What I find interesting about E-Bay in the context of a Gorilla type investment theme, is that for an auction site like E-Bay, sheer size is an important competitive advantage. If you are thinking of listing your item for sale, you want it seen by as many others as possible. So you go with the biggest and most popular site. That is E-Bay by a mile. If you are looking for a particular item to buy, you go where there is the biggest selection. Again, E-Bay. In their business the biggest and most popular site has a huge advantage, that only makes it grow bigger and bigger, giving it an even bigger advantage. I think potential rivals will have a hard time competing with an established giant in the internet auction business. So maybe E-Bay, as the biggest auction site, already has a type of "lock" on the market that we look for in Gorilla game investing. The same isn't true for a book seller like Amazon, by the way. As a buyer, I don't care how big Amazon is, just whether it has the best price and the best service. I could as easily go to Barns and Noble.com. Not so with E-Bay.
Another thing I like about E-Bay business is what everyone has noted: no inventory, no storage costs, no shipping costs. And your customer base is everyone in the entire world with a computer or access to one. Soon to be most every person in the world. People in Morocco, or Shri Lanka, or wherever, selling their home made wares to the world market. Coke collectible collectors in Japan (yes, they are a lot of them there), buying at the Coke collector site on E-Bay. etc, etc. |
