Posted in: ebay, stumbleupon, web20

eBay and StumbleUpon? I Just Don’t Get It

I generally agree with (or at least find thought-provoking) most of the things I read on GigaOm — it’s one of my favorite blogs. However, in reading the logic in why eBay and StumbleUpon makes sense, I just don’t get it. I am a big StumbleUpon fan – it’s a great service. And I like eBay. I just don’t get how the two fit together. Two quick thoughts:
You can’t build a new search engine based on a discovery tool with 2 million registered users. I don’t see how StumbleUpon’s 2 million users and their surfing habits could be used to build a comprehensive web index. That just strikes me as highly unlikely. There are lots of segments of the Internet that I bet their users probably don’t venture into — how will they get visibility into it? I agree that eBay probably wants to have more control over its own destiny and sees itself as very reliant on Yahoo and Google for traffic and acquisition, but trying to bootstrap a search business from a toolbar strikes me as an odd proposition.

Sponsored advertisements directed toward eBay auctions or sellers might drive some incremental sales, but probably won’t move the needle very much. From what I hear, some advertisers are seeing decent returns from the StumbleUpon advertisements. I can see how the premium inclusion might help a few eBay sellers. According to their latest financial release, eBay had 610 million listings worldwide last quarter. It would take a lot of active toolbar users looking at and clicking on websites for the traffic from the toolbar to impact a meaningful portion of eBay’s listings.

I am quite confident Skype could do a more interesting deal with one of the search heavyweights to embed a search bar in Skype and get a respectable revenue share. That might end up being a better way to leverage and potentially monetize the Skype user base. It doesn’t solve their reliance on search partners for traffic acquisition for their core service, but it does give them an opportunity to generate some new revenue in a way that’s helpful for their user base.

Discovery is an important trend and StumbleUpon is a great service. But I don’t see how a great discovery tool matches eBay’s current business and how they will get leverage out of the deal if it goes through. But for $40-50 million bucks, maybe it’s worth running the experiment if they have some ideas they are keeping close to their vest.

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