TAGeX Brands in the News
USA Coverage of TAGeX’s early involvement in the On-Line Business and Industrial Marketplace on eBay.
The Economy According to eBay
By Kevin Maney, USA TODAY
SAN JOSE, Calif. — In 2003, the nation finally felt worn out. That's the conclusion when looking at the year through the unique lens of eBay, the gigantic, freewheeling online marketplace where one can buy anything from a Beanie Baby to a backhoe. In a year of lives lost at war and jobs lost to a difficult economy, of a crisis of faith in two institutions — mutual funds and the North American electrical grid — that previously seemed unshakeable, judiciousness took hold. t the beginning of 2003, BMWs, Gucci and Prada reigned supreme on eBay (EBAY). All were among the 10 most-searched terms. Last year, the No. 1 search was for Gucci.
Here at the end of 2003, the most-searched items have shifted to Fords, anything pink (forget which designer), and gold (the kind you store in a wall safe as a hedge against geopolitical or economic disaster).
There are many ways to analyze 2003. You can sift through major news events. You can chart best-selling books and top-rated TV shows. You can dissect the stock market. But if you want the gestalt of America — the unified essence of this nation at this time — there might be no better place to turn than the massive databases that run eBay.
There sits a repository of culture and commerce unlike any before it. No executive decides what eBay sells. Instead, millions of individuals post items on the Web site in response to shifting nuances in the marketplace. Because it is so fluid, the site captures the collective mood and unique extremes of the 86 million people who use it.
EBay by the numbers
9: Number of minutes between the sale of SUVs on eBay.
$18: Cost of eBay share at public offering (September 1998). After splits, worth $760.32 as of Friday.
95: Percentage of eBay's sellers that are individuals or small businesses.
$729: Value of goods sold on eBay every second.
10,000: Number of people who visit eBay Motors every month.
19 million: Number of items on the site at any given time, more than 300 times the number of stock-keeping units in a typical Wal-Mart.
86 million: Number of registered eBay users in 2003. That is up 36% from the year before and almost on par with the population of Vietnam.
$6.7 billion: Value of cars, used and new, sold on eBay in 2003.
$20 billion: Dollar value of goods sold on eBay in 2003, $6.5 billion more than the annual revenue of Gap clothing stores.
$40.9 billion: EBay's market value as of close of market Friday. That is $11 billion more than the market value of 100-year-old Ford Motor.
"EBay is the perfect manifestation of everything the Internet makes possible," says Aliza Sherman, a Web pioneer now teaching and writing in Laramie, Wyo. "It is for and by the people. It is organic." So USA TODAY came here to eBay's campus, where the lobby features a Pez dispenser collection and conference rooms have names like Fiestaware and Matchbook, and asked the company's computer wizards to cut the site's data every which way, looking for trends and oddities that help define the year we're leaving behind.
Of course, it's not perfect. As much information as eBay collects, there's still a lot it doesn't yet know about its marketplace. The company is in the process of installing better ways to mine its data. At this point, conclusions are less an exact science and more artful extrapolation. Using eBay's data to find larger trends is a little like watching a movie trailer and trying to figure out the whole movie's story. Then again, people do that all the time.
In that spirit, some tidbits about 2003 from the eBay files:
The Aug. 14 blackout in the Northeast shook confidence in the power grid. In the week after the blackout, sales of portable generators jumped 67% vs. the previous week. But it wasn't just a knee-jerk spike. Generator sales on eBay are running at an annualized rate of $12 million, up 191% over 2002. It seems we're sure another outage is coming, and we want to be ready.
Wireless home computer networks have hit the mainstream. Sales on eBay of equipment for so-called Wi-Fi networks, which can let computers connect to the Internet wirelessly, have grown 243% over 2002. It is the hottest technology category.
SARS scared the pants off a lot of people. At the height of the epidemic, in May, eBay's "protective masks" category shot up 118% for the month. Sellers were listing masks singly, by the box and by the pallet.
People are just stinkin' weird. One listing offered to sell Paul McCartney's germs from a used tissue. After baseball fan Steve Bartman interfered with a pop foul ball in the Chicago Cubs' playoff series, someone tried to sell his personal contact information on eBay. (EBay pulled the listing.)
Currently, you can, if you wish, buy a kangaroo scrotum. It costs about $10.
Downshifting in vogue
Skulking through all the eBay data, though, is the mounting weight of persistent economic malaise.
Though government numbers show the economy is rebounding after more than two years of doldrums, the eBay economy suggests something different. In fact, it seems to show a lag effect. People and companies downshifted as 2003 wore on.
For instance, eBay tracks searched words, which in turn are indicative of what buyers are looking for. Word searches for all of 2002 reflect a society still spending freely. Among the top 10 searches for the year were BMW, Louis Vuitton, Prada and Coach.
Similar terms dominated the top 10 into early 2003, until August, when there was a sudden shift. The Iraq war was dragging on. Companies were still cutting jobs and keeping raises flat. The blackout hit. California was in political chaos with its recall vote. And just then the luxury names dropped off eBay's top 10, replaced by more mundane words such as Ford, Chevy and diesel.
In September, "salvage" made it to the top 10.
Meanwhile, the economy drove individual sellers to eBay, hoping to make extra cash in tough times. In July, Bill and Peterene Stanhope of Pembroke, Mass., listed a 14-acre island they owned off the coast of Maine. Bill's importing business was suffering, as was Peterene's business of making bookmarks. They needed to sell the island, which they'd bought years earlier, to make ends meet.
For similar reasons, eBay's industrial products market took off in 2003. As an example, doctors and dentists, squeezed by insurance companies, turned to eBay in 2003 to buy medical equipment. In general, medical professionals are wary of buying used equipment. But the category is up more than 100% over last year.
"I don't see any huge economic recovery," says Neal Sherman, whose company, The Advantage Group, uses eBay to liquidate goods for companies and public entities. It recently listed the entire contents of a supermarket, minus the food, and sold a yacht for the state of Maryland for $275,100. "Take coffee equipment and mixers — a good operator in flusher economic times would buy those new," Sherman says. "When times are tough, they save money and buy it in the aftermarket." From everything Sherman sees, the aftermarket for used business stuff is turbocharged. For that matter, the economy is exactly why Maryland went through Sherman and eBay to sell the governor's yacht. The state needs cash to offset its budget deficit.
War, Cubs, Arnold
If America 2003 hasn't exactly been a nation of peace, eBay shows we were a nation of pieces.
The war in Iraq began March 19. Those of us at home seemed to want a piece of it. Some individuals tried to use eBay to sell fragments of Baghdad's toppled statue of Saddam Hussein. (This was another time when eBay pulled the listings, citing its policy of not allowing profiteering from disasters.) Also after the war started, the site did a brisk business in military model toys, up 50% vs. the year before. Items such as the Iraqi most-wanted trading cards sold well, too.
The war proved a boon to eBay's category for pieces of gold. Sales are up more than 70% over a year ago. People generally buy gold when they believe bad times will drive down the value of the dollar.
In October, when the Cubs seemed on the way to their first World Series championship in more than 80 years, everyone wanted a piece of that, too. EBay's sales of Cubs paraphernalia shot up more than six times over the year before.
During Arnold Schwarzenegger's campaign for California governor, everyone wanted a piece of him. EBay's sales of Schwarzenegger-related items — from a 1969 Iron Manmagazine with him on the cover to Terminator 2 talking dolls — climbed 1,500%.
Finally, there was the Feb. 1 Columbia disaster, when the shuttle disintegrated on re-entry. Fragments were scattered across the Southwest. EBay landed at the center of controversy when some people tried to sell pieces of Columbia on the site. The listings were pulled. More legitimately, sales of space-related model kits jumped 95% in February, compared with February 2002.
Best buy? Maybe eBay
Overall, the success of eBay itself says something about 2003. First, it shows that the Internet revolution didn't end when the 2000 dot-com bubble burst. Sure, a lot of things didn't work and went under — Pets.com, online grocer Webvan. But businesses that made it are transforming markets. Just look at what eBay and the Internet have done in 2003 to the $300 billion used car business. About $7 billion worth of cars, most of them used, will sell through eBay this year. About 30% of used cars will be sold on the Net. A market that used to be local has become national in a year or two.
The eBay concept is even transforming politics, as seen in the campaign of Democrat Howard Dean. "You can draw a clear connecting line from eBay to Google to the Dean campaign," says Steven Johnson, author of Emergence: The Connected Lives of Ants, Brains, Cities, and Software. "All are bottom-up systems organized by lots of individuals acting in small ways, as opposed to top-down systems where a small elite calls the shots."
As a company and phenomenon, eBay continued to grow in 2003. In 1998, its gross merchandise sales — the total value of all transactions — were $700,000. In 2000, at the height of dot-com mania, they hit $5.4 billion. This year? The number should pass $20 billion. The stock market values the company at about $41 billion — about $11 billion more than the market value of Ford Motor. That says a lot about what society thinks of eBay and its future.
Speaking of the stock market, eBay is in sync with developments there, too. After nearly three years of stock market gloom, the Dow Jones industrial average and Nasdaq turned upward in 2003 — but eBay did even better.
With such news comes the possibility that our humbling will not last. At the close of 2003, mad cow disease in the USA is a worry. But Saddam Hussein is captured, stocks are up, companies are reporting better profits, and managers seem poised to hire once again. IBM this fall said it will create 10,000 jobs in 2004. Perhaps we'll soon be in a different mood, and eBay will be there to capture it as the likes of Gucci, Prada and BMW once again rise to the top of our desires.