Who is Really the eBay Customer?

Many years ago during my consulting career I was hired to help the New York Stock Exchange answer the question of who their customer really was.  For example was it the buyer of stocks, the sellers, the press etc.    After considerable exploration and thought we concluded, with the ultimate agreement of the Stock Exchange Management, that the customer was the seller of stocks.  For without the people selling the instruments they had no market.

It has occurred to me that a similar situation exists with regard to eBay.  Is their customer the buyer or the seller.   Clearly they operate in such a way that they view their customer as the buyer, as all the rules of the entity are skewed in favor of the buyer, and we can say with many instances of first hand knowledge that whenever there is a dispute they favor the buyer.   The recent change in the eBay rating system is further support of their view that the buyers of items on eBay are much more important to them than the sellers.

In the current monopolistic enviornment in which ebay operates it is easy to see how they view the buyer to be their customer.   However, with each passing day there are more and more options for sellers.  While eBay still owns the market, with what we would guess to be a 95% or more share, the time is not too distant when others will begin to invade this territory and appeal to sellers of merchandise.    The buyers will follow the sellers as without the products there is no marketplace.

We do not believe that eBay has throught through this strategy, and certainly hope they will address this key strategic issue in the near future for their own good.   Given what we believe to be a very unhappy group of eBay sellers, we suspect that if the strategy does not change in the near future, they will see an even greater erosion of the market.   It is well known that the number of eBay buyers are down, and we know of many sellers experimenting with the secondary markets.   Whey the eBay management can not make the bridge between happy sellers and a good marketplace is well beyond our grasp.   However they probably have two or three years to address this issue.   After that time the market will be ripe for significant new entrants and there will be an erosion of their sellers who see more "customer friendly" enviornments in which to sell their goods.

Lets hope the people who advise eBay on their strategic direction can think more broadly and address this issue...before it is too late.