eBay's acquisition of Kurant's store-building technology in January may be one of the first indications that eBay is preparing to move into the ecommerce Web-hosting space. Recent remarks made by eBay's CEO, and eBay's acquisition of Shopping.com, may further signal the direction in which eBay is headed.
eBay has a Stores offering for sellers who want to list high volumes of items at a fixed-price at a more affordable rate than the fixed-price format on its core site. (Stores pricing favors high volumes with its monthly subscription rate and 2-cent listing fee, compared to a minimum of 35 cents for items priced at $1-$9.99 on eBay.com.)
But eBay Stores lack features that independent ecommerce sites generally offer. While Stores have seen an improvement over the last 12 months, they do not keep the largest sellers from setting up their own sites independent of eBay. At the most recent PESA (Professional eBay Sellers Alliance) summit, eBay representatives listened to sellers sharing multi-channel selling strategies and marketing techniques to drive traffic to their own websites.
If eBay offered a service for sellers to set up their own sites, hosted and managed by eBay, it would be in the hopes of keeping sellers from taking a multi-channel selling approach. How? By integrating eBay into an ecommerce solution that does not support outside marketplaces like Amazon, Yahoo, Overstock and others.
eBay CEO Meg Whitman discussed this strategy at the Goldman Sachs Sixth Annual Internet Conference on May 25, 2005. In addressing a question about eBay's acquisition of Kurant (http://www.auctionbytes.com/cab/abn/y05/m01/i14/s01), Whitman said sellers who have an eBay Store can use Kurant technology to build a store on the web and use the same backend (inventory system) to send items to either their eBay Store or their own ecommerce website.
In addition to satisfying mid-level sellers' desire to expand beyond eBay while keeping them from selling on other marketplaces, eBay could also collect fees for the web-hosting and possibly for add-on services, like domain-name registration, templates and design.
eBay could adopt Kurant Technology's pricing model. Kurant's StoreSense service allows merchants to set up an ecommerce presence on the Internet at an introductory level for as low as $19.95/month, and $319.95/month for advanced levels. eBay could also integrate PayPal into the shopping cart system, driving revenue for its online payment subsidiary.
This scenario makes it easier to understand eBay's decision to acquire Shopping.com, a comparison-shopping site that drives traffic to merchants' listings on a pay-per-click model. There would be little benefit to populating Shopping.com with millions of eBay listings, but using it to drive listings to eBay merchants' own sites (for an additional fee, of course) makes more sense.
Auction-management services like Marketworks and ChannelAdvisor, which began as eBay-only services, have been helping eBay sellers for years create their own sites and sell across multiple marketplaces. eBay sees high-volume sellers creating strong off-eBay brands, using services like Google Adwords and Shopping.com, as well as eBay listings to drive traffic to their own websites. By offering eBay sellers of all sizes an easy-to-use, scalable and full-featured site-building tool, eBay could to keep its sellers in the fold and earn fees that are now going to other companies and marketplaces.
It might not keep eBay's largest sellers from expanding beyond the eBay marketplace. But eBay's strength has always been providing merchants an easy way to sell online without extensive knowledge of technology or marketing techniques, and it has millions of users who might take the bait. The downside for sellers is increased reliance on eBay, which has shown it can ratchet up fees without much notice. Any eBay site outage would also impact 100 percent of a merchant's revenue-generation.
The biggest risk for eBay (besides technological disruption the integration might cause) is that it would be helping to educate sellers about having their own sites, and those sellers could trade in an eBay-hosted service in the future for a competitive service that offers more flexibility across multiple marketplaces.
eBay is preparing to celebrate its 10th anniversary in San Jose next week at its fourth annual eBay Live conference. One of the courses at the event is entitled, "Let eBay Help You Build Your Own Website."
With growth rates slowing in the U.S., eBay may see a scalable, ecommerce web-hosting service as a good beginning to its second decade.
