eBay has a wonderful formula. Their auction format assures that they collect a commission on each sale. Once a bid has been placed on an item, they are locked in. The Abe customer can call the seller directly to buy around Abe, avoiding the commission. The eBay seller must let the auction go to its conclusion and sell through eBay to the highest bidder. Any dealer who tries closing off his auctions before they are completed will quickly be dumped by eBay, and as we noted, there is nowhere else to go for auctions. eBay is going to be paid.

The guarantee of payment allows eBay to be very competitive in its commission structure. It can charge less than the bookselling sites, and the auction format has the advantage of moving material quickly. Books can stay on the bookselling sites for years. On eBay, they are gone in a week. Of course the price may be lower than the dealer really wants, but setting minimum bids prevents those prices from being unacceptably low. And sometimes competitive bidding will drive prices higher than the dealer ever expected or would have dared ask. eBay may someday decide to move into more traditional bookselling, or it may stick strictly to auctions and never do more. Even if it never attempts traditional bookselling, its formula will almost certainly earn it a larger and larger share of the bookselling pie. We know what that means. A smaller share will remain for those engaged in “traditional” online selling.

With all of this in mind, I’m not sure that increasing prices is the best way for Abe to go, though I certainly could be wrong. Management at Abe is going to have to be very smart in the years to come to deal with what promises to be a rapidly evolving and competitive marketplace. They have lived up to all challenges in the past, and I hope they continue to do so as their contribution to the book world has been enormous. If I were sitting on their Board of Directors, I would be considering all possible options, including a buy out by one of the large companies that may become a competitor. If I were on the Board of Alibris, even with extra cash in hand from a public offering, I would be looking at the same choices. Usually, size wins out, and Google, Microsoft, Yahoo, eBay, Amazon and Barnes and Noble are all much bigger than any of the bookselling sites. Being a division of a monster sounds a bit more secure to me than being a potential target of one.