eBay is Ripe for Competition

“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