The Depth of EBay's Problems 2: Angry Sellers
Here's another angle on what's wrong at eBay: Sellers increasingly find eBay too expensive and are becoming successful finding buyers on Amazon.com or on their own sites. I wrote Friday about why Amazon should buy eBay.
Context & Ripple Effects
This Times column is the second half of an argument begun Friday, when the same author made the case that Amazon should buy eBay; today's installment supplies the seller-side evidence — confirmed reports that eBay merchants find the platform too expensive and are successfully relocating their buyers to Amazon.com or to sites they run themselves. The defection matters because it attacks eBay where its auction model monetizes: listing fees and final-value fees paid by sellers who now have alternatives.
First-order effects
- eBay's fee-paying seller base is eroding at the margin, with disgruntled merchants moving inventory to Amazon.com's fixed-price marketplace or off-platform entirely.
- Amazon gains incremental third-party supply at essentially zero acquisition cost, deepening the buyer-selection advantage that makes its marketplace more attractive.
Second-order effects
- Sellers running their own sites need hosting, storage, and databases — and Amazon has spent 2006–2007 assembling exactly that stack, from S3's launch in March 2006 to SimpleDB entering limited beta this week, positioned against Oracle and IBM.
- eBay faces pressure to cut fees or add seller value to stem defections, which compresses the take-rate that funds its marketplace business.
Third-order effects
- Marketplace competition shifts from buyer reach to seller economics: the winner is whoever charges sellers least while supplying the most demand, a structure that favors Amazon's dual role as storefront and infrastructure vendor.
- If independent-seller sites built on rented cloud infrastructure keep scaling, the long-run risk for eBay is disintermediation — sellers keeping the customer relationship and paying Amazon only for plumbing.
The trend: E-commerce platforms are competing on seller economics rather than buyer reach, with Amazon uniquely able to serve defectors both as a rival marketplace and as the cloud infrastructure behind their own stores.