Sunday, August 01, 2004

Amazon and Ebay

Amazon, eBay and PayPal are creating platforms for eCommerce.
At CBDI Forum, we have been tracking these developments from time to time. See news commentaries: July 2004, February 2004, February 2004, July 2003. See also Jeff Bezos and Ecosystem Thinking.

Jeffrey McManus of eBay claimed recently that 'we make inefficient markets efficient'. (Source: Aaron Johnson blog.)

In his blog, Jonathan Schwartz (Sun Microsystems) talks about selling computers on eBay, as a web services experiment. Schwartz expects this experiment to provide "unvarnished" pricing information, as well as providing practical experience with a service-oriented supply chain. This seems to support the McManus claim.

However, efficiency often conflicts with adaptability. How wise is it for Sun and other firms to link to the eBay platform? What is the likely ecosystem effect of allowing eCommerce services to be defined and controlled by a small number of like-minded firms?

I've just had a look at the eBay technical documentation. Developers must follow detailed procedures for design, testing and certification, before they are permitted to plug into the live eBay environment. Rightly so no doubt, but this raises questions about service life cycle management and technical change.

In response to the possible difficulties of raw eBay, a number of service providers are now offering DropOff services that provide a simple eBay front-end. These include AuctionDrop, AuctionWagon, QuikDrop and Picture It Sold! and 1StopAuctions. The last of these makes strong and explicit claims about the difficulty of using eBay. (Success here means not just completing the transaction but getting a good price.)
"To successfully sell an item on eBay requires marketing and selling strategies unique to eBay – and learning those strategies can take years to master. has that unique knowledge to successfully sell your items on eBay. We have been buying and selling on eBay since 1998. Over the years we have found the secrets of launching successful listings to obtain the highest possible price ... and so on ..."
For me, the appearance of these secondary service providers simply confirms that the big issue is business hegemony (power) - the value ladder now belongs to Amazon and eBay, they control the terms on which everyone else is trading.

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