Turning The eBay Posse Into A Dot Com
from the productizing-the-posse dept
Stories of eBay posses forming are becoming quite common these days. A group of buyers gets scammed by a seller who never ships any actual product, and they all get together to try to help track the scammer down. However, not nearly as much is done to stop the practice of "deadbeat bidders." These are bidders who bid up prices much higher than they should be, and after the auction closes, admits they don't have the money. While eBay's feedback system is supposed to help take care of problems like this, it's not doing enough according to some, and so they've built a business around watching out for deadbeat bidders. Basically, they try to go beyond the basic ratings services, and more actively block out questionable bidders. It seems like quite a small focus to build a business around, but if it does help sellers better sell products, it could be worthwhile. Of course, you have to wonder, if it's really any good, how long it will be before eBay simply copies it themselves? Building a business that is based entirely on improving the product of another company is always a big risk.
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Risk isn't the one you identify
Yes, building a business on the single product of another company is a big risk, since you depend on that other company to do their own job properly, and your maximum long-term growth rate normally can't get much bigger than the growth rate of the company you depend on (think of a business making cases for powerbooks -- your customer base can never be more than 100% of all pwerbook owners). However this could conceivably grow into a successful general rating company if they do things right.
I think the risk of eBay doing this themselves, however, is low. They need to be extra-careful to be a neutral marketplace. Otherwise they open themselves up for all sorts of liability problems, which would totally screw up their business model. So that particular risk is a non-issue.
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