Want an idea of the opportunities for companies selling eBay-related products and services? PayPal co-founders Peter Thiel and Max Levchin launched their online payment service in October 1999. It quickly became the standard way for users to consummate their eBay transactions. In July 2002, eBay purchased PayPal for $1.5 billion. "PayPal is the 500-pound gorilla of the eBay aftermarket phenomenon," says Adam Cohen, author of The Perfect Store: Inside eBay.
Online payment is far from the only opportunity available in the eBay aftermarket. Start-ups have blossomed offering everything from shipping supplies for sellers to sniping software that slips in last-second bids on behalf of bargain-hungry buyers. With 46 million users and 7 million items for sale on eBay at any time, there's room for almost any conceivable product or service supporting electronic auctions.
AuctionWatch.com Inc. sells software that automates the process of placing items for sale on eBay. The San Bruno, California, venture has almost 100,000 users and is profitable, says Rodrigo Sales, co-founder and CEO. AuctionWatch is the largest of several firms that provide similar products and services to eBay merchants, but Sales, 28, says getting to where he's at wasn't easy.
AuctionWatch originally offered shoppers a single site that brought together some of the hundreds of auction services that were then competing with one another. As eBay grew to dominate the space, other online auctions disappeared or became irrelevant. AuctionWatch faced a similar fate until it found a new focus selling software to eBay merchants. Today, it sells general e-commerce software to merchants selling direct from their own Web sites.
Want to succeed in the eBay aftermarket? Companies like AuctionWatch have been successful because they've managed to maintain their flexibility and have benefited from alertness to the changing needs of the still-maturing online auction business. "One of the big lessons of eBay is that it gives you access to millions of buyers," says Cohen. "They'll tell you what they need."