I’ve been tough on eBay in the past, but it’s now necessary to give eBay its due. Not because I feel that my earlier criticism was in error, but because I don’t think eBay has gotten nearly enough credit for what amounts to a brilliant strategic move.
To what am I referring? Nothing less than eBay’s foray into microfinance with MicroPlace. This is such a smart maneuver that it’s surprising that it’s been all but ignored in the media. So, let’s take a moment to analyze what makes this so smart. First, microfinancing is one of the “hot” movements of today, on par with social networking. As a feel-good story, microfinancing is second only to environmentalism and the fight against global warming in the promise of worldwide benefits that it can reap. (If you’re not convinced, just do a search on Muhammad Yunus or Grameen Bank.) Think about it, the promise of microfinancing is the elimination of poverty in the developing world. What could be more worthwhile?
Second, like the acquisition of StubHub, eBay waited until someone else proved the market. In this instance, the groundbreakers were companies like Prosper, Kiva, Zopa, Lending Club, and others. Yes, this reinforces the notion that eBay should no longer be thought of as an innovator, but it is the smart strategy for a mature company, which eBay is.
Third (and most important) this move is a logical extension of what eBay is. EBay is a marketplace for connecting people to conduct transactions. The foundation was in the purchase of used goods, for sure. But, eBay can leverage its brand equity to expand into all kinds of transactions, with financial services being just the latest such type of peer-to-peer transactions. eBay can become the “un-social network” for transactions of all kinds.
Fourth and finally, the timing was impeccable. Just a week or so after eBay launched MicroPlace, Fed Chairman Ben Bernanke praised microfinancing for its promise of economic development domestically and globally. EBay seems to have caught the wave right at the perfect time.
Yes, eBay deserves a gold star for this latest move, or at least a little media coverage. This could more than make up for overpaying for Skype.
