*Extra* eBay's Not-So-Secret Strategy for World Domination - TheStreet

*Extra* eBay's Not-So-Secret Strategy for World Domination

Squeezing into the realm of classified advertising, the company is hoping to fatten revenue with regional auctions.
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Fretters will fret about

eBay

(EBAY) - Get Report

, its technology problems and its average customer spending (the latter being the conventional wisdom for why the stock is falling in after-hours trading). That's their job.

But the reason the stock has been so resilient is that eBay is a monster when it comes to generating new revenue. The company's newest world-beater: its regional auctions strategy.

In an interview Tuesday following eBay's quarterly earnings conference call, CEO Meg Whitman said that average selling prices in the Los Angeles test market for regional auctions were 22% higher than in the core business.

Average selling prices are pieces of information a more buttoned-down eBay doesn't report anymore. But in its initial public offering documents a little more than a year ago, eBay noted that its average gross merchandise sale (on which its commission is partly based) was about $40. Whitman says that figure is only somewhat higher today.

In any event, eBay recently rolled out regional auctions in 10 new markets, where it is offering targeted regional fare. For instance, the San Francisco site has a

Grateful Dead

section, bundled-up Minneapolis residents can buy ice-fishing equipment and Atlantans might bid on

Braves

paraphernalia (loved a headline in a New York tabloid Monday: "Chop This!").

Whitman notes that the revenue for classified newspaper advertising in the U.S. is $17 billion, but that no one's figured out how that translates into gross merchandise sales. Clearly, it's an order of magnitude higher. This is eBay's not-so-secret strategy for world domination.

Of course, if it can't keep the trains running, it won't dominate anything. Whitman says the company is in the final testing mode of its "hot" backup system, which can have the site running again after a system failure in as little as five minutes but at most within one hour. On Friday, the site "failed over" to its "warm" backup system in four hours and 15 minutes of down time, which is nearly acceptable performance for that system, says Whitman.

The Internet: So much to love. So much to hate.

Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at

alashinsky@thestreet.com.