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ebayBack in the days when OffTrack Betting was popular in New York City, the ad tagline said "bet with your head, not over it." It may be uncool to say, but eBay's recent conservative retrenching is a solid strategy. A little boring, maybe, but at least the company is betting with its head.

CEO John Donahoe told a group of analysts Wednesday that the company is going to focus on its original mission, which is ecommerce auction. No more eBay Express. No more plans to compete with Amazon for the overall ecommerce business. Donahoe was roundly trashed in the blogosphere. While it might not spike its short term stock price, it's the right move. With Skype and PayPal in its tent, eBay is positioned to play very well in the most active markets. It has communication infrastructure, payment infrastructure, and auction infrastructure. Right now anyway, no one is a serious threat to that trifecta.

And eBay would not be a serious threat for selling new products online to compete with Amazon. Over the next two years too many companies are going to take desperate measures to sell goods online. Nordstrom's, Macy's, and Neiman Marcus are getting absolutely killed at their brick-and-mortar businesses and they're not alone. The only viable strategy for big box retailers over the next two years is ramping up their online presence and revenue. Ebay would spend a lot of money trying to compete with that, and most of it would be wasted.

Donohoe has been quoted as saying "we're going to focus where we can win." Amazing how that will get a CEO brickblogged these days. Imagine if anyone in the banking industry had that attitude instead of inventing businesses they later lost at. Maybe the economic picture would be a bit clearer.

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Published 13 March, 2009 by John Gaffney

John Gaffney is US Editor at Econsultancy. Follow him on Twitter

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Comments (2)

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David James

In the current economic climate most businesses are fighting for survival rather than pursuing ambistious diverisfication plans. This statement doesn't suprise me.

over 7 years ago

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Claire

It is a good idea for Ebay to focus on that, as competing with Amazon would be silly. I would use amazon and play.com over ebay any day, purely because it is easy. However, it is a good time to concentrate on the bidding side because, with todays economic climate, people are less likely to choose convenience over price. Many people have lost jobs, my partner included, so we have turned to means of saving money and it may just be ebay soon as well.

I must admit though, Ebay have kind of come to a standstill. Last time i looked at it before today was about a year ago. Has it changed? no. Apart from the countdown you get when you are watching something, rather than having to keep refreshing the page for how much time you have left. I would say that people are getting bored of it, it is good yes, but not great. I have got bored of it and i don't hear anyone speak of it anymore.

They have got something great as you say, they are the only good auction site out there. This is a massive benefit, and if they concentrate on what they have, they will get better. They just need to keep updating and improving. They seem to be dropping back in comparison to other sites.

over 7 years ago

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