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Sunday, May 09, 2004

What an Old Sears Catalog Could Teach eBay Today via NYTimes

When Internet bulletin boards were first melded with auctions, there was little reason for buyers to pause in the absence of a guarantee. Bids were tiny, the risk small and the entertainment value of the novelty considerable. In the beginning, eBay's rise was anything but predictable; as late as 1997, it was but one funky site among 150 or so online auctions.Today, of course, it is the behemoth, reporting quarterly results last month that its chief executive, Meg Whitman, says put it on track to reach merchandise sales of $32 billion this year. Its 105 million registered users constitute a sprawling country without borders, which Ms. Whitman notes is equivalent to the 11th-most-populous nation in the world, just ahead of MexicoEBAY is not wholly consistent, however, in maintaining that it is merely the disinterested landlord of the auction shed. To coax leery buyers into purchasing used automobiles for prices that put at risk a bit more money than a Care Bear collectible, eBay Motors offers the buyer some service protection, gratis. It's only for one month or 1,000 miles, but the details are less important than the principle that eBay has quietly embraced in this one corner: it is willing to spend some of its own money to offer buyers the same protection that would be found in similar transactions elsewhere, though the company never holds legal title to the goods.As eBay sells more new goods, the brand's lack of a money-back guarantee will become a hindrance. "History suggests that in order to remain competitive, retailers must match the offerings of others," Professor Koehn said. "EBay is unlikely to be an exception." Interesting observations about the ebay model.

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