eBay’s Defense
Google’s stock price has been spectacular since the earnings release. It has also many new “possible” services offering recently. One of the service is a payment service, but at the moment we do not know the extent of how Google will use the service. The latest possible service is called a Google Base. It is speculated to be a database for people to submit all types of content. What a great idea!!! leverage other people’s content to display advertisement.
These two rummer services has hurt eBay’s stock price as people worry about the possible competition for eBay’s two main businesses, online payment and online market place.
At the moment, we do not know what Google’s intentions are. But one thing is for sure, that eBay must prepare to mount a defense. One defense I can think of is to leverage its item listing pages. It should start displaying advertisement on these pages and drop posting fees. As for individuals and merchants who does not wish to have advertisement on their listing page, they can certainly opt out by pay posting fee. I believe this approach will energize slow growth in the maturing markets like the US, Britain, and Germany. Most important of all being more competitive in china.
Google is scaring their competition. Even Microsoft had just announced their plans to put office and some of the Windows service online. The two services are called Office Live and Windows Live. Office Live may be a subscription base like Salesforce.com. Windows Live will be pay for by online advertising.
I’m not sure what the right strategies would be for eBay, but they must not continue to rely Google for their search because it sure looks like they will start taking some of eBay’s business.
It's not when you buy. It's when you sell!
