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What Can ebay Learn from The Ancient Venetians?

April 18th, 2008 by Skip McGrath

Lessons from the past on business and trading can be found in the history of Venice

Karen and I are taking a long vacation in Italy this month. We have been planning and saving money and airline points for this trip for over two years.

Our first stop was Venice –easily one of the most beautiful and interesting cities in the world.  Venice is a true gem or geography, history, art and visual impact.  While we were here we learned a lot about the history of Venice.  History is all about lessons –Lessons learned and not learned by those who live it. One lesson, struck me as being something eBay could learn from the history of this great city.

Venice was originally found by refugees fleeing the invading hordes from the Lombard North.  In the 6th century refugees fleeing the Lombard invaders of Northern Italy sought safety on the largely uninhabited islands. The communities organized themselves (697) under a doge –an elected leader. Venice was perfectly located for handling seaborne trade between East and West, the communities grew, and by the 9th cent. they had formed the city of Venice.

Beside its perfect location, the early Venetians has a novel idea to attract trade.  In the 7th and 8th centuries, Roman and Byzantine ports levied high duties or tariffs on imports through their ports as well as other fees. The second Doge of Venice had the novel idea, that if you lowered tariffs and fees it would attract business. For over 700 years Venice offered traders the lowest cost of any trading port in the Mediterranean. Venice grew in trade, power and wealth.  From about 900 to the early days of the Renaissance, Venice was the leading economic power in the western world. And it all started by lowering fees.

It is difficult to pinpoint the exact year Venice started into decline, but the eventual decline of Venice was also due to fees and taxes. 

Around 1400 the Muslim Caliphate (Ottomans) controlled the spice trade between China, India and the Mediterranean. They began charging high fees on all the spices and goods that moved through their territory.  At the same time in Venice, the publicly elected Doges started giving way to an Aristocracy.  To fund their lavish palaces the aristocracy began raising the tariffs and fees for use of the port and the warehouses.  They also began issuing laws and regulations without input from the merchant class that had ruled the city in a democratic fashion for 700 years. Venice started into a decline that did not reverse itself until it became a tourist destination in the 20th Century.

There are many similarities to the story of Venice and the founding and growth of eBay. Early eBay sellers were essentially economic refugees;  Ordinary people looking for a way to make a buck trading with others. eBay was essentially an electronic Venice –a port that attracted trade with low fees and very little regulation.

Little-by-little however, eBay moved into its own Renaissance period.  Fees were raised little by little each year. Every year saw new regulations.  Many of the early regulations and policies were sorely needed to tame some of the wild behaviour on eBay by everyone from rogue sellers to outright fraudsters –but the regulations and policies and the new fees just kept coming.  At first they were manageable and sellers felt they had some input into the system.  But just like Venice –no one can pinpoint the exact date –at some point an aristocracy took over. Unlike the early Venetian Royals –this modern aristocracy owed its loyalty to the Kingdom of Wall Street and soon forgot the merchant class that founded and nurtured the city.

it is still early and we are not yet at the point of no return. With the number of listings declining and more and more sellers becoming multi-channel sellers, eBay seems to be listening.  I am not sure if the democratic doge has returned, but I think eBay may have figured out that you not only need the merchant class to succeed –you also need to listen to them. 

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