eBay: Here Come the Neighborhoods

[qi:012] eBay (EBAY) is finally jumping with both feet into social networking with its eBay Neighborhoods. It’s clearly arriving at the party at a late hour, but what it’s brought to that party has enough panache that it deserves a good look.

eBay will formally lift the veil on its eBay Neighborhoods a little later today, but the site was live Tuesday evening and reports and reviews were already appearing. eBay described it as

“a collection of micro-communities built around common interests and passions …, eBay Neighborhoods draws content from existing community features such as eBay listings, eBay Blogs, eBay Guides, and eBay Reviews, while adding new Neighborhood-specific message boards, member-uploaded photos, and social mapping tools to visualize the interconnections between people and their common interests.”

Which raises a question: If blogs, guides and reviews weren’t enough to entice new buyers in droves to its site, why does eBay think that glomming them together with some new features will make much difference? eBay’s answer seems to be that, unlike many social networks, eBay offers people a reason to connect.

Just as MySpace gained traction where Friendster didn’t by becoming a platform for building communities around up-and-coming bands, eBay Neighborhoods wants to build community around stuff. Stuff to buy, stuff to covet, stuff that can connect you with other people simply because they like the same stuff.

(As of this writing, some neighborhoods had already signed up at least a dozen members: Coffee lovers, Apple iPhone, Star Wars. The San Francisco Giants had several. The New York Yankees none – go figure.)

eBay Neighborhoods is, really, a social network powered by commodity fetishism, a development that might horrify the critical theory scholars but is in fact a natural outgrowth of what eBay has been doing all along. At its peak, eBay was more than an auction site. It was a lifestyle that buyers and sellers threw themselves into every day. Neighborhoods is an attempt to capture some of that old eBay magic.

Of all the early Internet giants, eBay is the one that still feels the most Web 1.0-ish. Deals like StumbleUpon, Shopping.com and Skype had the potential to upgrade the company to new times, but the core of the business – the marketplace and PayPal – hadn’t changed much in the past several years.

In some ways, the Skype revaluation was a sobering sign that eBay meant to clean house and become more relevant. The appearance of eBay Neighborhoods a week after the release of an eBay Desktop widget hints strongly that the company has other new looks and features to roll out in coming weeks.

Investors had been shying away from eBay earlier this year, but the stock’s rise to nearly $40 this morning from $32 in early August suggests they have started viewing it as a bargain with some promise. The stock is up only slightly today, but if new features could boost business into eBay’s busiest quarter it could move higher. The stock is still trading at around 25 times 2008 estimated profit.

Most of these changes (along with a protracted but successful effort to weed out the more undesirable listings) have been aimed at drawing in – and winning back – more buyers. Sellers are hoping that these new changes won’t introduce new glitches right before the holiday season. But they may also just return some mojo to a company that seems to have been short on mojo for too long.