eBay auction data and the economy

Via Infectious Greed comes this very interesting USA Today piece. I had written earlier about eBay's stated move towards licensing its auction data and what that might mean. Well, this article takes a look at the year 2003 through the lens of eBay auction data. Some excerpts:

There are many ways to analyze 2003. You can sift through major news events. You can chart best-selling books and top-rated TV shows. You can dissect the stock market. But if you want the gestalt of America — the unified essence of this nation at this time — there might be no better place to turn than the massive databases that run eBay.

There sits a repository of culture and commerce unlike any before it. No executive decides what eBay sells. Instead, millions of individuals post items on the Web site in response to shifting nuances in the marketplace. Because it is so fluid, the site captures the collective mood and unique extremes of the 86 million people who use it.

Though government numbers show the economy is rebounding after more than two years of doldrums, the eBay economy suggests something different. In fact, it seems to show a lag effect. People and companies downshifted as 2003 wore on.

For instance, eBay tracks searched words, which in turn are indicative of what buyers are looking for. Word searches for all of 2002 reflect a society still spending freely. Among the top 10 searches for the year were BMW, Louis Vuitton, Prada and Coach. Similar terms dominated the top 10 into early 2003, until August, when there was a sudden shift. The Iraq war was dragging on. Companies were still cutting jobs and keeping raises flat. The blackout hit. California was in political chaos with its recall vote. And just then the luxury names dropped off eBay's top 10, replaced by more mundane words such as Ford, Chevy and diesel.

In September, "salvage" made it to the top 10.

"I don't see any huge economic recovery," says Neal Sherman, whose company, The Advantage Group, uses eBay to liquidate goods for companies and public entities. It recently listed the entire contents of a supermarket, minus the food, and sold a yacht for the state of Maryland for $275,100.

"Take coffee equipment and mixers — a good operator in flusher economic times would buy those new," Sherman says. "When times are tough, they save money and buy it in the aftermarket." From everything Sherman sees, the aftermarket for used business stuff is turbocharged.

Some other tidbits about 2003 from the eBay files:

* The Aug. 14 blackout in the Northeast shook confidence in the power grid. In the week after the blackout, sales of portable generators jumped 67% vs. the previous week. But it wasn't just a knee-jerk spike. Generator sales on eBay are running at an annualized rate of $12 million, up 191% over 2002. It seems we're sure another outage is coming, and we want to be ready.

* The war proved a boon to eBay's category for pieces of gold. Sales are up more than 70% over a year ago. People generally buy gold when they believe bad times will drive down the value of the dollar.

* In October, when the Cubs seemed on the way to their first World Series championship in more than 80 years, everyone wanted a piece of that, too. EBay's sales of Cubs paraphernalia shot up more than six times over the year before.

* During Arnold Schwarzenegger's campaign for California governor, everyone wanted a piece of him. EBay's sales of Schwarzenegger-related items — from a 1969 Iron Man magazine with him on the cover to Terminator 2 talking dolls — climbed 1,500%.

* eBay's industrial products market took off in 2003. As an example, doctors and dentists, squeezed by insurance companies, turned to eBay in 2003 to buy medical equipment. In general, medical professionals are wary of buying used equipment. But the category is up more than 100% over last year.

This is a treasure trove of information: about the medical equipment market, about the market for used cars, the likelihood of success of gubernatorial candidates and sports teams, estimates of the likelihood of power failures, and consumer confidence and spending. There should be a rich aftermarket for eBay auction data analytics.