eBay Is Slowly Losing Its Soul

By Josh Catone
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In the late 90s, eBay’s online auction model was being heralded as the future of online selling, with smart people predicting that fixed prices would disappear online in favor of the booming auction trade. But a decade late, the exact opposite is happening. Auctions are a dying breed, and eBay has taken a thumping from traditional fixed price merchants like Amazon.com. Over the past year, eBay’s stock is down about 27 percent.

Last March eBay put itself at odds with many of its most prolific sellers when it instituted policy changes that favored sellers using a Buy It Now (BIN) pricing model — i.e., fixed price sales. Sellers boycotted, and some third-party measures found that eBay listings were down 13% during the time of the seller action (eBay has always denied that the boycott had any effect). That and other changes by the company has caused many sellers to leave the site. 10-year eBay veteran nancybusinraleigh told me in May that eBay was putting themselves through “death by a thousand cuts” and was ignoring sellers at their peril.

This week, eBay announced more policy changes that will favor fixed price sellers. eBay will lower its upfront per listing fee by as much as 75% and raise the commission it takes on successful sales on the back end. That favors fixed price sellers who can flood the site with more listings at a lower initial cost. It hurts sellers who use the auction format, though — those who generally sell unique, one-of-a-kind, hand made, or antique items.

It is in this way that eBay is losing its soul. By chasing Amazon with its new emphasis on fixed price sales, eBay is leaving its original core customers — the sellers who built the site into an auction giant by selling unique items and hand made goods — out in the cold.

eBay’s slogan used to be, “Whatever it is, you can get it on eBay.” But that is less and less the case now. As selling a few collectibles or second hand goods from your attic becomes infeasible due to higher costs, and as competition with the growing flood of fixed price listings (including from corporate partners like Buy.com) increases, those sellers will increasingly abandon eBay.

I pinged nancybusinraleigh for her take on the new eBay changes. “The seller with one unique item, who is not a mass merchandise seller, loses the edge – again – and [the changes] force them to look elsewhere for a selling platform,” she told me. “And eBay further deteriorates the reputation they had for finding anything you might be looking for on eBay. So it’s not just the auction business they’re turning from … they take away the unique array of items people would list.”

At this point, says Nancy, eBay is just “rearranging the deck chairs on the Titanic.” They’re nickel and diming sellers, she says, in their effort to chase Amazon. But competing with Amazon might be hard for eBay.

Amazon has almost four times the quarterly revenue and more than double the sales growth, and as Nancy points out, the changes eBay is making might increase its total listings as more fixed price sellers flood the site, but it will likely decrease the variety that the site is known for. With less variety, no “Amazon option” that offers free shipping, and no value added content like customer reviews, author blogs, product wikis, etc. competing with Amazon in the fixed price market is going to be seriously difficult.

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  • Anonymous

    eBay is run by brain dead senior management who cannot or will not change their fixation on becoming another Amazon. They simply do not realise that consumers DO NOT WANT another Amazon (we already have one). If eBay dies I won’t shed a tear. The only question is whether the death of eBay will be quick and painless or slow and painful. At this stage it looks like slow and painful.

  • Ebay has a reputation of place where you can easily get scammed and loose your money. It is also #1 place if you are looking for fake brands.

  • Kim

    When Ebay lose the unique sellers, they are also losing buyers, continuing the downward spiral of poor sales. I used to do a lot of selling on Ebay, and it followed naturally that I would do a lot of buying on the site.

    Now, with all the new rules, the whole process became complicated and there were less buyers about. So I stopped selling about 6 months ago. And I stopped buying, in fact, I haven’t been back to the site since my last sale completed. I have made numerous purchases from Amazon in those last 6 months because the process is so simple and reliable.

    Ebay started out with a unique offering – they need to come back to that or the small sellers that made Ebay into the force it once was will continue to depart. And with them go the buyers.

  • rustybuddy

    I buy on ebay… I don’t buy on Amazon. If ebay becomes the next amazon, I will not buy on ebay.

    It’s that simple…. Craigslist here I come!!

  • I still think that eBay is a vibrant marketplace, and a good option for consumers. I’ve noticed an influx of BIN items in certain categories, but I wouldn’t say it’s site wide, yet.

  • David

    It is pretty easy to exclude the BIN and/or corporate items in categories (like tools) where it is widespread. Since most of it is stuff at poor or not better value than conventional online shops there is no point. Actually I find I can usually do better. If every ignores it – not a problem.

  • whatever

    eBay sucks!

  • ryguy4025

    This may be off topic, but I would like to point out that as a business Ebay has by far the absolute worst customer service/help I have ever seen. I have been scammed by Ebay for atleast $500 because of auction cancellations in which they say I will get refunded but I never do. In my eyes Ebay is going downhill and downhill fast, prices are off the roof, the fixed auctions are ridiculous, and there is no help, period. If I had enough capital I would start an auction site because ebay is pitiful.

  • Cardgems96

    I have been saying it for a good while now, eBay is on the downturn and it may be too late to turn it around.

  • Well I take a contrary view – I don’t like auctions, and almost always go for the BIN option if it’s available; if it isn’t I’ll usually keep searching until I find one that has it, or I’ll go elsewhere.

    My reason for buying on ebay is that I can find things which are hard to find elsewhere – because they’re old, rare, specialist or whatever. But I don’t like the aggressive atmosphere of an auction, I just want what I want.

    btw – where does the inference that ebay is trying to be like Amazon come from? Is that just conjecture, or does it have a basis in fact?

  • chris

    Who cares if eBay fails — someone better, smarter and faster will replace them. Stop clinging to the past!

  • @brothercake — inference, I suppose, but not just mine. Since John Donahoe took over at eBay they have been pushing fixed/BIN pricing more and more with rule changes, and even proposed design changes. That they’re chasing Amazon is a common conclusion among reporters. The BusinessWeek article I linked to above mentions eBay’s “Amazonification” in the title, for example.

  • gero1369

    I received an e-mail about more changes going into effect soon the other day. One good, the rest bad. I have an eBay store (I fix the prices). I started out with auctions, but was losing my shirt on most of the stuff that I was selling due to the fact that there were many, many more copies of the items out there. The thing that I noticed in the message that I recently recieved from ebay is that they are going to ONLY accept electronic/online forms of payment. That’s right, NO MORE CHECKS OR MONEY ORDERS! Though I don’t receive many paper payments from buyers, it is a nice option to have available. this is insane.

  • sam

    Ebay has gone down the pan, I am pretty close to giving up on it entirely because of the lack of auctions. That was what ebay was, an auction site. Chances are good that you will find what you are looking for cheaper elsewhere if the only choice is buy it now. Oh well, they are the ones that are going to lose lots of money and I cant say I will feel any sorrow for their departure.

  • Anonymous

    ebay.co.uk have recently DOUBLED their final selling price
    charges. They need competition to prevent this rip off.

    The only alternative is Ebid. Unfortunately potential
    buyers don’t bother with ebid because all the goodies
    are on Ebay and all the sellers avoid ebid becuse they
    know the buyers are all searching Ebay.

    It’s a chicken and egg situation and the only way to solve
    the problem is for the majority of buyers and sellers to move over to ebid at the same time, so i propose a MOVE TO
    E-BID DAY.

    The ideal time to do this would be the very day that Ebay
    implement their charges increase on 24/9/08. This would
    need an advertising blitz on all the social networking
    sites, forums, youtube etc.

    So, there’s the ball. Can you roll with it??????????????

  • I just feel sorta sad for the many people making their living scouring used clothing stores and flee markets to make a few bucks per item selling them on ebay. Ebay has helped a lot of people who have been laid off from their jobs or wanted a way to get out of corporate america but lack the technical aptitude to churn out a website for themselves or setup a shopping cart. If Ebay just disappears one day, there will be no place for those people to turn except back to a j.o.b. somewhere they hate.

  • I suppose things need to change over time, maybe this will open up a door for some new auction site to take hold that offers the uniqueness of items that eBay grew from.

  • eBay: an eCommerce case study in how not to treat your core users
    Having followed the eBay story since its early days when in the UK it was a poor man’s alternative to Yahoo UK auctions, I am keen to know just what the rest of you think about recent changes.

    It seems as if eBay’s policy changes essentially as one commentator put it, “amount to nothing more than reaaranging the deck chairs on the Titanic”. Chasing fixed price listings and ignoring its core users with higher fee charges simply begs belief. It is clear they are chasing Amazon’s share but going about it with such a contemptuous attitude toward your own members seems suicidal. Would it not have been more prudent to split the business, in some way, thus retaining the core auction model?

  • Anonymous

    I had to snigger…

    I know of one woman who made just over £100,000 net profit in 2006/07 from eBay alone with her soaps, etc and now what is she going to do?

    She’ll just have to make a honest living like the rest of us.

    I’m still smirking by the way ;)

  • andalso…

    Ebay also destroyed their feedback system recently. Now it is almost meaningless. You cannot leave negative feedback for a buyer who causes a problem, doesn’t pay, any such shenanigans, only positive feedback. On the other hand, a buyer can post whatever he wants. (Yes, I know why ebay says they did this, but it still made the feedback system almost useless.)

  • Unit7285

    Right from the start, eBay has always been a terrific idea implemented very badly. It has raked in money not because the people running it are clever, but because the idea was good and people put up with their incompetence.

    Even a decade later it’s still cumbersome, awkward and confusing for sellers and buyers alike. Just try defining Shipping details for domestic and international for multiple eBay sites and it soon becomes clear that the people in charge of Shipping (and I believe there is a Vice President of Shipping, or some stupid title) don’t even realise that there are more than about 10 countries in the world, and have no understanding of how people ship stuff. After 10 years! It could be quite straightforward – just tick off a list of countries that you will ship to – but no, they made it incredibly complicated and it’s often impossible to get the desired result.

    It doesn’t surprise me at all that eBay are trying to run themselves into the ground at full speed with other misguided changes. It’s a great shame.

    However, Amazon is going downhill too, in my opinion. It’s like a chaotic car boot sale when you search for pretty much anything these days, full of dodgy listings from third party sellers and out of date Reviews referring to different products.

    eBay also holds the world record for Worst Software Program Of All Time Bar None – namely the putrid excuse for an application that is Turbo Lister. It defines the word ‘rubbish’ and must have cost them billions in lost sales over the years.

    I hope eBay can sort itself out. It needs new people with brains and common sense.

  • orokusaki

    Ebay is done. If I owned a business that was completely based on something that was going away. I wouldn’t fight the uphill battle just to reach the top and fall off the face of the earth. I’d go out gracefully, and commit sepukuwith a samurai sword found on Ebay.

  • it might be interesting to see what an innovative player like Google would do with the eBay group. definintely would love to see them do something new with Skype and PayPal.

  • Fed Up Ebayer

    Well I’m just an ebay buyer. I have thought about selling at times, but it always seemed so confusing I gave up. I have purchased a lot of unique items over the years, but I do find that things are much riskier now than they were in the past.
    I don’t like the fact that ebay and paypal are connected. This hardly seems like a healthy scenario for buyers and sellers alike when you have a problem. Obviously ebay and paypal are going to be united in the outcome so it’s you against both. I also find it cold that ebay has to attach itself to everything just to make another buck.
    I won’t buy on ebay much if at all anymore. Their new amazonian remake sounds like a disaster plan to me.
    I love honest auctions. They even took the honesty away from that venue when they allowed multiple names on the site and hidden bidders. There have been many times when I have felt like I was indeed bidding against the owner of the item or a very close friend.
    Also, the hidden feedback ratings that are fairly new. How senseless is that? Obviously the sellers will be hurt by this and it’s only another way for ebay to dishonestly manipulate things in their favour anytime they want to.
    I liked the good old days when buyers and sellers worked things out on their own without the help of ebay and/or paypal. Who wants to buy from a scared seller or an over-charged seller? Since ebay got involved in everything things went downhill.
    Ebay has become too big too fast. They think they are God – and they are far from it. The internet has always been an unsafe place to make purchases and it hasn’t become any safer due to ebay’s mismanagement.
    It’s time to do my buying locally again. I can find any fixed price item I want – it’s the auctions I will miss. Fed Up Ebayer

  • Emily

    ebay is too expensive for me. So I abandoned it. Now, I use FastCommerce.com ecommerce platform. It is low-cost, high-powered e-commerce for small business or home based business! It’s free for me.