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eBay moves from bargains to 'buy now'

Although I don't claim to be an expert on eBay, I know an instance of the Innovator's Dilemma when I see one. The company announced it will emphasize its "buy now" program over the auction model that provided its start, the Times reports.

"Acknowledging that most online shoppers cannot be bothered with auctions, eBay plans Wednesday to announce changes to its fee structure that emphasize fixed prices over bidding. The move is intended to help eBay compete more effectively with Amazon.com and other big online retailers."

I'm crossing my fingers that eBay recognizes it entered the retailing market in the bargain basement, with an online-only discounter model that should never be scrapped entirely. All successful companies must protect themselves on the low-end of the market from upstarts.

Let this be a lesson to media companies, who so infrequently learn from anyone outside their industry. eBay began as a disruptive business model versus newspaper classifieds, although lower-end competitors such as Craigslist got all our attention.

If media companies weren't so worried about losing their classifieds cash cows, they would have protected their lower-end flank from attacks by Craigslist and eBay. If that had happened, what would moving to a new high-end promised land look like?

Don't expect Craigslist to find out. They won't even sell banner ads, which are an obvious way to let traditional advertisers benefit from a classifieds marketplace. They won't even sell contextual text ads, which would be another way. The next move for Craigslist is one the company is unlikely to take because of its "principles." That spells opportunity for competitors.

If you are in the final stage of the five stages of grieving, ready to accept the old newspaper classifieds model is dead, then I've got a way to regain the low-end. I've been promising to post it soon.

Your homework is to imagine what you'd do after regaining the low-end market. Consider eBay.

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This page contains a single entry from the blog posted on August 20, 2008 7:11 AM.

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