Thursday, August 21, 2008

Ebay Goes Down Wrong Path and Hurts Those Who Helped Build Them

Do you feel the ground shaking and hear the sound of distant thunder? That’s the sound of the coming stampede of Ebay sellers making a mass exodus to other sales venues.

Ebay has, once again, presented changes in their venue, many of which I predicted last year, that will be sending a good portion of their sellers elsewhere to do business and leaving their stockholders in a long holding pattern or perhaps experiencing new lows.

Starting last ast year, and much to my dismay, I started predicted eBay would lose a good portion of their market share to their competitors. It looks like this will continue to occur as the company implements their most recent changes. (Links to articles in which I've made eBay predictions are below.)

You see, eBay forgot who got them to where they were, and it wasn’t the buyers. They’ve spent entirely too much time trying to please the buyers, when it was the sellers who helped build the company. In my opinion, it may be too late to salvage their position in the marketplace now or in the future.

Since eBay has continued to raise the percentage they take on completed sales, I predicted eBay would discontinue listing fees altogether, and stated it was in their best interest to do so. Today, they’ve dramatically cut listing fees but have not eliminated them. Most sellers don’t mind paying a little more if their items sell, but if they don’t sell, they take a direct loss which isn’t acceptable.

While from time to time, the company runs special days offering sellers no listing fees, I still predict the time when eBay permanently offers no listing fees will be just around the next bend. However, by then, it will be too late to bring back those who’ve been comfortably comfortably in another company’s pasture.

In their effort to make up for lost revenue and please their stockholders, other changes the company made will prove to be a big turn off to its sellers. Like the increase in fees for their PayPal services and their insistence that this is the only way to pay for fees when doing business with them. Forcing customers to use only the programs they provide will prove to be a mistake in the future. It’s cheaper for their sellers to go elsewhere and use other merchant account providers with more reasonable fees. No, the public isn’t going to let eBay make up their loss in revenue in this way.

Any reduction in fees will prove to be beneficial for those of us who use eBay to sell our wares, but the other restrictions, I believe, will be rejected in the market place. It may prove that eBay has, for too long, underestimated the intelligence of the customers who helped build them.

Ebay’s efforts to swing in the direction of retail sales by emphasizing fixed price selling is about four years too late. Companies like Amazon are not likely to surrender their market share to eBay without a fight.

What eBay might do next in their effort to increase revenue, will be to charge for their completed sales information. I made this prediction earlier, and I stand by it. Only time will tell.

To re-establish their growth pattern, eBay will have to reinvigorate their seller base, and that isn’t going to be easy. In fact, they might have to reduce profits for a while to build future sales volume. This might very well put eBay stock in a holding pattern for quite a some time and their stock prices might even hit new lows.

As I have stated in the past, what is bad for eBay can be good for us. So, when they have specials, take advantage of them, like listing several items on free listing days. Try not to get caught in the traps they set like reserve price auctions and the other gimmicks they state will bring you greater returns but actually cost you more. “Keep it simple” is a good rule to use here. In the meantime, investigate other selling venues if you haven't already done so.

Keep Skip McGrath and his newsletter close to you because I think he has the pulse of what eBay is doing down to a tee. You will find his many great resources available on our site. Don't forget our friend the “ The Auction Rebel – Gary Hendrickson” as he demonstrates his method of being successful on eBay.

Ebay made a change in my life, and for that I am very grateful, but they’ve been very slow to change with the markets. They might have thought they were invincible. But, none of us are. I still hope it isn’t too late for them. They’ve been a tremendous help to me and my family, and I thank them for that. God protects the humble, but if we try to do all things ourselves and even go down the wrong path, He allows for that too. I believe eBay has gone down the wrong path.

LINKS to my Previous eBay Article Predictions:

10/02/07 Will eBay Remain King of the Hill?
01/30/08 eBay Serves Scrambled Eggs
02/14/08 Is Ebay Running out of Juice?
03/25/08 eBay Fighting Hard in Wrong Direction

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