Basically, eBay has a monopoly and they are abusing that fact. Is it possible to neutralize the network effects that protect them?
If any group can come up with a viable strategy, why not news.yc?
They are certainly speeding the process along with their mistreatment of the most important kinds of sellers and allowing the rampant spam and fraud that has nearly taken over whole sections.
When ebay began the web was a very different place. The rise of social networking and basic online shopping awareness will allow smaller niche markets like etsy to flourish. A reputation system that is portable, secure and inter-operates easily would be a big plus in this direction but I think it will happen even without it being fully developed.
I can't wait for an online market of makers that can offer unique, one-off technology products. I'd gladly trade in my Ipod for a funky handmade OS Ogg player that did more of what I want and less of what Apple wants. Reputation built by how many cool things you've made, commissioned items.. Hey there's a startup in there somewhere!
I don't agree that eBay is evil. It's just a big company behaving like all big companies eventually do. Still, I've given much thought to why no Western companies (Asia is a different issue) have been effective at competing with the company over the years.
I think there are three issues:
1) Trust and Safety is what eBay calls the never-ending cycle of identifying fraud, modeling it, and preventing it from happening in the future. It's a difficult, expensive, ever-evolving challenge that is far more complex than I realized before working at the company. Craigslist, which has recently seen a massive flood of spam on some of the more popular categories, is seeing how difficult it can be to keep a lid on this stuff. eBay is in a never-ending battle against criminals who are often very smart and highly motivated. New entrants in P2P payment systems have to deal with this problem to even get started. People think there is a lot of fraud on eBay, but they have no clue how much of it is killed before it sees the light of day. In many ways, eBay is like an immune system that can fight off infections it has seen before. It's the new stuff that gets through the system. Competitors won't have the benefit of eBay's decade-long immunity memory.
2) eBay spends millions on search marketing to maintain their position by keeping buyers coming to the site. eBay is, by most accounts, Google's largest ad buyer. It didn't used to be this way. There was a time when most users went directly to eBay.com to start their shopping, and that's still true of auction fanatics. But a large percentage of sales on eBay are now fixed price (or buy it now), and commodity shoppers increasingly start their shopping with a Google, Yahoo, or Live search. The cost of acquiring new fixed-price customers will be a major problem for anyone hoping to enter the general goods retail category.
3) It's still the best auction platform. The bottom line here is that no one has come up with anything fundamentally better than eBay's auctions. Personally, I think this is eBay's soft spot because the company is focused on fixed price goods and because they've owned this market for so long. The margin on auctions is very, very high, and someone could take them on. A better (more fun, cheaper) product would be a good place to start.
I agree with those who suggest that niche players will chip away at eBay's dominance, much like niche retailers at the mall chipped away at department stores over the years. If I was going to build an eBay competitor (and I'm not), I'd choose a single category of easily-shippable, high-resale-value items (e.g. SLR camera lenses or whatever) and create a better C2C trading system that kicks butt on that specific category.
I don't think I'd have appreciated this before reading the Levchin interview in Founders At Work, which made it clear that Paypal's advantage was in staying a step ahead in fraud detection. They knew that any competitors who couldn't do that would be eaten alive (and were).
One thing I've been thinking about is using double-sided auctions instead of the typical second-price English auction you find at eBay. The idea is that buyers leave bids and sellers leave offers for a particular item class, rather than for a particular item "instance". For each class of item (e.g., 2GB iPod nano) you would essentially have a market similar to the stock market. You can leave an offer or a bid or you can act on a bid or an offer that is already left by somebody else.
This will be a much more efficient market than eBay, so the forces of supply and demand will be stronger. Buyers will be able to choose between speed of sale and profit. On average, buyers will have less of an advantage against sellers - things will be more balanced.
Overall, this greatly decreases the transaction cost, which is the cost of the time and effort to research the item, determine the veracity of the listing, and devise a bidding strategy. In a way, the market has already done the research for you.
In addition, it removes the wait until the auction expires. If I want to buy an iPod for $200 and you want to sell it for $200 we can close the transaction immediately.
The market principle won't be so strong with rarer items, but people will be able to show demand for rare items before sellers list them.
The major problem is the adequate clustering of similar offers (e.g., all 2GB iPod Nanos). It needs to be done automatically, so this idea becomes to eBay what Powerset is to Google.
Of course as you mentioned there would be clustering of items for this to work, but the principle of the system is that all items in a category are 100% interchangeable.
In the stock market one share in X corp. is no different than another share in the same corp. For 2G iPod Nanos there are very specific differences (color, usage, markings, etc.) that will deviate unlimitedly.
I guess the way this would work is buyers would know what they want (2G iPod Nano), see what the going rate is (ask), if interested, make an offer (bid), and then when the buyer is matched to a few potential sellers, they would have a chance to look at the individual products to either confirm or deny a final sale.
A nice benefit of this is that you can see what sort of 2G iPod Nano $90 will get you (say if you're on a budget), simply by "bidding" $90 on the product and seeing your matches. If they're aren't any matches, you need to bid higher. If you have a few matches, you'll probably be seeing some beaten up iPods, but that's fine - you only wanted to spend $90. With eBay, if you look for $90 iPods, you'll only see current auctions, and the final price will most likely be bid up before the close.
I read about it a few weeks ago when they launched and thought it was a pretty neat idea, so I wish them the best of luck.
If I were trying to beat ebay, first I'd separate feedback into another application. Why should you need separate feedback for ebay, amazon, and other sites? It should all just be one reputation score, which lets people know whether you're an honest buyer/seller or a crook. You could import existing feedback from existing sites.
Second, I'd come up with an app that would allow users to search for items not just at ebay but at other sites too, in the hopes of attracting users, given that they would have little reason to help bootstrap a new auction site that has neither buyers nor sellers.
Third, I'd write an auctomatic-like app for sellers that would have a superior interface for them to list items at ebay and other sites (Amazon purposely gives sellers inferior tools for listing items unless they pay $40 to become a power seller).
If all goes well, I would now have buyers and sellers visiting the site. Next, I would start hosting auctions myself, which would optionally automatically be listed if a seller listed an item at another site. My fees would be quite a bit lower than ebay's or amazon's and scammers would not be tolerated.
Of course, this is all easier said than done... I guess there's a reason ebay remains dominant after a decade of craptacular service.
If the sellers come I think the buyers will come. Here's a potentially useful question: how can a site be made that is hassle free for sellers and also eliminates the risks associated with an initial lack of buyers? This may be easier to do for "Buy it now" sellers than for auction sellers.
What's eBay's precedent in allowing websites to repost scraped data from its listings? It'd be easy as all get-out. My guess is that something like this has been tried.
So honestly I don't think anyone can take eBay down. Even if Craigslist/Google/Microsoft comes out with a free version.
So unless you want to get government involved I wouldn't bother
google => powerset,mahalo msft => zoho (they're full of fail, but still)
And, no, I'm not going to tack it to the end of my post because it's so annoying that it's immune to ironic mockery :(