I recently read that eBay Bans Google Checkout. I don’t think that was smart.

You’d think that such a large, progressive company would learn from the mistakes of so many other companies who have built silos around themselves. Apple wouldn’t allow the creation of “Apple compatible” hardware, and now it’s computer systems and software have 2.5% market share and they have started offering their competitors’ processors! Music producers didn’t embrace digital music for a long time— they stubbornly focused on CDs, and they missed the revenue they could have had but instead lost to illegal downloading. The Soviet Union cut itself off from the democratic world, and it eventually crumbled due to social and economic pressures.

eBay Isn’t Invincible

eBay just happens to have the largest, most established marketplace. But that won’t stop people from leaving like rats fleeing from a sinking ship. If another firm comes along and makes it easier to carry out an auction and make a transaction, then eBay will start losing ground to them.

The winner in the auction game will be the player who makes it easy and secure.

A huge part of easy is offering different payment methods. The site that wins will accept VISA, Mastercard, Discover, American Express, checks, money orders, PayPal, Google Checkout, bank transfers, and many other methods, in every world currency. Maybe they will even allow bartering—I’ll trade you my Elvis CD for your used bicycle!

PayPal Isn’t What Makes You Special

Remember, eBay, Paypal isn’t what makes you special. People don’t visit eBay.com for PayPal. They visit because there are a lot of people selling stuff and it is reasonably easy to carry out an acceptably secure transaction. As soon as someone does it better, perhaps by offering PayPal AND Google Checkout, you will start to lose this game.

Focus on Your Core Competency

Working with people to fill their core needs is the best strategy for a company to pursue. Be open and willing to work with lots of people and systems. Products and services like Amazon and Google Maps have been enormously successful because they have opened their APIs to allow others to work with them. eBay should allow people to pay however they want to—its focus is the auction itself.