The beginning of the end for eBay?
The NewYorkTimes today has an article entitled Buy.com Deal with eBay Angers Sellers which covers a couple of interesting things.
Firstly:
Consumers appear to be tiring of online auctions, and rivals like Amazon.com are attracting more shoppers with fixed-price listings, while eBay has been struggling for growth.
This came as a bit of a surprise to me, but when I think about my personal experiences on eBay, I wonder if I should have seen it coming. All the action now happens in the dying minutes of an auction which makes it a difficult way to buy stuff. You need to be present at exactly the right time or you probably won’t get what you want, and you are faced with difficult decisions as to value which need to be made uncomfortably quickly. Fixed price buying has neither of these issues. Further, I wonder if auctions were important in the early days because nobody knew what the right price was for stuff, but now that so much has been traded people feel more comfortable going for fixed price deals.
The smart response for eBay is obviously to allow more fixed price sales for their existing sellers - something they have been doing for a while with ‘buy now’ prices.
The response that isn’t smart is to bring buy.com onto the site:
eBay has struck a deal with the Web retailer Buy.com that allows the company to sell millions of books, DVDs, electronics and other items on eBay without paying the full complement of eBay fees.
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The recent change is one of several under eBay’s new chief, John Donahoe, that is stirring rancor among the faithful who depend on the site for their livelihood. The deal with Buy.com has added over five million fixed-price listings to eBay.com since the beginning of the year — for items from Xbox 360 video game consoles to Weber grills.
Small sellers have been eBay’s bread and butter so alienating them just seems plain dumb to me. Being a front website for large retailers is not a big value play long term and if eBay isn’t careful that is where it will end up.
You can see the short term attractions of getting 5m Buy.com products on the site - a quick boost to revenues and profits, something eBay is in need of. However, for me this shows that eBay’s management don’t understand that their value lies in the community, and when that is the case you have to align your strategy with the long term interests of your members.
July 14th, 2008 at 3:47 pm
Nic - Brilliant insight into auctions becoming victims of their own success in establishing fair prices for myriad things, thereby taking reducing the potential upside of the auction process (for both buyer and seller one would think?).
July 14th, 2008 at 7:14 pm
Ebay is headed downhill. Donahoe’s concept of patterning the site after Amazon will not work because Ebay is not willing to spend the money for customer service that would help it succeed. In effect, they will end up just a cheap cheesy clone of Amazon with none of the safeguards Amazon has put in place for both its buyers and sellers.
The concept of auctions was a good one and it was exciting - the sniping at last minute and the hunt to find those vintage or unique items was overpowering - Ebay should have built on that instead of ignoring it! Also with sellers milked dry at every turn their profit margin became less and less and they could offer their buyers less of a good deal than in the past. You can’t feed ebay/paypal’s vociferous appetites for revenue and still turn enough of a profit to make selling on Ebay worthwhile. The simple example: Buy it Now - in return for getting instant sales (which Ebay/Paypal profits from) they have a nerve to charge a fee for buy it now!!! Such an option should be free, encouraging their sellers to use it! Also, international selling now costs yet another fee where it was free to be brought up in search in the past. I can go on and on, unfortunately, every new fee has caused more sellers to leave - more sellers to list less and the remaining sellers forced to charge more. Now, I see most of my seller friends in the chatrooms and forums of other venues! Ebay is dying - bringing on buy.com with no listing fees and a miserable sell-thru rate of less than 3 percent is not even a bandaid on the gaping wound. With the proper expertise (and Ebay can certainly afford it) this whole situation could have been avoided - the site tweaked and purged of a lot of fraud - and proper advertising and incentives put in place to lure buyers back.
One other thing ebay lost that they do not value at all is the trust of their sellers. I think if you polled sellers you would find the majority actually hate what ebay is now and do not trust them.
That’s my take on it and I’ve been a constant seller on ebay for the past 10 years, with feedback 100 percent and over 3,500 transactions.
July 14th, 2008 at 10:40 pm
Great comment Patricia. Thanks.
July 14th, 2008 at 11:01 pm
I’d like to add to my post.
The concept of auctions is not dead. Ebay has been killing them off by ignoring fraudulent sellers and rip-off artists and by lack of customer service to help buyers. Anyone who has ever attended a real auction will tell you it is very exciting and the prospect of winning a big bargain makes it even more so. Also the prospect of finding long lost items you cannot find anywhere else. The idea that people are getting tired of auctions simply is not true - its some sort of propaganda being used as an excuse. I think anybody can see that if we wanted yet another retail outline online it certainly would not be ebay with buy.com’s drop shipped items. There low sell-thru rate proves my point! I can go online to Walmart, Sears, Target, Kmart, Best Buy, etc. (which I already do) and buy from good solid companies who stand behind the items they sell….why in the world would I need Ebay? Of course, Donahoe will carry this out to the bitter end before the fact hits them that this will NOT work and they’ve killed exactly what made them so big in the first place. by that time, I and the other small sellers will already be entrenched elsewhere - where we are wanted and appreciated and treated like fellow human beings. Sellers are not only leaving ebay, they are urging their buyers to leave as well. The same vibrant source of auctions as they used to be can now be found on any other venue…but ebay!
July 15th, 2008 at 10:18 am
Thanks again Patricia. I have no axe to grind against auctions, and I agree that they are exciting and have their place in the retail mix. What I’m not sure of right now is whether eBay’s early success artificially inflated their market share and it would be interesting to see what happened if eBay really tried to get fixed price transactions from small sellers moving. We are in total agreement on the pointlessness of eBay being a front for buy.com.
July 15th, 2008 at 10:57 am
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July 15th, 2008 at 3:55 pm
If ebay’s auctions are failing then they are mostly to blame. First, for not weeding out dishonest sellers - which could easily have been done when they instituted a feedback percentage. They could have skimmed off all the sellers in the 80 percent range for starters. Just outright suspend them permanently. They could have tried to investigate more complaints of fraud. These are things they should have been doing from the get-go instead of relying on totally canned replies that did nothing but make users resent them. Second, they could have tightened up the fees - less fees could have meant more sales. Now a seller has to think twice whether or not to even put an item on ebay because of the exhorbitant fees. It should never come down to that because then you are denying your services to your own customers - in effect hobbling them to the point where they can’t make a decent starting price to get that sale!
Ebay Express would have been successful if Ebay got a decent shopping cart on it, advertised it more AND took off all the restrictions that entitled a seller to have an item on Ebay Express. ALL fixed price items and even BIN’s could have automatically been included in Ebay Express. So, when you look at the site on a whole all these blatant errors in Ebay’s judgement helped to bring the site to where it is today. It could have all been a different story if proper management was in place from the start….and I’m including Whitman and Cobb in that as well. Now, we have more of the same - the same stuffy thinking - the same domineering attitude - the same arrogance and disrespect for their customers (the sellers). They were never into helping their sellers to SELL - they were only into fees and revenue. How much can they milk a seller before he ups and leaves. That’s a no-win situation that they continue today. Sorry…when it comes to Ebay, I tend to ramble. Any long time seller could have told you all these things. These are the principle reason why I, and thousands of other sellers, no longer list on Ebay.
October 3rd, 2008 at 5:31 pm
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