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eBay enters B2B fray
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March 15, 2000: 3:17 p.m. ET
New exchange for office supplies and products aimed at small businesses
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NEW YORK (CNNfn) - eBay launched a new exchange Wednesday featuring such items as office equipment, computers, software and other tools aimed at small businesses.
Although the move is the online auctioneer's first in the growing business-to-business e-commerce industry, eBay is not yet ready to call itself a competitor in that market, executives said.
The new service, called eBay Business Exchange, was developed in response to growing demand for small-business items on eBay (EBAY: Research, Estimates), the leading person-to-person online trading community, according to Matt Bannick, vice president of products and community.
"It's just a natural evolution of our trading platform," Bannick said in an interview Wednesday. "There have always been business-to-business items, and there continues to be a very strong and growing demand for a trading platform for those items."
Currently, roughly 60,000 of the 4 million items available on eBay are listed in the Business Exchange. By separating those items and highlighting them in a separate exchange, the company expects the growth of those items to accelerate, according to Bannick.
"Given its growth rate and the broader exposure we plan to give to it, we expect over the coming weeks and months that there will be an ever higher percentage of merchandise sold over the Business Exchange," he said.
eBay will use its name recognition to build up its business-to-business presence. However, the company does not immediately plan to use the new exchange to try to compete head-to-head with the larger online B2B exchanges such as CommerceOne (CMRC: Research, Estimates) and VerticalNet (VERT: Research, Estimates), Bannick said.
eBay was developed as a site where individuals could come together to buy and sell goods. And the new exchange is being targeted at business with fewer than 100 employees.
"The strongest interest will be more of the small-business to small-business items, because it's more of a logical extension of the person-to-person trading platform that we've built," Bannick said. "Over time, I think you'll find larger and larger businesses having a strong interest in trading on the eBay platform, and we will evolve with that demand."
However, some analysts were a bit dubious as to eBay's prospects as a competitor in the B2B marketplace moving ahead.
"I wouldn't expect them to do that any time soon," said David Trossman, an analyst at First Union Securities in Baltimore. "I think it would be a big leap to go from what eBay is to the likes of a CommerceOne. That's a whole different game."
Instead, Trossman said he sees the new exchange as just another example of eBay adapting to its growing business.
"For eBay to maintain its lead in the online auction market, it needs to continue to innovate and provide more services and conveniences for both its buyers and sellers," Trossman said. "One of those conveniences is just slicing and dicing the community in as many ways as possible, and I expect them to do a lot more slicing and dicing as they continue to get bigger."
eBay executives said that by targeting the fragmented small-business marketplace with the new exchange, it will be able to entice more of them to trade through eBay, opening up future growth opportunities for the company.
In afternoon Nasdaq trade Wednesday, eBay shares were down 13-63/4, or 6.6 percent, at 197-1/4. 
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