eBay: Not quite as much "IT" as one might hope

I am proud to say that I was one of the early adopters of eBay way back at the beginning of internet time. Setting aside my extensive poetic license, I’ve been a pretty big fan of the eBay way for a long time. However, in recent years I’ve become a little disenchanted. More often than not it seems that I can find a better deal on the same product at a "regular" online retailer. If eBay is really the efficient market place that it has touted itself to be, this should self correct over time. All else being equal, eBay auction prices should end up at parity with the rest of the online retailers. Let’s look at some numbers.

It’s no surprise to anyone that eBay is definitely a big daddy of the web. eBay tallies in as the 4th most trafficked domain in the US market. The reality for eBay though is that a large majority of the traffic to the site is not particularly fruitful. In order to buy or sell you need to register. It’s a little tricky to exactly identify registered users since there are a number of ways registered users can interact with the site. We developed a proxy set of activities that we felt captured most of registered user activity; visiting My eBay, starting the bid process, and starting a listing process.

So, we know that there’s a lot of people just browsing on eBay. If we look at the breakdown of registered users that are bidding and listing here’s how it breaks out for the past six months.

It appears that there are a lot more people bidding on items than actually selling items. This alone would be a pretty good driver for pushing prices up on listings. However, it isn’t quite that simple since we know there’s a lot of heavy duty "Power Sellers" that list hundreds or even thousands of items a month. There probably isn’t the same dynamic on the buy side however. One way to get at this is with Page Views per Unique User.

From this data we can see that "listers" visit about 3 times as many eBay pages as "bidders." This indicates that sellers are more active and supports the Power Seller notion.

So to recap we’ve got a lot of browsers, a few bidders, and relatively tiny pool of sellers selling a lot of items. Since a seller is unlikely to compete against him or herself it’s pretty obvious where the advantage lies in the eBay marketplace. eBay has clearly done a great job to establish its brand in consumers eyes. The question that remains is which has more staying power "¦ brand equity or market theory?

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