eBay Vulnerability

But eBay is not the perfect Long Tail marketplace, for a reason that I and the team of Stanford Business School students who worked with me on an eBay case study discovered early in our research.

One of the questions we asked is why eBay did not have Amazon-like recommendations, product reviews, ranking by price and ratings, and other sophisticated filters. The answer is that eBay, surprisingly, often doesn’t know what’s being sold on its site.

It knows who is selling and who is buying, but because the product listings are created by the sellers themselves and each seller describes things differently, there is nothing like the standard “shelf-keeping unit,” or SKU, designation (a unique product number) that most retailers use to track their inventory. (There are exceptions in categories such as CDs and cars, where eBay has encouraged sellers to use standard categories and nomenclature in their listings.)

Without this product-level information, eBay can’t offer many of the powerful filter technologies, such as recommendation engines, that drive demand so effectively at other Long Tail retailers.

And because sellers can list their products in so many different ways, including misspelling them, it’s even hard for buyers to know if they have indeed found all the examples of what they’re looking for.

This represents a significant vulnerability in eBay’s otherwise remarkable marketplace. Most of eBay’s sales volume comes not from grannies selling old Beanie Babies, but from nearly 400,000 small- and medium-sized merchants worldwide who use eBay as a storefront.

But most of them have their own Web sites, too, and Google’s Froogle, Yahoo! Shopping, and other aggregators are finding smarter and smarter ways to extract the necessary information from these hundreds of thousands of merchants and create a virtual marketplace that can offer product-comparison features eBay cannot.

The challenge for eBay will be to do the same within its own service, keeping competitors at bay by providing better filters to help customers find what they want and buy with confidence, not just in the seller but in the product.