EBay Shows It’s Sold on Software Makers
Rare coins lured Gene Chandler to EBay. Now the movie theater owner and self-employed programmer hopes the software he’s hawking to rookie EBay sellers brings him money of the common variety.
Six years after making his first EBay purchase, Chandler journeyed here last week from Howell, Mich., to talk shop with 500 other techies at the first full-blown EBay Developers Conference. Then he stayed in town for the EBay Live convention, to try to persuade the thousands of sellers who attended to create their auction listings with his software program SpoonFeeder.
“EBay is a great, very cool platform, but the tools are very basic,” said Chandler, who charges $20 to $200 for SpoonFeeder, depending on the bells and whistles. “This is an opportunity.”
Programmers like Chandler are emerging as the next wave of EBay entrepreneurs.
First came the hobbyists who quit their day jobs to auction trinkets like Lava lamps and Pokemon cards full-time. They were followed by the pawn-shop and surplus-store owners who had so much success on EBay that they abandoned their bricks-and-mortar operations altogether. Then came the consultants and drop-off stores that help people unload their goods by taking care of the technical nitty-gritty.
Now, with encouragement from EBay Inc., the number of entrepreneurs selling software to buyers and sellers on the world’s biggest online marketplace is exploding.
Last year 400 people enrolled in the EBay Developers Program; today there are more than 7,500. EBay has given its stamp of approval to 550 programs designed specifically for the auction site, up from less than 200 a year ago.
“If it’s easier to buy and sell,” said EBay Chief Executive Meg Whitman, more “sales will be transacted on the site, and we get a percentage. The more business is done on the platform, the better off we are as a company.”
EBay’s enormous e-commerce platform is a logical place for software writers to direct their efforts. More than 105 million people have EBay accounts, and bidders spent $23.8 billion on the site last year. At any given moment, 25 million items are listed for sale.
All that activity helped the San Jose company post a $441.8-million profit on revenue of $2.17 billion last year. EBay is counting on programs like SpoonFeeder to help it continue to grow in the United States and internationally.
The 1,400 technologists on the company’s payroll are busy tackling the big issues, like rolling out new product categories, fighting fraud and keeping the massive website running smoothly. So EBay counts on others to address many of the smaller issues that make buying and selling more efficient.
MyStoreCredit of Chapel Hill, N.C., for example, peddles a program that helps EBay merchants turn customers into repeat buyers. For $7.95 a year, the software monitors a merchant’s auctions and sends e-mail to winning bidders offering store credits on future purchases.
Brea-based Highline Auctions’ software is being used by about 400 auto dealerships that sell on EBay. Dealers that once had to spend 30 minutes locating a vehicle in their inventory and posting it online can now do the job in only a few minutes, said Randy Ching, vice president of platform solutions for EBay.
“Because it’s easier to list on EBay, more dealers do it,” Ching said.
For EBay, that means more commissions, which in turn help the firm satisfy Wall Street’s demand to keep growing.
Some programmers spotted the opportunity years ago. Antiques dealer David Eccles wrote the first “sniping” software back in 1997. A frequent EBay shopper, he created the program, Cricket Jr., to swoop in during an auction’s final seconds and place a trumping bid. Some users decried the practice, but within a few months Eccles was selling so many copies for $10 each that he took up software sales full time.
EBay never discouraged the efforts of programmers like Eccles but didn’t make it easy for them either. The company didn’t share access to its application programming interfaces, or APIs, the codes that software developers need to enable their programs to talk directly with EBay’s central database.
So programmers had to pluck data off EBay’s website. And every time EBay changed its site, those programs would stop working.
EBay heard the complaints from programmers and realized it needed them. The company created its developers program in November 2000 with the goal of giving access to the APIs. It has been promoting the initiative heavily for more than a year, playing up the business potential in pitches to software developers.
Just last week, EBay set up a searchable directory of certified programs from independent developers. Previously, those developers had to rely on advertisements, Internet search results and old-fashioned word of mouth to pitch their programs to potential customers.
Venture capitalists have taken notice of the growing ranks of software entrepreneurs trying to make the EBay marketplace run better, and they are intrigued.
Greg Martin, a principal in the Los Angeles office of Redpoint Ventures, roamed the developers conference last week looking for start-ups in which to invest. He said he thought the EBay platform would produce some big success stories.
But tying your business plan to EBay’s coattails leaves start-ups dependent on the whims and fortunes of the giant online auctioneer, Martin told a group of developers seeking tips on getting funding.
“It’s always a question of how big you can be if you’re a parasite on the side of a big whale,” he said.
Developers like Brian Lawe of MyStoreCredit do worry that EBay may support their early efforts, then write its own software to put them out of business if their products prove successful.
“The fear is EBay could come in and take over your space,” he said.
Whitman said EBay tried hard to avoid that.
“We need to be careful, because if you are too aggressive in this regard, you cut off your innovation lifeblood,” she said. “There is a tremendous number of innovations, new product features and functionalities that can make this marketplace more valuable to buyers and sellers, and we will not think of all of those.”
EBay has been quick to promote companies that succeed where it has failed.
A few years ago, the company wrote software to make its auction site accessible via mobile phones, but the software never took off. Then Bonfire Media of Los Altos, Calif., came up with a program that lets users of Java-enabled phones browse EBay, track auctions and make bids while on the go.
Now EBay promotes Bonfire’s software on its website. It even gave the company a “Star Developer” award at the conference.
“The whale’s health is absolutely fine,” said Bonfire co-founder Alex Poon. He’s happy to be along for the ride.