There's a sort of morbid fascination about watching a successful business get it wrong, as eBay are doing now. I've been an eBay watcher from the start, I've even written a book about it, but for the last couple of years it has been apparent that they've lost their way and their latest deal may finish them off. And what's really bizarre is this is all happening just as the economic downturn would have, should have, driven more business their way as millions of hard-pressed households turn to this on-line car boot sale to make ends meet. How is this happening?

eBay was one of the great Internet success stories, it highlighted the anarchic, populist side of being on-line. Ordinary people could sell everyday things at very little cost, and there were millions of people willing to buy them. Unwanted presents could earn a few pounds from someone looking for a bargain; unappreciated ornaments or nicknacks could find a collector willing to pay handsomely. Cottage businesses sprang up across the UK and America as people turned full-time to finding and selling products. Charity shops were stripped of their best wares to feed demand and, it has to be acknowledged, stolen goods had a ready market too. But eBay was up to the challenge. Feedback and ratings ensured buyers could bid for goods with a reasonable degree of confidence in what they were buying and who they were buying them from.

The problem, as is often the case in a retail disaster story, is they took their eye off the target. In retail, the customer is king and eBay forgot that. They started to focus more on the sellers, not the buyers. By introducing virtual shops and advantageous listing terms for the higher volume sellers, they made it cheap and easy to re-list unsold items. The ethos slowly turned away from being an auction site to being a straight-forward shopping mall.

The culprit was probably the "buy it now" button. It must have seemed like a good idea at the time; if a buyer was willing to pay the price the seller was looking for, why drag the auction out, why not simply let the two conclude a deal there and then? What was wrong with that idea was that retailers, those with large quantities of goods to shift and who were not interested in the auction concept, could list their goods with a "buy it now" button with a set price. When coupled with the sophisticated listings options they had access to, a search for any particular item a buyer might be interested in produces pages of listings packed with their goods.

This is worth closer examination. Someone trying to auction an item has to pay a fee, and there has to come a point when if it hasn't sold they accept it isn't going to sell and they don't waste any more time and money listing it. The market will filter out goods there is too little interest in and over time the market will generally feature good quality, saleable goods. This makes it buyer-friendly, it is a good market. The retailers, however, are immune to this process. It costs them no effort and very little money to constantly re-list anything and everything they have to sell, the whole concept of an auction is lost. What we end up with is a poor version of a price comparison site, like Kelkoo, only less user-friendly than Kelkoo. eBay are aware of that, and so even with their search facility as sophisticated as it is, you cannot exclude listings that feature a "buy it now" button. You cannot list the genuine auctions on their own.

So what has eBay done now that is going to finish them off? They've done a deal with Buy.com to feature millions of fixed-price listings on eBay. eBay says it will fill gaps in its "product offerings." Yada yada yada. The marketing spokeswoman goes on to say: “Instead of focusing on being an auction business, we are looking at what it takes to create the best marketplace out there.” An auction web site that actually says, "Instead of focusing on being an auction business"? Well, what can I tell you? It's another marketing disaster unfolding before your very eyes.