eBay 2009 : a few thoughts

29/12/2008 at 02:37

2008 has been a year of huge change on eBay. The one thing we can say for certain about 2009 is that there’ll be more of the same: the only constant is change*. Randy‘s posted his predictions; so has Ina (the comments on both threads are particularly instructive). Here’re mine, and I should emphasise – this is what I expect, not necessarily what I’d like:

What eBay will not do

Despite rumour and some public wishful thinking:

  • John Donahoe will not quit, or be fired, or get sued by a rabid pack of sellers.
  • eBay will not get rid of classic feedback.
  • eBay will not sell off PayPal, Skype or the auctions business.
  • eBay will not get rid of auction listings.

eBay sellers may have a long list of what they think is wrong with eBay, but eBay themselves appear to think they are on the right track. Therefore we can expect most of the things that have begun in 2008 to be continued next year.

More big retailers will be enticed into listing on eBay.

With western economies in recession, and no listing fees to advertise on eBay, more big catalogue retailers will see an advantage in using eBay as an online channel alongside their existing websites. Household names will be uploading thousands of products to a category near you, with special deals on fees and also on DSRs and feedback: diamond PowerSellers will be given long “grace periods” to establish themselves on eBay where smaller sellers would have been suspended.

There will be some spectacular failures: more than one “diamond” will be unable to recover the shine from feedback that starts off in negative figures. Some retailers will withdraw from eBay as buyers are “too demanding” for them to deal with. But many will stay, so smaller sellers need to consider how they might play to their strengths: specialist knowledge of their niche, and the ability to offer a personalised and human service to buyers who will be increasingly frustrated that big eBay sellers ignore their communication.

Third-party software providers should be taking advantage of the complaints that will be generated from disadvantaged smaller sellers, and offering better products to tie in – for example – stock control between websites and eBay stores. Anything that can help small sellers operate like big sellers will be a hit in 2009.

Catalogue listings will be expanded

The “Amazonification” of eBay will continue as pre-filled item information expands to more categories. Media listings have long offered automatic inclusion of track and publication data, but we’ll see more of this in categories from electronics to branded clothing. It will become easier and easier for large retailers to integrate their product databases with eBay.

Smaller sellers need to consider how they can take advantage of this to save them time which could usefully be invested in other areas of their business, or whether they want to take steps to make themselves stand out on eBay.

More third-party advertising

Third-party ads on view item pages are here to stay. eBay will insist that these do not detract from sellers’ sales, but no one will believe them. More than one category will see a wholesaler advertising on a retailer’s listing. However, this scheme will not be an unmitgated success: some merchants will pull out of the advertising, as Shopping.com merchants did this year, complaining that the quality of traffic sent by eBay is low.

eBay will open up onsite advertising to sellers themselves (as Stephanie Tilenius suggested at Live). Canny sellers will use advertising + listings to ensure that they dominate their categories, rather than simply complaining that it’s a way for eBay to extract more fees from them.

More brand restrictions

More brands will follow L’Oreal’s example and sue eBay for allowing the sale of fakes and, increasingly, merchandise sold through unofficial channels. The presence of some official distributors on eBay will encourage all parties to restrict sales by smaller sellers. eBay, however, will continue to refuse to provide a public list of brands whose sale will be restricted, or whose rights’ owners they know are active in the misuse of the VeRO system to close down eBay listings.

Sellers, therefore, need to investigate the situation fully before commiting large amounts of capital to branded stock. At the very least, run a couple of dozen test listings and see if they survive.

So far, this has been a particular problem for cosmetics’ sellers, but expect to see it for clothing, electronics, toys and some branded craft items.

Changes to Checkout and payments policies

Checkout is changing: sellers will be able to integrate third-party merchant accounts through eBay’s checkout, so those who wish to take credit card payments on the site will be able to do so. So far, that’s not a prediction: eBay have said they’re going to do it.

My guess would be that at the same time, paper payments through the post (cheques/checks, money orders etc.) will be banned in every country where it is legal for eBay to do so. If eBay don’t go that far, there will at least be a carrot of a fee-incentive for PayPal only listings, which might, for example, nullify the PayPal per-transaction fixed fee.

This will all be presented as a security improvement measure. Few people will believe that.

It is – of course – the economy, stupid

Then there’s the bigger picture. There are undoubtedly those who do well in a recession. Online merchants may be some of them: there’s certainly a perception that online = cheaper, and we should all be looking to take advantage of that (actually *being* cheaper is a question for another day).

But the outlook that some eBay sellers are expressing at the moment – that hoardes of cash-strapped buyers are going to mean we’ve never had it so good – seems a little naive to me. The economy is about more than eBay + buyers. Recent weeks have already seen the DVD industry turned upside down by the failure of some huge wholesalers; all eBay sellers (and everyone else) needs to consider how they’d survive if a major supplier went under. Do you have alternative lines of supply? Moreover, without huge retailers buying, will the price of wholesale supply go up? Are you running a business based on catalogue returns or retail seconds? If your eBay business doesn’t have multiple sources of stock, frankly, you’re asking for trouble.

It’s not the death of the small seller…

though many people are saying it is. It might just be the death of the medium-sized eBay seller: eBay 2009 is going to be about being big enough that you can weather a recession, or small enough to sneak past it. If you’re a business with a set plan, fixed in what you do without built-in flexibility to adapt to constant change, then honestly you’re in for a hellish time. If you can stay lithe and nimble enough to deal with everything that’s going to be thrown at you, you might just end up on top.

So that’s what I’m expecting – over to you.

* Hat-tip to Heraclitus for that thought: rather a lot of his wisdom seems applicable to eBay somehow.