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Thursday, November 20th, 2008
articles.php?which=eBayRevampsBusinessModelByCopyingCompetition
eBay Revamps Business Model By Copying Competition. Novel!

When Whole Foods announced the other day that they're switching their marketing strategy to reposition themselves as an "affordable" business, we chuckled. The rationale made sense, but the plan didn't seem realistic. Of course, retooling your approach to marketing is one thing—but what about changing your entire business model?

That's effectively what eBay announced this week when they revealed that they plan to emphasize fixed-price sales instead of auctions. A quick look at the numbers reveals why eBay is looking for a change. Auctions only generated only 57% of eBay's revenue in recent quarters. What's worse, that figure is dropping, according to the New York Times. And page views are down more than 15% year-over-year, according to TechCrunch. It's obvious that to stop the company's slow descent into entropy that eBay execs had to do something.

But given that auctions are what makes eBay, eBay does quashing them in lieu of fixed priced sales make sense? Herein lies the problem with eBay's new business plan: by slowly moving the company toward a model that mimics Amazon, they're simply parroting an existing business. How will they be any different, better, or more competitive than any of the other online retailers out there that let people sell stuff on their site? Their rationale is likely that there's enough of a large enough market for online retail these days that even if they manage to capture a part of Amazon's pie, they can take it and run with it.

The question, of course, is whether they can actually accomplish that. But as it stands now, there's no particular incentive for a shopper to buy something on eBay as opposed to Amazon—unless it's an auction. In fact, when it comes to the fixed-price items, there's a lot of cross-over, with sellers listing items on both sites.

But then what's eBay's alternative? It's a good question, and not one that we necessarily have an answer for. What are your thoughts?

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I've always gone to ebay for one thing, and one thing only: the cheapest stuff on the net. Ebay's able to provide this because apart from front end listings, they don't do much else to incure cost. Ebay allows small independent sellers to set up virtual storefronts that benefit from Ebay's massive number of bargain hungry users. Ebay offers payment services,listings, and well, not a lot else. Amazon offers a massive array of services, they do fulfillment, product reviews, merchandise their own products, offer affiliate marketing programs, and so on.

I'm think ebay is more or less headed in the right direction, but to say that they are parroting Amazon by encouraging the fixed price sales model that customers demand is, honestly, a little weak.
manpower
1:49, August 23rd, 2008



This is basically the business model of microsoft and many others at this point. Integrate what the little guys are able to innovate on.
matteo
20:09, August 21st, 2008