Interesting Departure for eBay...

Getting An Oil Change, Maybe More, Off eBay

By JENNIFER SARANOW
And MYLENE MANGALINDAN Wall Street Journal

November 18 2005

EBay is aiming to take over the phone book's customary role as the first place people turn to find local services, from housecleaners to accountants.

Although eBay Inc.'s focus for now is on auto services, such as oil changes and brake jobs, its goal may be to connect consumers with local businesses of all kinds. This could signal a major shift in the way consumers shop for such services and greatly affect pricing and competition among local shops.

EBay plans to develop by as early as next year a new area devoted to automotive services on its existing eBay Motors site. It may be a standalone service category in which consumers could search for service discounts and coupons.

The online auctioneer's latest push comes amid a broader online land grab around what is known as local search. Local search services - which are offered by Google Inc., Yahoo Inc., and an increasing number of other Internet companies - help users locate businesses in specific geographic locations. Consumers can use a local search engine to find car-repair shops in a particular neighborhood, then locate the garage on a map, and even read customer reviews of the businesses.

EBay's move comes as its core business faces possible threats from Google. The search giant Wednesday released a new service called Google Base, whose features include letting consumers and businesses submit free classified-type ads that are searchable by keywords online.

Google executives play down the idea that Base is competitive with eBay or online listings site Craigslist Inc., a classified-ads site that focuses on metropolitan areas, in which eBay owns a minority stake. But Base includes categories for jobs, products, services and vehicles, and lets users specify payment options they are willing to accept. Google is allowing consumers and businesses to submit items to Base at no charge, which could accelerate its use as an alternative to traditional fee-based services, such as newspaper classified ads and eBay's auctions. Google also has said it is working on an online payment service, which could compete with eBay's PayPal.

For eBay, the move marks a departure from its traditional business of helping people sell products. EBay is a middleman offering a venue for sellers and buyers to trade on its main auction site. It takes a fee for a product listing, and a commission once the product sale closes. The company is not ruling out auction sales for services, but says it may not be the right type of sales format because services usually aren't sold this way.

EBay is already a big player in the auto business. As of April 2004, eBay Motors has sold more than a million vehicles since it was launched in 2000. The huge automotive service and repair market is a logical extension.

The service and repair market is a $34.4 billion-a-year industry, according to the Automotive Aftermarket Industry Association in Bethesda, Md., which represents companies that provide motor-vehicle service and parts. The industry right now is highly fragmented, with thousands of independent repair shops and service chains, such as Midas Inc., and both franchise and independent dealerships.

To shop for the best deal for such services, consumers now typically rely on local newspaper ads, individual company websites or word of mouth. EBay Motors says it is doing research to figure out what its service section should look like. This summer, it launched a "services and installation" category within its "parts and accessories" category.

With the future offering, consumers would likely be able to see multiple offers at a glance and get a better sense of the best overall prices available. With their deals showcased side by side on one website, providers may also be forced to compete more aggressively with lower prices.

Services have been an expanding category on the Web, generating rapid growth at classified-ad listing sites. Craigslist says new services listings in September roughly doubled, to 462,000, from the same month a year earlier. And NexTag Inc., a comparison-shopping site, attributes its growth rate during the past five years, in part, to the addition of services, such as listings for mortgage and insurance brokers.

EBay also has branched out into other areas, such as classified-ad listings, rental property listings and a comparison-shopping site in the past two years to create new revenue sources.

EBay Motors says it began thinking about moving into auto-services listings earlier this year when it started seeing postings on its site for things such as custom paint jobs and tire alignments. In addition, eBay Motors says some automakers have asked how they can get their maintenance and other repair services listed.

Some in the auto service and repair industry have reservations about eBay's plan to list local services.

Nathan Sanel, a Loudon, N.H., merchant who sells motorcycles on eBay, says he is skeptical about consumer interest in services online. Service appointments are logistically complicated because merchants and consumers have to coordinate timing and schedules, he said.

Traditional yellow-pages companies are trying to defend themselves against online threats by beefing up their online offerings. By year's end, SBC Communications Inc. and BellSouth Corp. plan to integrate their listings at SmartPages.com and RealPages.com into one site, YellowPages.com. At BellSouth's RealPages.com, revenue from coupon posting by advertisers rose 23 percent from 2004 to 2005.