The Ebay Way Of Life

What we found was that eBay, while struggling to hold onto its founding values of community and its roots among computer buffs and Beanie Baby collectors, is moving closer to mainstream retailing. Ebay managers are still fanatically attentive to the complaints and desires of their members, who in the last week of May were deluging the company with e-mails protesting, or defending, changes it was making to one of its innumerable electronic forms. Meanwhile, however, the whole basis of the business was slowly shifting.

As eBay has evolved under the leadership of CEO Meg Whitman, an experienced corporate manager who took the reins from Omidyar in 1998, a growing share of items are being sold at a fixed price, rather than by auction; those sales accounted for 20 percent of revenues last year, a figure Whitman would like to boost to 33 percent. Collectibles, which amounted to two thirds of the business as recently as January 2000, now are just one third (although of a much larger whole), and cars have grown from almost nothing to one of the largest categories on the site. Large corporations like Motorola, Sears and IBM now sell directly through their own "stores" on eBay's site. "The pie is looking much more like that of a mainstream retailer," says chief financial officer Rajiv Dutta--although looks can be deceptive in this case. EBay disclaims any ambitions to dominate the vast middle ground of everyday retailing, the khakis and compact discs and cosmetics. Instead it concentrates on the two tails of the retail bell curve: unique or hard-to-find items, such as new computer games that can be sold at a premium, and used or outdated or overstocked merchandise that can be discounted. But in a $900 billion retail economy in the United States, even those two tails cover a lot of territory.

Since everything that transpires on eBay is recorded, and most of it is public, the site constitutes a gold mine of data on American tastes and preoccupations. Had we been watching on September 11, we would have seen, "within minutes" of the World Trade Center collapse, people putting up chunks of debris for sale, according to eBay spokesman Henry Gomez. (The company removed the listings as soon as it found them, although it took no comparable action last year when eBay sellers ran from their TV sets to their computers to be the first to list their Dale Earnhardt coffee mugs.) Last winter saw a booming business in Enron paperweights, key chains, polo shirts and tote bags, which has since tailed off, although by the end of May someone still harbored enough outrage to pay $14 for an Enron "Ask Why" mouse pad. Beanie Babies and Furbies continued their descent into collectible purgatory, from which they can be redeemed only by nostalgia, while buyers bid up bobblehead dolls, which "exploded out of nowhere" last year. This is what the Internet was invented for, the seamless meshing of demand with supply across infinite distance. Somewhere in those terabytes of data we hoped to answer what could someday be a trillion-dollar question: what makes America click?

One pair of used ballet shoes, 6XXX, for $11.50. Secondhand clothing has a somewhat disreputable history on eBay. Until the company banned the practice, there was a thriving trade in women's used underwear, which would sell for as much as $30 a pair. Used ballet shoes could also carry the kind of value-added that eBay frowns upon, but this pair had an impeccable provenance. Jeanene Russell, 28, who recently gave up dancing to become a choreographer with the North Carolina Dance Theater, has been emptying her attic of the new and used shoes she bought, cheap, as a student with the Bolshoi Ballet in Moscow. Listing them at first for a dollar, she was delighted when one pair was bid as high as $32. The pair she sold on May 29 were bought by a young woman in Bellevue, Wash., who no longer dances, but wanted them for a Halloween costume party.

Kitchen sink, new, $50.Stan Searing, 43, of San Jose, describes himself as a "consummate collector," although his tastes run to used amplifiers, power supplies and motor controls, which pile up in his garage until his wife threatens to throw them into the pool. Then, he says, "I go out there and start picking things out" to post on eBay. The flaw in this system is that even in the act of disposal he is irresistibly attracted to eBay's fabulous bounty of electronic gear, so he imposes on himself the dubious discipline of buying only stuff that's smaller than what he's trying to get rid of.

The sink was being thrown away by a friend, and Searing decided he could sell it on eBay instead. He was right; in fact, he sold it twice, the first time for $140 to someone who promptly sent it back because of black specks in the finish. Searing checked with the manufacturer, who informed him that it was normal to have black specks in the finish, but he gave the buyer his money back anyway; otherwise he risked every eBay user's nightmare, negative feedback. Searing put the sink up for sale again, this time with a warning about the spots, and resold it for $50. This was a lot of trouble for $50, he admits, but once he got started on the project, he wanted to finish, and besides otherwise the sink could have wound up in a landfill, and also, there's a lot of stuff on eBay you can buy with that $50.