eBay's Not-So-Secret Weapon: Half.com

From the beginning, eBay (Nasdaq: EBAY) made no secret about its plans to transform Half.com, the used goods marketplace it bought last year, into an online retail destination.

But there are signs now that eBay plans to use Half.com more as a tool for bashing its way further into the well-guarded territory of the best-known fixed-price e-tailers.

Amazon (Nasdaq: AMZN) should be looking over its shoulder -- as if it is not already -- because eBay and Half.com are right on its tail.

Half.com, of course, began as a place for people to sell used stuff to other consumers. In that sense, it fit perfectly into the eBay peer-to-peer mold.

But eBay wasted no time getting Half.com beefed up to include more business-to-consumer (B2C) sales and to expand the site's category listings to include computers, electronics and sporting goods, among other products.

By the Book

In June, Half.com made another move into Amazon's territory when it inked a deal with Abebooks.com that brings thousands of rare, used and collectible books into its offerings. Many of these same book dealers claim to have been burned by bad experiences on Amazon's zShops.

Half.com is chipping away at the online book sales market at a time when the other players are in flux and at war. Amazon is busy taking over fulfillment for Borders.com, while on another front, BN.com and Amazon are going back and forth on free-shipping promotions.

Meanwhile, in a show of strength, eBay's Half.com actually increased the shipping fees that buyers pay in response to higher postal rates.

Short Leash

There's even more evidence that Half.com wants to be everyone's default e-tail destination. In June, it unveiled its Price Patrol Web browser plug-in, which is designed to pop up a new window when a shopper clicks on a product description at another e-tail site.

While the move may highlight how many used copies of current books and CDs are on the Half.com marketplace, it is also a prelude to more competition on new releases.

Of course, Half.com is playing with fire by using the pop-up ads that electronics retailer X10.com has been criticized in virtually all corners of the Internet for employing.

But Half.com's pop-ups actually offer something of value: discounts on purchases. They are far more enticing than the X10.com ads, and frankly far more likely to work.

Bundle of Joy

Roll it all together and you get the picture: eBay is working to burn the Half.com brand into the minds of consumers and to singe away any vestiges they might have of the old Half.com, where tattered copies of "On the Road" were the most common item for sale.

Why should Amazon or anyone be worried about this effort? Because eBay has a potentially blockbuster customer base and moreover, a thriving community to bring to bear in the e-tail fight.

Combination Lock

The Internet auction giant is cobbling together an impressive list of partners who are drawn to the option of selling through both a fixed-price and auction-style marketplace at the same location.

eBay and Half.com are a formidable combination. And best of all, eBay is not letting anyone else set the pace. It has the deep pockets. It has the track record. And it has the upper hand. Competitors should know it has more than half a chance, too.

What do you think? Let's talk about it.