Powerful lessons from eBay

This week’s Economist magazine features eBay on its cover and has a special report about the company, analzying its history, its business model and its future as it marks its tenth year in business. It’s a terrific report and well worth reading if you want to gain some knowledge about one of the most successful companies on the internet and why it’s successful.

What might be an even better analysis of eBay’s successful model is the Economist’s one-page editorial leader. This summarizes the depth report and focuses attention on some crystal clear common-sense points:

[…] The remarkable tale of eBay’s growth points to some important lessons for any business trying to operate online-and today that includes, one way or another, most firms. The commercial opportunities presented by an expanding global web seem almost limitless. But the pace of change is rapid, and so is the ferocity of competition. To succeed, firms need agility, an open mind and the ability to reinvent themselves repeatedly. Most of all, they need to listen carefully to their customers, paying close attention to what they do and don’t want.

It’s this last point – listening to customers – that should be the business mantra for every company today. Many will say that they do that, of course, but you’d never guess that in far too many cases.

The Economist’s leader makes powerful points that illustrate the secrets of eBay’s success and which apply to any organization:

[…] The internet is not only growing, but changing rapidly-which, in turn, changes the rules of the game for any business relying on it. The barriers to entry are still low compared with those for most offline businesses, which means that just keeping track of your existing rivals is not enough. These may not represent the greatest competitive threat tomorrow or the next day. That could come from a number of directions-a firm in a different type of online business; one that does not yet exist; or even from one of your own customers. On top of all this, the behaviour of many consumers is constantly changing as well, as individuals discover new ways to shop and interact with each other via the web.

We’re already seeing some of the new – and increasingly influential – ways of interaction: blogs. No business can afford to ignore blogs.

The leader’s concluding point is the takeaway:

[…] For managers of any business, the lessons of eBay are both exhilarating and daunting: the prizes offered by the internet are dazzling by any measure, but only those who can satisfy the demanding and changing tastes of consumers, the internet’s true sovereigns, will survive to enjoy them.

This edition of the Economist also includes its latest Technology Quarterly with 24 pages of reporting about the new world of digital radio, flexible screens, advergames, lasers, biomimetics, and more.

There’s a great article on search technology (entitled Google, meet TiVo) which discusses making video as easy to search as text, which is more easily said than done. And another on gaming and advertising (And now, a game from our sponsor) which looks at how advertisers are devising new ways to reach youth audiences who spend less time watching TV and more time online and playing games.

Incidentally, some of the links I’ve included in this post may land you on pages asking you to subscribe or register. I’m not a paying subscriber to the Economist but I did sign up quite a while ago for free access to the website for limited content. Yesterday, on my trip back to Amsterdam, I bought the magazine at a newsstand at Heathrow airport. Well worth the three quid.