Sunday, 20 October 2013

Person to Person digital market places are broken

I was very interested by a number of video blogs this weekend concerning the problems with digital market places.  On Techcrunch Simon Rothman explained about Greylock's $100M dollar fund wanting to invest in this trillion dollar market.  Simon explains that eBay (where he used to work) is not broken but they have moved from their initial person to person buyer seller relationship to professional sellers selling to the public.  This leaves a gap in the digital economy; he says there is a secondary market in personal goods selling which is not being exploited properly.

Separately on the BBC's Bottom-Line, Francios Coumau of Ebay also explained how eBay does $65B of business per year but 70% of this is from professional sellers.  This means that $19.5B is still person to person selling but as Simon Rothman says the "experience selling secondary goods is broken. If you go around and ask your friends have they sold something on eBay recently; generally the answer is no". He estimates that there is a trillion dollars of "stuff you own" sitting in people closets which is not being sold.

Of course Craigslist is a supposed "successful" person to person digital market place.  But their UI has not changed in years and their mobile app (although functional) is extremely poor in its look and feel and integration with other parts of the internet totally non-existent.  In fact CraigsList is a very weak implementation which still gains traction simply because the demand from the public is there.  Craigslist is partially owned by eBay and is reported to have turned over $122M in 2010 and made $99M profit in the same period.

There are other more local person to person market places.  The UK has Gumtree (ultimately owned by eBay) which does a better job than Craigslist at giving users a good buying and selling experience. However, I wonder if eBay really wants these other market places to do that well as ultimately they compete with eBay itself where their $19.5B person to person market is still vastly larger than all their other market places put together.  By buying up these smaller market places, it restricts the chances of the success of new market places by other new startups.  But this restriction will only remain whilst these alternative market places are very boring and poorly implemented - particularly on mobile where new exciting opportunities exist.

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