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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: stevenallen who wrote (42317)	6/17/2003 3:03:38 PM
From: Frederick Langford	Read Replies (1) \| Respond to of 57110

EBay vs. Google Commentary: They compete more than we know By Bambi Francisco, CBS.MarketWatch.com Last Update: 12:05 AM ET June 17, 2003 SAN FRANCISCO (CBS.MW) - Just when you thought you knew all the surviving players on the Internet, the game changed. For instance, if you asked someone who Google's biggest rival is, they'd likely say, Yahoo (YHOO: news, chart, profile). If you asked someone who EBay's (EBAY: news, chart, profile) biggest rival is, they may say Amazon.com (AMZN: news, chart, profile). But increasingly, those answers may change. It may very well be that Google and EBay will be viewed more as competitors in the coming years as search is revealed as the center of online media and commerce. It's really not hard to see this connection. If you're a vendor, you can advertise on a search page, or put up your wares on EBay's bazaar. The question to ask yourself is: Which initiative delivers a customer at the cheapest rate? For instance, if I sold mortgage calculators, I might choose to spend $4.45 per click for the keyword "mortgage rates" on Google ($1.75 per click for the same term on Overture (OVER: news, chart, profile)), or I could list my mortgage calculator on EBay's mortgage calculator category. Both Google and EBay attract a significant pool of potential buyers. Both rely on a significant pool of advertisers, like the ones who've typically used the classified pages. In both situations, a merchant asks: "Which outlet will get me in front of the most people?" EBay can boast of its reputable brand name. Its marketplace certainly attracts potential customers as $5.3 billion in products were sold over it in the first quarter. But Google can boast that it's a great information booth outside of the EBay mall that can direct people right to the store. Google accounts for about 27 percent of the nearly 4 billion searches conducted monthly, according to ComScore. It ranks right behind Yahoo. In fact, for the last 18 months, EBay has stepped up its effort to use search to get people into its mall. EBay bidding fee = Google listing fee A vendor pays EBay a listing fee and a final-value fee. Including other sundry fees, the total is roughly 7 percent for an item worth $100. In the same way, Google gets a fee for sending a prospective buyer to a seller. In time, as Google and other search engines understand consumer behavior better, Google might get a fee for matching a buyer and seller -- similar to EBay's final value fee, perhaps. It's likely that that higher fee will be reflected in the price-per-clicks. For now, Google can at least boast that it's amassing a pretty good base of buyers. According to recent data from ComScore, Google's site had 59 million unique visitors in the month of May. That's up 22 percent from December. EBay, meanwhile, saw slightly fewer visitors as 56.7 million unique visitors went onto EBay, up 5 percent from last December. Perhaps you'll think this connection has more merit from someone who actually worked at EBay -- Peter Thiel, a general partner at Clarium Capital Management. Thiel sold PayPal, the online payment company he co-founded, to EBay last year for $1.5 billion. "Clearly, the No. 1 competitor to EBay is Google," said Thiel, who still owns shares of EBay. But as he peers into the future, he sees that the efficiency of search is helping to build a massive buyer base that may, if EBay isn't careful, avoid going to EBay's bazaar to find a product. "The search experience is central to the Internet," he said during a recent chat over coffee. This is where EBay may have to make some changes about its business. cbs.marketwatch.com Fred