Skyping a good deal on eBay

Summary:eBay buying Skype doesn't make a lot of sense if you think of Skype as "just a VoIP company." Thinking of Skype as a CRM solution in embryo, however, yields some interesting ideas.

This morning Steve Fulling, CIO of Sento (where I'm on the board), asked me via IM: "why would eBay pay $2.6B for Skype when Oracle "only" paid $5.8B for Siebel?"  Since he and I have had lots of conversations about customer interaction hubs and CRM, the context of the conversation naturally flowed in that direction.  I realized that in some ways, what Oracle and eBay are doing is similar, although they're operating at opposite ends of the longtail: they're both selling tools for people who sell things to interact with the people who want to buy.  Oracle is trying to sell expensive, feature-rich CRM software packages to big companies so that they can manage their customers. eBay enables small merchants to interact with with small numbers of customers for a small monthly fee.

But, why would eBay buy Skype?  Unlike Yahoo! or Google, eBay has always had a fairly narrow strategy.  Their Web site isn't anything fancy and looks about the same as it did in 1998.  So, why buy a VoIP company?  I can think of several reasons which are squarely within eBay's area of interest: exploiting longtail opportunities in eCommerce.  

First the obvious: your next version of Skype could have a way for you to search for great deals at eBay and buy them using the money in your SkypeOut account.  More likely, SkypeOut will just morph into PayPal.  Skype gives eBay a client on the desktop.

More interestingly, Skype, with it's huge installed base and proprietary protocol would make a marvelous P2P auction platform.  One of eBay's biggest expenses is their technology platform.  What if, instead, they could use your computer and bandwidth when you list a product for sale? That would save eBay a lot of money.

Why would you be willing to do this?  For the opportunity of having potential customers skype you to ask questions. If eBay is clever they could even get you to pay for the privilege.  A plugin that provides a CRM solution for small merchants and professional eBayers could be sold as a "premium service."   The system could even skype you when a customer has visited the auction more than a few times and hasn't bid, allowing you to sell proactively.

eBay has always been a walled-garden because eBay is afraid, and rightly so, that if they let merchants and customers contact each other directly, the transaction could happen off-network with eBay not getting their cut.  Having control of the client on the desktop gives them better control and consequently enables richer merchant and buyer interaction--that's a big win for eBay.

Topics: E-Commerce

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