Category: Business Ideas

eBay is Ripe for Competition

6/27/2023

“If you're a true warrior, competition doesn't scare you. It makes you better.”
---Andrew Whitworh (American football player)

eBay was founded in 1995. The company is an open distribution platform for retailers, and primarily caters to private sellers in both a “buy it now” and auction formats. eBay happens to be fronted by the CIA. The CIA uses the distribution platform to launder money and receive a percentage of the company’s commissions fees from every sale the site brokers.

The CIA generates large revenues from the sale of record albums, compact discs, DVD’s, and the like through BlackOps assets that sell their goods on the site. Like drug lords, the CIA’s assets charge exorbitantly marked up prices for most of these goods on eBay and price a few at reasonable prices to appear legitimate. This activity has been going on in earnest since 2004.

eBay’s business model is commission based. The site charges a 10%-12% commission fee on most goods sold, and tacks on additional fees for premium placement. The percentage of the fee depends upon the type of goods sold.

eBay’s platform is built around a hierarchical search engine. Sellers use drop-down menus to categorize their goods, and then add a text-based title along with a detailed description of each item they are selling. Buyers can search for items by category, or through text-based searches. eBay’s search technology includes both boolian and exact phrase matching capabilities.

eBay’s commission fees are exorbitant, and they have recently put the squeeze on sellers to provide a far greater level of personal information than originally required. Also, eBay has begun to withhold payments from sellers for up to thirty days under what they have labeled a “buyer protection” precaution. The added information requirement is being driven by both the CIA and the IRS. Based on all three of these factors, long-time sellers are growing increasingly dissatisfied.

From a technological standpoint, reverse engineering eBay would be simple enough. The greatest challenge being the bandwidth and the capacity to handle comparable traffic. The site does have a nifty, user-friendly design and this would have to be matched to compete with the monopolistic juggernaut.

eBay’s service model has two competitive advantages. First, the company provides high-level and accessible customer service over the phone as well as through text chat rooms. Second, the eBay offers buyers company-branded credit options directly through the point of sale. This second advantage happens to be a revenue generator for the company.

Aside from eBay’s service center, their entire business model has relatively low overhead. A savvy entrepreneur with a solid marketing plan could easily cut into their market share in a big way with a similarly featured site that charged reasonable flat-rate fees to their sellers.

Author: Erik Gagnon - Managing Partner, Chi Rho Consulting

0 Comments

Search Engines Haven't Evolved

6/19/2023

0 Comments

“Every once in a while, a new technology, an old problem, and a big idea turn into an innovation.”
---Dean Kamen (American Businessman}

In 1876 Melvil Dewey introduced the Dewey Decimal System. His library classification system allowed new books to be added to a library in their appropriate location based on their subject.

His decimal number classification system introduced the concepts of relative location and a relative index. Libraries previously placed books on shelf locations that were related to the order of acquisition rather than topic. His system used three-digit numbers for main classes, with fractional decimals allowing the expansion of further subcategories. Dewey’s system is still used in 200,000 libraries in at least 135 countries today.

Keep in mind that all this was done before the information age. Today, computers and artificial intelligence make this type of categorization simplistic. Why then haven’t tech entrepreneurs capitalized on this type of system to revolutionize the search engine industry?

There are twenty-nine general search engines in use today. They include the likes of Google, Baidu, Brave, and Bing. Every year or so, a handful of startups enter the market with little or no real leaps in technology. They are built along the same lines as Google: word driven; and rely on web crawlers to scan every page of a website for exact phrase matches or near subject matches.

Those phrase and near subject matches produce search results based on the end-user’s input. Oftentimes end-user’s have to run multiple strings to find a match on the results they’re looking for. In short, the interfaces aren’t very friendly. A search engine with a comprehensive subject index would be much more helpful.

A search engine with a numerical subject-based indexing system doesn’t exist today. Nor has one ever. You can largely thank the tech entrepreneurs and their engineering teams at Google and Microsoft for this. You can also point the blame at the lack of creativity in the tech market.

Simply put, the existing business models do not allow for innovation or generational leaps in technology. Google and Bing’s business models are both entirely based around paid search. Their engineering teams categories search results on their worth to their respective companies rather than a website’s value to their end-users. Entrepreneurs that have attempted to enter the market have mirrored their business models.

Arguably, it wouldn’t take a team of NASA scientists to revolutionize the industry. At a high level there really are only fifteen categories of searches internet users engage in. The categories include:

News
Sports
Entertainment
Retail
Religion
Medical
Self-Help
Consumer Services
Professional Services
Business Services
Food & Restaurant
Directory Searches (people, maps, dating, etc.)
Educational
Weather
Government Services
Adult (Pornographic) Content

Artificial intelligence could be employed to group sites into subcategories underneath these categories, and from there the technology possibilities are endless.

Drop-down menus could be employed, and pages could be categorized based on a relative index value and/or end-user feedback. Sub-searches based on a character strings could also be employed to help users find specific goods, services, or educational materials that meet their needs.

Arguably, a subscription business model would work under this type of scenario. From an end-user’s perspective a Dewey Decimal-like search engine would be well worth the value, eliminating paid-search results and placing the information, goods, and services right at their fingertips with far fewer queries.

“Little children understand wisdom; and unwise men pursueth wisdom.”
---Proverbs 8:5

Author: Erik Gagnon - Managing Partner, Chi Rho Consulting

0 Comments

JUMPSTART STRATEGIES

Strategic insights for investors and entrepreneurs on a variety of topics.

CATEGORIES

ARCHIVES

eBay is Ripe for Competition

Search Engines Haven't Evolved

About Us

COMPANY

SERVICES

RESOURCES

SUPPORT