eBay, Amazon, and buggy-whips

We may never see the end of eBay and Amazon growth, but we are definitely seeing the growth rate slowing for both of these monoliths. Ever since the first computers were connected, an epic battle has raged between the centre of the network (centralized services), and the edge of the network (the personal computer).

The IBM mainframe maintained all processing in a central location, allowing users to only communicate via "thin clients" or "green-screen" terminals. The PC changed all that by giving "power to the people". That power turned out to be a double-edged sword when hard drives failed and backups got lost. The Internet pulled power away from the little guy, and gave him a web browser. Using this modern-day "thin client" he fed the ever-growing machine of centralized dotcom services like eBay and Amazon. - Often at the expense of bricks and mortar retail.

Any stock analyst will tell you that eBay and Amazon are experiencing declining growth rates. Why is that? The simple answer is that the edge of the network is now figuring out how to do what centralized monoliths held as they’re own advantage. It used to take deep pockets to integrate e-commerce gateways. You needed to buy servers, bandwidth, security policies, relationships with banks and credit card companies, and then hire legions of programmers. Unless you were a publicly funded company, or a major retail chain, this was not going to happen. As a result of these hurdles, if you wanted to sell something, you did not have much choice except to hock it on eBay or Amazon. It is an interesting paradox of nature that the success of one paradigm is exactly what leads to its demise. This is because the weight of success creates opportunity potential for an opposing paradigm. Equal and opposite reactions. Like water sloshing back and forh in a tub.

How do "eBay millionaires" become millionaires? They start by selling items on eBay. After they get really good at selling these items, they start their own web store on their own web site. They continue to use eBay, but only as a mechanism to bring new customers to their own autonomous site. They make their money by selling items from thier site. They use eBay as a form of advertising to bring in new customers. Hmmm... - Does that sound familiar? Isn't there some other company that also accepts money for web advertisements?

It is Google that is causing the foundation of the monoliths to crumble. Most people use Google to locate what they want to find. That link Google displays can take them to any web site. - Since that's the case, why bother parking your stuff on eBay or Amazon? Why not just bring that customer straight to your very own web store? Google is the interconnecting bus that gives power back to the edge of the network. It also gives power back to the bricks and mortar retailers who can now use the web to their advantage.