NetSuite joins the eBay ecosystem

The tie-up between NetSuite and eBay is a great example of two on-demand ecosystem platforms meshing together. It also highlights hidden dimensions of each company.

On-demand business automation provider NetSuite today adds eBay integration to its ecommerce functionality, giving customers direct visibility into and control over their eBay listings and transactions from within the NetSuite application. The integration takes advantage of eBay's web services API, which provides direct programmatic access to the company's online auction and ecommerce services. More than half of all items listed on eBay are processed automatically via the API rather than manually uploaded using a Web form.

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I recently wrote about the various flavors of on-demand ecosystem that are currently emerging, and the NetSuite-eBay tie-up is a great example of two such ecosystem platforms meshing together. There is no sense in which you could describe NetSuite and eBay as mutually competitive. They address different market segments and offer distinct sets of functionality.
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The on-demand model allows them to symbiotically add each others' function sets simply by hooking up APIs. EBay gains a sophisticated on-demand business automation option to offer its larger merchants, while NetSuite gets to offer its customers integrated management of their forays into the eBay marketplace.

Another aspect of this tie-up is that it highlights hidden dimensions of the two companies. Although eBay is popularly known as a marketplace for trading hobbyist collectibles and secondhand household items, it has a substantial user base among conventional businesses. Many use eBay to offload excess stock or to acquire others' unwanted stock at special prices, and it's also useful for acquiring or offloading second-hand business equipment. Nor should eBay-specific businesses be dismissed as somehow second-class. Less than 1% of registered users account for the vast majority of items for sale on eBay, and many of these 'power sellers' are multi-million dollar businesses.

For its part, NetSuite is often overlooked as an ecommerce provider. More than 1500 of its 7000 customers use the ecommerce add-on to run their online stores, and their aggregate online revenue in 2006 was $290 million (that's an average of close to $200k per store). As Craig Sullivan, VP international products, told me when we met in London last week, that's more than double the figure for 2005, even though visitors and transactions were up by half that amount — which suggests NetSuite merchants either got a lot better at closing and upselling their customers or became more richly skewed towards higher-value merchandise.

Today's release should help reinforce that trend with the introduction of new store features such as multi-site, multi-company, multi-currency and multi-language capabilities, and complete control over the look and feel of the store. I'm sure that specialist on-demand ecommerce competitors such as Demandware and UK-based Venda can pick holes in the offering but it looks to me as though the new features bring it much closer to their capabilities and at a competitive pricing level.

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