The Ebay Way Of Life

Behold, I have a broken Panasonic DVD player, in the original factory box.

Actually, I have no such thing, and if I did, it would be shoved away someplace where I wouldn't have to face the existential choice of fixing it or throwing it away. But now I realize there is a third option, to list it for sale on eBay, the electronic auction Web site that has revolutionized the meaning of "junk" for nearly 50 million people around the world. Someone else sold one last week for $33.26, plus shipping charges, which meant I would have cleared enough to purchase, say, 16 uncleaned authentic ancient Roman coins at $2 each, and the buyer would have... well, that would be his problem, but maybe he'd know someone who fixes this stuff cheap. By definition, though, we both would have gotten something we wanted, increasing by some tiny increment the sum total of happiness in the world--mine, his and that of Pierre Omidyar, the young engineer who founded eBay in his apartment in 1995, and built a $4.6 billion fortune on the premise that the Internet is the perfect device for the second most important form of human convergence, the meeting of buyers and sellers.

That proposition was proved nearly 170 million times last year, as eBay users exchanged some $9.3 billion worth of goods in 18,000 categories that together cover virtually the entire universe of human artifacts--Ferraris, Plymouths and Yugos; desk, floor, wall and ceiling lamps; 11 different varieties of pocket watches; contemporary Barbies, vintage Barbies and replica Barbies. Admittedly, this was only about 4 percent of Wal-Mart's $220 billion in sales last year--but Wal-Mart deploys a worldwide network of warehouses, more than 3,000 stores and 1.3 million workers. EBay got by with no stores, fewer than 3,000 employees and without taking legal or physical possession of so much as an Indian-head penny. (Of course, that also means it doesn't book the $9.3 billion as revenue; revenues from listing fees and advertising last year amounted to $749 million.)

If Wal-Mart is the exemplar of modern, centralized, mass marketing--the last stage of an evolution that began with the 19th-century department store--eBay signals the coming of age of postmodern, decentralized, virtual marketing. It's a step, says global marketing chief Bill Cobb, toward the creation of "the first worldwide economic democracy." And, while almost anything you can buy at a Wal-Mart, except perishable groceries and firearms, can probably be found on eBay, the reverse doesn't hold. EBay members can sell a five-bedroom, triple-turreted Tudor-style castle in Arizona while Wal-Mart's polyester-backed middle managers would still be wondering where to stick the bar code.

It began, legendarily, as a place for Omidyar's girlfriend to trade with fellow collectors of Pez dispensers. (A new history of eBay, "The Perfect Store" by journalist Adam Cohen, calls that the "romantic" version of eBay's founding.) But in retrospect eBay's success was almost overdetermined. It brought to millions the excitement of participating in an auction, previously confined to those who shop for antiques, thoroughbreds and oil leases. In the nature of an auction buyers may get carried away and overpay--a boon to sellers--but those who prevail get to think of themselves as "winners." And Omidyar, out of a combination of conviction and shrewdness, built his business as a "community" of "members" or "users," but never "customers." Members police their own manners and honesty by awarding one another feedback points for successful transactions; almost nowhere else in the world can you garner so much praise for the simple act of putting a check in the mail. And, now that the technological infrastructure has caught up with the explosive growth of the site, it is almost seductively easy to use. The ability to search across 11 million items puts every belt buckle, router or ceiling fan on the site just seconds away.

May 29, 2002--the day the broken DVD player made its appearance on eBay, with an opening bid of $5--was a fairly typical day on eBay's 19 worldwide sites. Just over a million auctions ended, with gross merchandise sales of $26,422,255--ranging from a $53,100 coin collection down to 49 cents for a set of NASCAR matchbooks. For those 24 hours, NEWSWEEK correspondents at eBay's headquarters in San Jose, Calif., and at computers around the country kept watch on the site, monitoring a river of merchandise as it flowed from garages and warehouses around the world to... well, other people's garages.