Geoffrey Fowler had a very interesting piece (subscription required) in the the Wall Street Journal yesterday detailing eBay’s shift in focus at the hands of CEO John Donahoe. According to the article, while auctions accounted for over half of eBay’s $8.5 billion in revenue last year, looking forward, the company will focus on building secondary markets.
I read Fowler’s article via Kindle last night during my Chicago to San Francisco flight. The discussion about changing focus to providing fixed priced goods left me pondering the fate of online auctions versus other secondary markets (namely classifieds) in an economic downturn.
Turning to Hitwise data, I charted volume of searches for “auction” v. “classifieds” over the last three years.

Summer 2008 marked the first sustain lead in “classifieds” v. “auctions” searches. During the last months of 2008, however, “auctions” regained the lead, signaling the utility of auctions for holiday gift buying. 2009 however, has been the year of the “classifieds” as the economic downturn has fueled our desire to save money by buying second-hand goods.
Given the uncertainty of how long this downturn will last, Donahoe’s direction towards building out additional secondary markets within eBay, looks to be a defensible strategy. Your thoughts?