In the online auction sector, eBay is not just king of the hill; it owns the mountain.Some challengers to the throne have stepped forward in the past few years, but all havebeen trounced.
Is it possible that in coming years, a more savvy and well-funded contender couldchallenge eBay and steal away part of its auction business? Although Giga InformationGroup analyst Steve Telleen told the E-Commerce Times that smaller players could attemptto nibble away at eBay’s market share by serving niche markets, many analysts said theanswer is: absolutely not.
“EBay will be [the] only real player for online auctions for a long, long time to come,”Jared Blank, an analyst at Jupiter Media Metrix, toldthe E-Commerce Times.
Fee, Fi, Fo, Fum
Industry giants usually serve as attractive targets for small companies looking to copytheir success. Witness the swirl of online booksellers that try to take on Amazon, or themultitude of ticket sites that want to catch Ticketmaster unawares.
EBay, however, has proven to be such a powerhouse in its field that attempting to copy itis widely seen as business suicide.
A recent Jupiter Media Metrix report on retail Web site traffic in April listed theauction mammoth atop the e-commerce heap, with 24.3 million unique visitors. Thecompany’s closest rival, UBid, squeaked into therankings with just 3.6 million visitors during the same period.
“Basically,” Blank said, “eBay is so successful because of its size. It became large veryearly and established such a cycle of growth that it became the online auction site ofrecord. Which means that it’s difficult, if not impossible, for anyone else to catch up.”
Lightweights of the Ring
But although eBay is a heavyweight champion, it does not lack competition.
Sites like UBid and Abidon market themselves asalternatives to eBay’s frenzied marketplace, where a bidder may be overwhelmed bycompeting offers. While some users may take comfort in a smaller pool of buyers andsellers, the majority of auction-goers gravitate toward eBay.
Few big players have tried to take on the Web auctioneer. Most recently, Yahoo! attemptedto enter the online auction fray — with dismal results.
Jonathan Gaw, research manager at IDC, told the E-Commerce Times: “Yahoo just got out ofit in Europe because they got their hat handed to them by eBay. In the U.S., the game’sover. EBay won.”
Rather than stumbling far behind eBay or shuttering its European venture, Yahoo! choseto forge an alliance with eBay’s European operation and promote the auction site on itsYahoo Europe portal.
Plain and Simple
“There’s nothing really magical about eBay,” Gaw said. “If you and I were to sit down andreally think hard about what we want in an auction site, we’d come up with something thatlooks a lot like eBay. It’s pretty simple.”
The formula for success, according to Blank, was that eBay built momentum quickly. Itattracted a large number of buyers and sellers at a rapid clip, and provided them with afinancially secure arena for their transactions.
The site also did not attempt to be anything other than an auction site. Yahoo, on theother hand, tried to be both auction site and Web portal, spreading its resources toothin and confusing consumers. In contrast, eBay resisted selling products or providingadditional services.
This single-minded focus made a big difference as the economy went south, according toanalysts. Everyone knows what eBay does. That consumer recognition secures the company’sposition in the marketplace.
Nibbles at the Pie
Although it is doubtful that a serious eBay competitor will advance, some companies maybe able to capture at least part of the market.
Steve Telleen, vice president of Giga Information Group’s Website Scorecard Service,told the E-Commerce Times: “There is some opportunity for smaller players to get in, butit wouldn’t be in taking on eBay directly. Rather, they would have to look at nibblingpieces out of their marketplace.”
Telleen said the only feasible way to do this is to open a segmented auction that relieson either geography or a limited selection of products. For example, if people in Texaspreferred to buy from other Texans, or if antique clock collectors wanted to interactonly with others of their ilk, someone might be able to serve such a niche.
Even if niche sites could be created, Gaw said he wonders whether consumers wouldn’tgravitate toward eBay anyway.
“If you’re a buyer or a seller, you go to where there are the most sellers and buyers,”he said. “So, why would you go anywhere but eBay?”