Friday, May 16, 2008
Craigslist and Amazon and eBay (Oh My!)
At dinner last night, I couldn't help but overhear (because they were speaking quite loudly) a group of people talking about the internet--how it was dangerous and how they could not understand people's, especially young people's, fascination with it. I wanted to say that the future is always dangerous and fascinating, but I instead cowered minded my own business and finished my Hunan Tofu.
I've spent the week talking about internet business models and have come to (what I feel is) the last major one: the marketplace. The big three are eBay, Amazon Marketplace, and
Craigslist.
There are two hallmarks of an internet marketplace: the don't buy or sell themselves so much as they facilitate (and charge commission on) other buyers and sellers, and they really only work if they are ubiquitous.
Amazon Marketplace is the most structured of the three. It takes care of the product listing and photos and shipping charges. You simply give the price and condition of the one you're selling. This works out great for consumers--multiple sellers compete with each other to offer the lowest price, and the price stabilizes because when it reaches the theoretical market-determined-value, buyers are purchasing the product at the same rate as sellers are offering it. More or less.
EBay is less structured, giving sellers more freedom to tailor their listings/images/shipping-charges/etc. It's auction-style format is good for sellers because buyers bid the price up. The price stabilizes because if something is selling well, more sellers will offer it.
Craigslist is the most free-form and also the most bare-bones. It's strictly a classified listing, and they only charge commission on specific types of listings in very specific markets. Furthermore, it's region-specific, so the price of a Metallica CD in Brooklyn will reflect that market and may not be the same as the price of the same thing in Poughkeepsie.
Of course, this also means that while you can find absolutely everything on Craigslist in Los Angeles, you're a bit harder pressed to find as much on the Jefferson City version.
I have been fascinated by the idea of a marketplace since I first learned about them. I enjoy watching market forces at work, or seeing how the "value" of a thing may have very little to do with the price of it at Wal-Mart. Nintendo Wii's, for example, seem to have a market value of around $350, even though the price tag is only $250. Metallica CD's, on the other hand, seem to run around $4-5 despite their $16 price tag in the shop. And in a testament to the laws of supply-and-demand, despite the fact that their formats are vastly different, prices on eBay and Amazon Marketplace end up roughly the same.
Had I a bit more wherewithal at the age of 21, I would have written my undergraduate econ thesis on this topic. Oh well.
Have a good weekend.
I've spent the week talking about internet business models and have come to (what I feel is) the last major one: the marketplace. The big three are eBay, Amazon Marketplace, and
Craigslist.
There are two hallmarks of an internet marketplace: the don't buy or sell themselves so much as they facilitate (and charge commission on) other buyers and sellers, and they really only work if they are ubiquitous.
Amazon Marketplace is the most structured of the three. It takes care of the product listing and photos and shipping charges. You simply give the price and condition of the one you're selling. This works out great for consumers--multiple sellers compete with each other to offer the lowest price, and the price stabilizes because when it reaches the theoretical market-determined-value, buyers are purchasing the product at the same rate as sellers are offering it. More or less.
EBay is less structured, giving sellers more freedom to tailor their listings/images/shipping-charges/etc. It's auction-style format is good for sellers because buyers bid the price up. The price stabilizes because if something is selling well, more sellers will offer it.
Craigslist is the most free-form and also the most bare-bones. It's strictly a classified listing, and they only charge commission on specific types of listings in very specific markets. Furthermore, it's region-specific, so the price of a Metallica CD in Brooklyn will reflect that market and may not be the same as the price of the same thing in Poughkeepsie.
Of course, this also means that while you can find absolutely everything on Craigslist in Los Angeles, you're a bit harder pressed to find as much on the Jefferson City version.
I have been fascinated by the idea of a marketplace since I first learned about them. I enjoy watching market forces at work, or seeing how the "value" of a thing may have very little to do with the price of it at Wal-Mart. Nintendo Wii's, for example, seem to have a market value of around $350, even though the price tag is only $250. Metallica CD's, on the other hand, seem to run around $4-5 despite their $16 price tag in the shop. And in a testament to the laws of supply-and-demand, despite the fact that their formats are vastly different, prices on eBay and Amazon Marketplace end up roughly the same.
Had I a bit more wherewithal at the age of 21, I would have written my undergraduate econ thesis on this topic. Oh well.
Have a good weekend.
Labels: technology
Subscribe to Posts [Atom]