eBay to capitalize on online auction data

Two recent stories (Reuters, Washington Post) report that eBay is considering licensing its online auction data. The articles note that Ebay has been quietly experimenting with about 20 customers who pay $10K annually for access to the data and that it plans to focus on its data business in the coming year.

Example applications (from the articles):
* PGA.com, on Friday launched a used golf equipment value guide based on raw data from eBay's golf club and accessory sales.
* Intuit Inc.'s Its Deductible division, depends on eBay information to help users of its TurboTax tax preparation software to figure the fair market value of their donated items -- from used jeans to hard-to-value gadgets like cell phones.
* Andale Inc. uses eBay data in its Sales Analyzer software that helps eBay sellers price their items most effectively. "Andale Inc., which uses eBay's data in a research service it started selling over the summer for $2.95 a month. Andale Research lets people compare pricing trends on specific items, such as a 10-gigabyte Apple iPod music player or the Viewsonic P810, a 21-inch CRT computer monitor. Typing the Viewsonic model number into Andale's research box tells you that its average selling price has dropped in half since January, to $100, while the number of units offered each month has fallen from 549 to 52. At the same time, the value of 10-gigabyte iPods has held relatively stable on eBay, averaging $237. Tens of thousands of people are paying Andale to use the new research service, said chief executive Munjal Shah. The data show how many items sold at different price levels, correlated with days of the week, time of day and various merchandising factors."
* tapping eBay's auction prices to help appraisers value insured items when they're lost or stolen

The Post article places this eBay initiative in the broader context of Internet companies (such as Amazon and Google with their web services APIs) licensing their databases to developers and customers as a means of tapping into innovation and reaching more customers. Munjal Shah (CEO of Andale) draws an interesting analogy:

Shah thinks we are witnessing the birth of data analytic services that will piggyback on eBay much the way Bloomberg News and other data providers piggybacked on the New York Stock Exchange. But we're just starting to set the kind of standards needed to allow smart retail data analysis, Shah said.

"It's still like the New York Stock Exchange was back in 1910 or even earlier," he said. "Imagine a stock market with none of the tools we use today to trade -- no tracking tools, no P/E ratios, not even stock symbols. Both from a buyer and a seller standpoint, today we are all trading blind."

Umair points out the issues with using eBay auction prices (correcting for winner's curse, etc.) - assuming for a moment that such effects can be corrected for or somehow normalized for, there is potentially a tremendous amount of value that can be unlocked through exposing eBay's transaction data (ideally through open web services APIs made available to developers at no/low cost as Amazon and Google are doing). This would open up opportunities for data analytics software companies that could mine this information. The eBay transaction data would be valuable not just to buyers and sellers on eBay but, independently, to marketing departments in a range of industries (in terms of pricing, demand forecasting, trend forecasting, etc. etc.). Fertile territory.