purchase risks for most items (outside of eBay)
In many markets brand, market momentum, network effects, and perceived social proof of value can hold up websites with inadequate social systems that do not tap the power of the marketplace. But given how competitive and open the web is competition can appear from surprising places. What makes Google so powerful in their role is that many publishers are dependant on their service. Which, in turn, allows Google leverage over how far they want to push copyright and how much information they synthesize in their search results.
Google can add new verticals overnight, make incremental changes, sell themselves free advertising, and compare their product side by side with competing products until their product is the clear winner.
