Globalization is a big word that offers a big promise. eBay is building marketplaces around the world or acquiring them where they already exist - companies with names like Bazee.com, Alando and MercadoLibre. These businesses operate independently, serving their local markets. Presumably, the endgame is to interconnect them, creating one massive exchange that renders consumer supply and demand completely transparent on a global level.
Cultural and language barriers may need to be bridged, but for the most part, eBay has the technological means to wire up the world today into one giant trading platform. The real challenge is logistics. In this global marketplace of the future, how do goods move from one corner of the world to another at a cost that makes one-off transactions between individuals feasible?
Built into the price of everything we buy is the cost of transportation across every point on the supply chain – all the way down to the retailer where we incur a direct and more easily measurable cost when we either consume fuel as we drive to the store to pick up the products we purchase, or pay separately for them to be shipped to us. The most significant influences of this cost are energy and efficiency.
Efficiencies resulting from technologies and economies of scale have shrunk the world – even in the face of skyrocketing energy costs. The Internet economy exists because the added cost of transporting goods is offset by the savings driven by a competitive and transparent market. But the big question remains whether there will come a day soon when someone in Bombay can purchase a computer from an apartment dweller in New York City in a transaction that makes economic sense to both parties.
The promise of a global exchange seems within reach. Will the increased market size alone create sufficient competitiveness to offset the relative high cost of international shipments? Competitiveness can only drive lower prices to the point where they hit floors created by raw materials and labor costs. Additionally, energy is intimately tied to eBay. With no short term expectations for significant reductions in energy costs, we must look to new and innovative businesses to develop novel and efficient methods to move goods across borders.
Will these services be offered by the dominant logistics players or will new companies emerge to connect the dots and reap the big rewards? How will governments respond to these transactions if at scale they threaten their local economies?
While it may seem like a flip of a switch for eBay to connect the world, there are many pieces to this puzzle that still need to be solved.