NFTs are huge here in crypto, but the old web is not sure.
Digital collectibles on the blockchain have captured the imagination of crypto heads and attracted hundreds of millions of dollars in investments. Players ranging from the Walt Disney Co. to Super Bowl champion quarterback Tom Brady are embracing their revolutionary marketing potential. Newcomers such as OpenSea and Rarible are rapidly expanding.
And then there’s eBay.
The online auction pioneer has been hosting sales of NFTs on its site for several months, but don’t feel bad if that comes as news to you. In stark contrast to the buzz surrounding most NFT ventures, eBay has set about offering digital collectibles with the same vibe it brings to peddling used chainsaws, vintage jewelry, old toys or any of the other staples on its site since the ‘90s: Business as usual.
It’s barely even trying. The company has earned the trust of mainstream America and could rake in some very easy profits if it just tried to be a little crypto-credible in the way it’s running these sales. It’s not, though, and the quality of its efforts show in the quality of NFTs available on the site.
EBay investors should ask themselves whether eBay is going to side-eye blockchains until it’s too late.
For instance, what’s the one thing everyone knows about NFTs? That a few are selling for very high prices. Well, the San Jose, California-based company forbids the sale of NFTs for more than $10,000, which is far below the sales price fetched by many of the digital collectibles. It hasn’t set up that indispensible feature for managing NFT communities and commerce — a Discord server. And it forbids minting, a practice where buyers don’t know quite what they will get that has driven much of the recent excitement.
EBay’s foray into NFTs, which are unique “non-fungible tokens” based on the Ethereum blockchain, started in May. But it has gone largely unnoticed by the crypto community, though you can find a few snarky comments on crypto Twitter.
“The eBay NFT experience is — predictably — a bit strange,” Maria Shen, of the venture firm Electric Capital, tweeted. “Not a ton of signal, no verified artists, and hard to understand the community around these NFTs, if any.”
EBay, of course, came up in an age when the internet was new and early casualties, newspapers and magazines, were reluctant to take the Web seriously and defend their classified advertising businesses from disruption. The ecommerce megasite was a beneficiary of the old media’s myopia, so its approach to NFTs raises the question: Is this Web 1.0 behemoth exhibiting the same myopia as the analog era retailers it disrupted in the 90s?
Not necessarily, says Lana Swartz, an assistant professor of media studies at the University of Virginia. “EBay has nothing to gain immediately from going all in and developing a sophisticated platform,” says Swartz, the author of New Money: How Payment Became Social Media. “Let the startups work out the bugs. In the meantime, eBay can dip their toes, and then down the line, it can poach what they need to build out an NFT marketplace.”
EBay’s media relations office failed to respond to repeated requests for comment from The Defiant, and the company is not obliged to disclose the size and scope of its NFT business.
There’s no reason why eBay, a marketplace with 178M active users and $22B in gross merchandise volume, shouldn’t take advantage of NFTs. Sean Dunlop, an equity analyst with Morningstar who follows eBay, told The Defiant that the fuzzy way NFTs are priced, along with their limited supply, make them a “perfect candidate” for the auction process eBay has honed over the decades.
“On the surface, they seem to fit eBay’s core competencies nicely,” says Dunlop.
When Jordan Sweetnam, eBay’s general manager for North America, announced the company’s NFT offering in May he said, “In the coming months, eBay will add new capabilities that bring blockchain-driven collectibles to our platform.”
Dunlop, for one, would be surprised if the company does a whole lot more in the space. What you see now could be all that NFT buyers are likely to get from eBay.
So what is there?
EBay features categories such as Emerging NFTs, Sport Trading Card NFTs, Non-Sports Card Trading NFTs and Art NFTs. NFTs are included as an exception to the site’s policy for digitally delivered goods, many of which are prohibited.
Local Delivery Only
At this moment, an NFT sale appears to work just like any other on the site: Sellers make a listing, they post a price or let it run as an auction and — if it sells — the buyer pays in a fiat currency like USD and the parties work out delivery between themselves. Most NFT sellers note somewhere in their listing that buyers will need to have an appropriate wallet to receive the item.
The difference is that nothing has to be shipped; it just needs to be sent to a crypto wallet. Strangely, a few of the NFTs The Defiant looked at had odd shipping terms, such as “local delivery only.”
Stephen McKeon, a co-founder of a fund oriented around NFTs, DeFi and DAOs called Collab+Currency, did not express optimism about eBay’s ability to contribute to the NFT space. EBay’s familiar user experience could be helpful for customers but he doubted that would be enough for the company to establish a foothold in this market.
Otherwise, most of the NFTs for sale on eBay run on the WAX blockchain. WAX is a proof-of-stake blockchain that dates back to the initial coin offering era that has been heavily marketed toward the gaming community. WAX has a market capitalization of less than $500M and is not a top-100 blockchain, as ranked by CoinMarketCap.
One offering on WAX is Bitverse’s BitBoy, which looks like a superhero in a classic underwear-on-the-outside crimefighter costume emblazoned with Bitcoin symbols. Our hero is on offer for $4.99. A more expensive item on WAX is Parasola, a demure nude figure in a sort of metaverse dreamworld of soft pastels and geometric flora, which is offered for $1,000.
The most recognizable pieces are collectibles connected to famous comic books, minted by VeVe Digital Collectibles, a company that facilitates licensing well known content as a digital good. For example, this Batman NFT is for sale for $399.99 or this Spider-Man for $799.99.
These are all offered by secondary sellers. A VeVe spokesperson told The Defiant that VeVe’s own marketplace, which supports secondary sales, is the only one the company itself uses or endorses.
Taken together, it’s hard to see how eBay is going to become a significant player in the NFT space, says Collab+Currency’s McKeon.
“A first principle in marketplaces like Opensea and Rarible is that the swap happens simultaneously on-chain. It removes trust from the transaction,” McKeon says. “In Web2 marketplaces, we relied on intermediaries like eBay to inject that trust into the transaction. They, in turn, relied on the legal layer.”
But these days it’s not clear which honestly matters more: a crypto project’s presence on chain or on Discord?
With loads of cash, including $5B to spend on stock buybacks, eBay certainly has the capital to make a major, creative push in NFTs. Yet it’s already ceded a lot of ground to more agile blockchain-based marketplaces such as OpenSea, the venture now known as the eBay of NFTs — it moved more than one million digital items last month.
For now, eBay’s approach appears to show that Web 1.0 incumbents are looking at blockchain technology in roughly the same way that retail chains looked at HTML.
Once upon a time, it was eBay that was the disruptor, realigning entire industries with its ingenious online auction engine. Even with its formidable market presence, the company already seems to have missed its shot at getting the attention of buyers who will drive the digital collectibles and art market in the years to come.
It’s unlikely that a slew of $5 to $500 NFTs can ever generate the necessary FOMO to put momentum into this uninspired Web3 initiative.
This is one not even BitBoy could save.