EBay wants a fight, but Craigslist won't put up its dukes
Headshot of Mathew Ingram
MATHEW INGRAM
July 5, 2007
Online auction site eBay launched a U.S. version of its Kijiji online-classified service this week, after more than a year of focusing on building that business in countries such as Germany, Britain and Canada (where it is the leading classified service, ahead of U.S.-based Craigslist).
You might think that such a move would make the shareholder meetings at Craigslist a little awkward, considering eBay owns a 25-per-cent stake in the service. And no doubt it would make things uncomfortable - if Craigslist had meetings (it doesn't), and if founder Craig Newmark and chief executive officer Jim Buckmaster gave much thought to the competition (they don't).
EBay launched Kijiji in 2005, and now runs online classified businesses in more than 300 cities worldwide, and is the market leader not just in Canada, but in Germany, Italy and Taiwan too. Kijiji Canada surpassed Craigslist in number of listings in November, and now has more than 500,000 ads.
The service - whose name means "village" in Swahili - grew by acquiring and merging with various market leaders in different countries: In 2005, eBay bought a Dutch service called Marktplaats, which had 80 per cent of the market in the Netherlands and also branched out into Spain, Germany and Canada, where it operated under the name Intoko.
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The auction site later acquired a British service called Gumtree, which ran classified businesses in Britain, Ireland, Australia and New Zealand, and bought a Spanish classified company called Loquo. EBay continues to operate the different brands in some countries, while in others (including Canada), they have been merged into one service under the name Kijiji.
EBay also happens to own a quarter of Craigslist, after an early shareholder of the company sold his stake to the auction site without telling his fellow co-owners, Mr. Newmark and Mr. Buckmaster.
Until the recent announcement about Kijiji, eBay had focused its efforts outside of the United States, as part of what appeared to be a "gentlemen's agreement" about competing with Craigslist. Now, the site seems determined to go head-to-head with the popular U.S. classified service.
So what changed eBay's mind? No one knows for sure, and the auction site isn't saying, other than to tell The New York Times that "we think there is room for competition," and that eBay intends to remain a shareholder in Craigslist (although for how long is an open question).
Venture capitalist and blogger Paul Kedrosky says he sees three potential explanations for the move by eBay: 1) the company remains in a "monstrously deep, self-flagellating funk" and can't think of anything better to do; 2) the auction site "tried to buy more of Craigslist, was rebuffed, and is now playing rough;" and 3) eBay "doesn't think it will ever see any liquidity from the nutters at Craigslist" and so it's effectively moving on.
Perhaps the most frustrating part of competing with Craigslist is the fact that the popular classified service - which is still run primarily by Mr. Newmark and Mr. Buckmaster and a team of about 23 tech staff in a renovated house in San Francisco - doesn't really seem interested in competing at all, or at least not in the conventional sense of the word.
When asked about the launch of Kijiji, Mr. Newmark told CNET News: "My take is that anything that helps community is a good thing," while Mr. Buckmaster told the Times that "Many companies offer classifieds, but since we don't concern ourselves with considerations such as market share or revenue maximization, we don't think of them as competition."
During a recent keynote address at the mesh 2007 Web conference in Toronto (full disclosure: I helped organize the conference), Mr. Buckmaster responded to a question about competition by saying that all Craigslist cares about is "things that users are asking for." In other words, not revenue generation or profit or any of the typical business benchmarks.
Sites that are driven by revenue and profit, he said, "sit in meetings trying to figure out ways to drive those metrics up [but] not only do they have very little to do with what users are asking for, oftentimes they run contrary to what users want." Similar criticisms have been made of eBay.
And if a competitor came along that offered better service than Craigslist? Then users should go elsewhere, Mr. Buckmaster said. "Our focus is providing what users want. If other companies are better positioned, then [users] should migrate over to that."
There's your opening, eBay.
mingram@globeandmail.com |
