December 26, 2008

eBay's problems are self inflicted. The more eBay has done in the name of bringing business back to their site, the more they have alienated current users that were once infatuated with the market place as both buyers and sellers.

eBay started to seriously slide when John Donahoe as CEO came out in front of changes which gutted the core of the marketplace and referred to any member that spoke out against the changes as 'noise'. His arrogant 'noise' label insulted the very customers he was trying to keep.

Led by an executive team that has barely used the marketplace, eBay is now headed for obscurity because they do not 'get' it anymore.

eBay, unlike Amazon, does not own inventory, and relies on sellers to provide merchandise to the site. This said, it is hard to understand why eBay executives have instituted so many anti seller policies over the past year.

Further proof of how out of sync eBay leadership is, they fail to understand that sellers are buyers as well. Alienating sellers diminishes their interest in purchasing from the site or doing business in any way with a company that is viewed as seller unfriendly.

eBay's increased fees across the board and forcing sellers to accept PayPal to entitle them to an even larger slice of sellers profits, has not improved the company's fortunes, but has motivated sellers to take their business elsewhere.

eBay has become a ship without a rudder, adrift in a marketplace they have lost control of.

eBay execs fail to understand that word of mouth is essential to the success of their marketplace. With sellers having nothing positive to say, buyers are going elsewhere.

Until eBay is led by a team of executives with vision and experience in what makes eBay tick, eBay is destined to become the next Internet bubble to burst.

Buyers and sellers alike have lost trust and confidence in current leadership over the series of poorly implemented policies, feedback changes, imposition of the failed DSR system, constant technical glitches, search that is horrible, forced PayPal etc...

eBay is now beyond reversing failed policy and system changes. eBay now has to replace the entire core of enthusiastic members which they have managed to chase in addition to changing the failed policies and defective systems.

The simplest solution would be for eBay to simply get out of being in the marketplace business since it is obvious they have no clue as to what it takes to make and keep a marketplace relevant and successful.

John Donahoe, Lorrie Norrington and company will go down in history as the executives that managed to screw up a free lunch.

They are not the team that will lead eBay out of the disaster they created, they are the team that turned a marketplace with millions of happy members into a poor imitation of its competition with customers who have nothing good to say about the new experience.

This is unlikely to change until the book smart MBA's are removed, and replaced by a team of executives that know and understand what the eBay marketplace is.

The fix would be for Mr Omidyer to get back to work, and restore the core principles upon which eBay was founded. He had the right ideas and the company became a worldwide multi billion dollar success under those principles. It will only restore itself to that level of success when the existing leadership is tossed and replaced with a team that 'gets' eBay.

Ebay spent the year building that wall it just ran itself into! Blame John Donahoe - NOT the economy. Amazon just proved its not the economy!

They've hit the wall because they've priced themselves out of the market. Yes, they lowered the initial listing fees, but they've raised the Final Value Fee twice this year. Sellers who used to pay something like 3.75-5.75% are now paying anywhere from 9.00-15.00%, depending on category and that's before you add in the now-required PayPal's fees. eBay is also pushing free shipping, because merchants have to add the cost of shipping into their initial price and then eBay gets to charge FVF on shipping as well. PayPal also charges their fees on the total purchase, including shipping. Sellers cannot pay all of these fees and still offer items at a bargain, so customers are going elsewhere on the Web where they can find the same thing at lower prices.

The rates might possibly be justified if you have a decent STR rate, but eBay's has been dropping all year. Add to that the fact that small sellers are basically paying listing fees to be buried on the last pages where they are never seen by Best Match, and you get the mass exodus that started this year and will undoubtedly continue into 2009. eBay's customers (their sellers btw!) aren't as stupid as eBay thinks they are. They will not continue to pay to list over and over on a site whose management despises them, micromanages them and suspends them at a whim, particularly when those listings aren't getting them sales. Despite public pronouncements to the contrary, eBay obviously wants to be done with the small occasional seller and become an Amazon-like fixed price venue with large corporate Diamond sellers like buy.com. They are also selling their eyeballs, with adds peppered all over paying sellers' listings, including adds that link to off-eBay sites. Interestingly, the non-Diamond sellers who pay management's paychecks can't link to their off-eBay sites, and they pay listing fees, which the Diamonds do not! What eBay hasn't taken into consideration is that the noisy small sellers are also the people who had the unique items who brought them their eyeballs in the first place, and that the Diamonds are only using eBay to drive customers to their own websites. They've basically shot themselves in the foot looking for short-term listing boosts and profit.

The customer base on eBay is also taking advantage of the "Buyer can do no wrong, all sellers are scum" environment created by the new management's anti-seller policies. Non-paying buyers and scammers abound, and nothing is being done about it, even as eBay never moved to protect buyers from bad sellers earlier in its existence. Small sellers of unique items are finding that a smaller site with less traffic than eBay can be a viable proposition if it is no-fee or low-fee-they can sell less and still make as much money as they were on eBay because they're not paying eBay's exorbitant fees. Many are also saying that the buyers they encounter off eBay are of a higher caliber-not the demanding, extortionate bottom feeders that are the norm there these days.

The economy has people looking for bargains on second-hand stuff, eBay's former specialty. But their current fee structure is not welcoming to such items. People are also not using credit, and eBay has just forbidden the use of checks or money orders, requiring PayPal or credit cards only, and acquiring Bill Me Later. Many loyal long-time buyers and sellers on eBay preferred paper payments, so they've driven that segment of their customer base away as well. eBay is behind the times and they are becoming increasingly irrelevant.

eBay and Amazon both host the same sellers! Both carry honest and dishonest sellers! Both will go out of business chasing after the same buyers if things do not change! Buyers on eBay and Amazon are truly Bottom Feeders who are also starving sellers! Competition between the two will drive them both out of business in the long run unless one bails out of the race! eBay advocates finding one's own nitch to sell on eBay. They should take their own advice!

The first two commenters are looking at eBay's problems from a sellers standpoint, which of course is a symptom of losing buyers (their true customers) in a vicious cycle of downward revenue.

Where eBay has truly missed the boat is in their complete ignorance of (1) building and fostering a community and the (2) absence of any loyalty program for their top buyers.

In this regard, Amazon has set the standard. Look at the number of dedicted product reviewers. Look at their Amazon Prime program, which has been a HUGE hit for Amazon. I could go on and on. The bottom line is that Amazon has focused on making the customer experience better. Thus, sellers follow where the buyers are.

On the other hand, eBay has focused on figuring out more ways to squeeze $$$ from their sellers, completely neglecting the needs of their true customers: the bidders. Consequently, they are bleeding market share.

Future looks very dismal for eBay & Co.

Ebay and PayPal policies are completely stupid and I will not be surprised if they will go down... I hate Ebay and I hate PayPal!!!

Great comments and interesting points of view but would dropping the fees bring them back?

The review suggestion could help but the ratings once was a big part of community building.

Ebay long ago forgot who the customer is. The customer, no matter what your business is, is the ones that pay your bills.

EBay is in the business of selling space. They forgot they are just a landlord, or a "venue" using their terminology.

The small time sellers, the ones that made eBay such a unique and vibrant marketplace, had their blood sucked dry for too long. Rent was up, and then you had to pay for the utilities that used to be included in the rent.

Then eBay decided to up the rent again. Then they had to change the rules of the game. Oh, and then raise the rent again. The only thing that could have burst the eBay bubble so quickly was eBay itself.

When eBay forgot about the small time seller, they forgot about the buyer as most small time sellers were also BUYERS. These large scale sellers may sell 10,000 items in a month, but probably only bids on less than 10 items.

Take 100 sellers that only sold about 50 to 100 items on eBay per month, and each of those sellers probably also bid on 10 items in that same month. That is a loss of almost a thousand bids LOST each month for each 100 small time seller.

Multiply that by the TENS OF THOUSANDS of small time sellers lost over the years.. now you see the picture that eBay can't.

I don't disagree with anything said here but if you look at compete.com ebay's traffic is telling a different story. They have had a massive turnaround on those stats alone for the last 6 months of the year. Of course that does not address conversion to the site and I don't know if them launching their own affiliate network instead of going through CJ.com impacted the traffic either (artificially increasing it since the URL changed). http://siteanalytics.compete.com/ebay.com/?metric=uv