Consumer Internet

The beginning of the end for eBay?

By July 14, 2008 28 Comments

The NewYorkTimes today has an article entitled Deal with eBay Angers Sellers which covers a couple of interesting things.


Consumers appear to be tiring of online auctions, and rivals like 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 onto the site:

eBay has struck a deal with the Web retailer that allows the company to sell millions of books, DVDs, electronics and other items on eBay without paying the full complement of eBay fees.

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 has added over five million fixed-price listings to 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 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.