eBay is caught between a rock and a hard place, and their share price is reflecting that, hitting a new five year low today. According to Morgan Stanley analyst David Joseph, who downgraded eBay today, the reason for eBay’s poor performance is an inability “to compete in buyer experience” with other online sellers. Joseph says that buyers are now looking for a simple buying experience, and the auction format isn’t that.
People also like and expect features like free shipping and one-click ordering that eBay — which isn’t actually controlling the sale of goods — has less leeway to offer, says Joseph. Not surprisingly, eBay’s share of the ecommerce market, according to Morgan Stanley, has fallen 2% over the past couple of years, while Amazon’s has grown a point and a half.
For all their troubles with shifting buyer attitudes, the biggest point of trouble for eBay might be with sellers — the site’s lifeblood. As we reported in August, eBay’s moves to please buyers, which have included putting more emphasis on fixed price auctions and policy changes such as turning off negative feedback against buyers, have not been popular with sellers. Many sellers feel that eBay has lost its soul and are now looking elsewhere to sell their goods.
Purveyors of handmade products are moving to sites like Etsy, while sellers of the antique, used, or collectible items that eBay originally built its business on are being pushed to classifieds sites like Craigslist. Meanwhile, fixed price sellers have opportunities to sell on other sites, such as Amazon, which can even also handle fulfillment.
So a question for you: Can eBay save itself?
Josh Catone joined Mashable in May 2009 and is Executive Director of Editorial Projects. Before joining Mashable, Josh was the Lead Writer at ReadWriteWeb, the Lead Blogger at SitePoint, and the Community Evangelist at DandyID.