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Sunday, July 8, 2007

EBAY and Trust

don't claim to be a heavy eBAY user. But, I do buy and sell stuff occasionally and my recent experience selling stuff on eBAY could be a good indicator of what is probably worrying the execs of EBAY: Managing scale.For the past month or so, I've been trying to sell a laptop on eBAY. I've listed the items two times already and here is what happened both times:

1. Within hours of listing, I get sent messages of two categories: People who want to cheat the sytem and barter offline and scammers with manufactured or stolen eBAY identities who want the "usual" information. I spend valuable time dutifully forwarding it to the security folks at eBAY.

2. During the weeklong listing, I spend even more time responding to form responses from eBAY and handling email discussions with CallCenter agents who plainly have no expertise in managing security.

3. During the last day or two of the auction, I will have three or four genuine buyers who I communicate with and keep engaged.

4. During the last minutes, I see bidding begin and notice my genuine buyers being beaten by scammers with stolen identities win the auction with outrageous bidding. I cannot do anything. Things move at the speed of the Internet!

5. I then get a "Congrats" email followed by a "sorry, the scammers beat us" email and to protect the integrity of the network (read: eBAY probably doesn't want this information getting public) the entire listing is removed.

This got me thinking and I've come to the following conclusions that you might or might not agree with:

- E-Commerce is now no different than regular commerce. An Internet business will initially probably have advantages due to the network effect, but in the end they will end up just like the other utilities: they will struggle to manage scale and offer a compelling service. My eBAY experience was no different than calling my telephone or cable company: Form responses, casual processes to address core business competencies, and frustrating customer service.

- Internet establishments will progressively develop a tiered system. The big customers will get all the attention and the small/occasional customers will not be able to take any advantage of the benefits the network provides. It won't be egalitarian like it used to.

- Secure E-Commerce is elusive. Internet businesses who depend on earning money through customers they trust will struggle to keep their infrastructure secure. There is a constant struggle between expanding the user base and offering a secure environment. There has to be a better way than the best computer scientists being routinely defeated by the dolts with a phone and a laptop from the most "backward" regions of the world.

eBAY is probably the most innovative of Internet businesses. Their annual report proudly states:

Our purpose is to pioneer new communities around the world built on commerce, sustained by trust and inspired by opportunity.

If eBAY is struggling to sustain trust, I shudder to think what the industry is going through. I am sure there is a venture opportunity in all of this! Know of any?

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