eBay Is Slowly Losing Its Soul
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.