eBay and Google

Om writes about eBay missing it's numbers and how it is possible that the ever-expanding network of buyers and sellers could be tapped out. We may have hit a growth wall with this business model. And while Om could be right... We will just have to wait 3 months more to see if this is a trend or aberration. In my opinion, if you own the online auction market, you are going to see exponential growth as long as there are exponentially more people to add to the Internet and exponentially more need to connect low cost suppliers with high-paying customers. Recently Chinese companies have been using eBay to sell all sorts of goods without the need for middle-men (besides eBay of course). BTW, is that PC? Should I have said middle-persons?

Point being that we are just beginning to see eBay used by manufacturers. This is a relatively new trend and taken to an extreme, eBay has the potential to eliminate more and more retailers and take layers out of the distribution network between markets and countries.

The post further goes on to compare eBay to Google, Yahoo! and Amazon. I have to admit the comparison to Amazon may be more valid than the aforementioned search engine companies. After all Google and Yahoo have the pay-per-click thing down cold. Advertisers put in credit card numbers and stand back and get charged month after month. Contrast this to eBay or Amazon where a product needs to be shipped from point A to point B. There is better ability to scale from a pure electronic business model such as Google. Of course Microsoft could come out and give pay-per-click ads away for free as a way to muscle into the market. After all Microsoft gives product away free to get into lots of markets. Advertising however may not b a market where his approach works. After all, if you allow advertisers to advertise for free, the ad quality will be inferior and customers may not want to use a search engine that displays inferior ads. Microsoft has a bunch of smart people and search has become strategic over in Redmond. This means they will find a way to get share. The Pie however is growing exponentially and is more than big enough for three dominant players. We will see if this is an accurate assumption as time goes on.

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This page contains a single entry by Rich Tehrani published on January 21, 2005 9:08 AM.

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