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E-bay as a barometer of the economy.
"Hot off the presses" referred to a phenomenon much like the paper output from a laser printer being warm, bundles of freshly printed newpapers remained warm for an hour or two, and with many major papers having two or three editions per day "hot off the press" meant up to date news.
To a large extent the phenomenon of the web server creating a "hot off the press" edition every time you click a link has killed this old multi-edition dead tree newspaper business model.
This phenomenon has not been confined to the newspaper industry alone, retail sales have suffered from the same phenomenon, and one of the more notable "culprits" in this case is E-bay.
E-bay started out in 1995 as an on-line auction site for individuals, and it was a good idea, but as it grew and attracted more wealth, so it also attracted more "city" type management, and the basic premise of a simple online auction site for individuals has become increasingly sidelined in the war of attrition to get as much of your mindshare as well as as much of your money as possible, passim PayPal etc.
Now, with an estimated >175,000 people in the UK alone who make a living via E-bay, they are changing again, because "Buy it now" has increased from 25% of sales by volume a few years ago to 43% today, and of course "buy it now" quite often represents high ticket price items, so the proportion of sales by value is even greater.
So now E-bay is moving to a straight electronic shopping mall model, ideally, from E-bay's perspective, with all those 175,000 UK E-bayers who make a living out of it shifting to the new, non aution, fixed price shop format.
From the E-bay perspective and the city management types this makes good sense, it sounds a bit like a co-operative Amazon public market, with all the benefits but none of the drawbacks like having to deal with actual stock, or shipping, or customers.
B-bay always claimed it wasn't an auction house per se, and Paypal always claimed it wasn't a bank per se, and now it will no doubt claim it isn't a State, per se, and yet it looks like a duck and walks like a duck and sounds like a duck.
For those 175,000 potential UK E-bay stall-holders / shopkeepers, the unique selling point of E-bay is obvious, the up front costs are basically zero, got a computer, net connection and bank account? Then you're in business.
Try to do the same thing in real life and you need a lot of money up front, you need your market stall lease money, you need your public liability insurance, you need an accountant to keep the tax man happy, and the chances are that you need to employ some qualified and certified electrical engineers if you are even hoping to be selling anything that plugs into the mains supply...
The flip side is a market stall is a fixed fee, unrelated to turnover, whereas E-bay will nickel and dime you to death on each and every single individual sale.
Let's face it, E-bay is a business, and the changes it plans for those 175,000 UK "stallholders" are not going to be aimed at cutting their fees and E-bay's income, on the contrary, it will encourage the "stack em high" methods of sales, which in most cases will involve selling "tat" that has been bought in job lots.
However, the original premise was that E-bay was a barometer of the economy in general, so lets get back to that.
In one sense a vibrant E-bay can be seen as a by-product of a vibrant economy, but upon closer inspection this is not the truth, not even close.
Before the internet we saw the rise and temporary dominance of the "Free ads" dead tree papers. At the time you could pay for a classified ad in the local rag, or pay a lot more for a classified ad in a national rag.
This just doesn't work out financially as being a viable business model, even if all you are trying to do is shift your old collection of bike magazines for a decent price, because the catchment area in terms of numbers of eyeballs per penny of classified ad listing fee killed it.
The Free Ads papers were regional, and placing an advert was absolutely free, and people purchased the paper for a nominal fee, in a sense this was a more modern version of that old UK warhorse the Exchange & Mart (which is still going) and out of the Free Ads papers grew the more specialised ones, like Auto Trader, that specialised in cars, but Auto Trader "double dipped"< in that they charged a listing fee as well as a purchase price for the magazine itself.
These things all worked, and they were all successful, but they lacked two crucial things.
The first thing they lacked was the "hot off the press" immediacy, missed listing your car in this week's edition, then wait a week, which meant it likely took at least two weeks to sell your property.
The second thing they lacked was interactivity, that whole crap about bidding against other people, when the ONLY sensible tactic is to decide what an item is worth to you, bid that amount and then walk away until the listing is finished, you either "won" (har har, roll up, roll up, everyone is a winner, babe) the item or you didn't, however, this interactivity and bidding mania worked as a business plan.
Then came the final part of the "Hot off the press" scenario, instant gratification with Buy It Now.
When you look at E-bay with this true perspective, it becomes quite different, a vibrant E-bay is not a sign of a vibrant economy in general, a vibrant E-bay is in fact just a niche made possible by the internet.
Selling (as I did recently) an old 3/4 horsepower electric motor for a Myford lathe is made possible by the cost of publishing and reading the internet, whereas it would be a waste of time and money to do it in dead tree media.
Sure, E-bay makes a useful place for buyers and sellers to come together (Craigs list is the obvious analogy) buy that just boosts the number of eyeballs, it is NOT a fundamental enabling technology.
So in fact the success E-bay is down to exactly the same TECHNOLOGICAL changes that make e-mail better than Air Mail, it is several orders of magnitude cheaper per word sent and several orders of magnitude faster.
If we try to look for examples in the real world in other areas of industry it isn't quite so easy, for example cheap goods in walmart is a result of outsourcing and offshoring, these are changes in business methodology, not changes in technology.
Once we understand that the success of E-bay is pretty much entirely due to technological changes that brought both the cost and time delay of individual communication down to something approaching zero, we can see that the success grew out of that, with effectively zero cost it becomes economically viable for me to sell an old electric motor.
From this perspective it becomes clear that the sucess of E-bay is predicated on weaknesses in the economy, whether that weakness was the cost effectiveness of classified ads in regional dead tree media, or the lack of capital and local markets for setting up in business.
Looking into my crystal ball, the inevitable next step in the evolution of the E-bay busines phenomenon is to address the sole remaining area where a considerable slice of the selling price does not pass through E-bay, namely carriage and shipping.
The next step is E-bay, market cap 32 billion US dollars, to buy FedEx, market cap 26 billion (UPS market cap is 64 billion) and at that point they have the whole shooting match sewn up, but they still won't be a bank, auction house, shipper or State, per se, you understand.
So a growing E-bay is a sign of a crapping out economy, simply because the underlying enabling technology that makes E-bay possible also serves to support the economy in general.
The ONLY advantage of trading on E-bay is no up front "bricks & mortar" type costs, which basically means you're doing something (eg selling electrical goods) that would be illegal if you did it in the same way from a market stall.