There was an article in this weeks’ Sunday Times about eBay which makes for somewhat depressing reading. Titled “eBay: online marketplace for sale, one careless owner”, it’s a hatchet job about all that’s wrong with eBay today but as always there are some truths in there and the truth often hurts.
Cutting through the rhetoric, there are three complaints about what’s wrong with eBay that do have some merit – fees, relevance and financial performance, which can largely be summed up as seller grievances, buyers not being engaged and investor unrest.
eBay seller grievances
Fees are ever growing on eBay and today they are higher than ever, which coupled with eBay’s stated desire to widen their margins means sellers are getting a raw deal.
Let’s put this into some perspective. I remember a time on eBay when you could list SIF (Shop Inventory Format, defunct for over a decade) for 3p insertion fee and final value fees were 5.25% of the first £29.99, 3.25% for the portion of the sale between £30 and £599.99 and just 1.75% for anything over £600.
At eBay Universities I remember happily telling people I ran my entire eBay business for around 6% to 8% total fees (including shop subscription etc) plus PayPal fees. Today you’re looking at double or triple that, even with free insertion fees, depending on category by the time you factor in 10% or 12% final value fees and voluntarily donate a couple more percent to eBay’s coffers through eBay Promoted Listings.
With fees that high, the only thing that can justify them is massive sales and yet eBay’s growth has stalled or worse is contracting. eBay worldwide are getting fewer sales for sellers than a year ago but asking for ever higher fees. I’ve never yet seen a seller complain too much about fees when their eBay sales are sky rocketing, but boy do they complain when sales shrink and they’re not making an income.
I went with a friend this weekend to pick up a second hand dishwasher she just purchased. Bought it on Facebook. My neighbour just sold a caravan. Sold it on Facebook. Want something tomorrow? Buy it on Amazon. Increasingly eBay are missing out on consumer to consumer sales and at the same time also missing out when a buyer wants speed and convenience.
You may well say that 2nd hand dishwashers, caravans, and some batteries delivered tomorrow aren’t eBay’s core strengths but equally all the time consumers are shopping elsewhere they’re not considering eBay for other purchases. It’s been known for decades that a consumer that occasionally sells on eBay is a much more loyal buyer but eBay are letting these customers slip away.
For eBay to be relevant it has to once again become the default place for buyers to start their search for pretty much anything. The Times describes Facebook and Amazon as “Both experiences are vastly different from eBay’s clunky bidding system and the faffing around with shipping. In an era when convenience is paramount, eBay is, well, inconvenient”.
Giving money back to shareholders, as eBay has recently started doing with a dividend, is says The Times “an admission of defeat – a sign that you’ve run out of ideas”. With the sale of StubHub likely to complete and Investors pushing for a speedy sale of eBay Classifieds they say it will free eBay up to get back to it’s rooks as the destination for self-expressionists and treasure hunters.
The problem with this is that eBay need to have some fresh ideas. Sell offs make it more bite sized for acquisition but eBay’s strength should be returning to be the marketplace where you can buy and sell (almost) anything. Caravans used to be one of the top performing search word (in the now defunct eBay pulse) – it was in the top 10 for over a decade (and so noteworthy we blogged when it was pushed out of the top 10 by tech) and yet now they’re sold on Facebook. eBay was a once the definitive place to buy a dishwasher online and (a nod here to Steve who used to sell on eBay as 99pbatteries) the defacto place to buy batteries.
Part of what’s wrong with eBay is undoubtedly, says The Times, due to eBay being an idea that was so good and so simple that they did little to change it over the years. Whilst Amazon obsessed about shipping and Facebook obsessed about local sales eBay never got into managing shipping and offering convenience (and indeed allowed Chinese sellers with crappy shipping to flood the marketplace) and with a focus on new fixed price products lost their unique knack of connecting consumers with something to sell with consumers who wanted to buy.
There are two things worth remembering about eBay. Here in the UK we get the distinct impression that eBay is performing better than their worldwide results. Second that even in the dire straits eBay find themselves today, they still generate a pot full of cash and if they could only keep investors off their back and find a way to invest it to generate double digit growth, just about everyone – sellers, buyers and investors – would be a whole heap happier.
On the flip side, if eBay fail to perform in a very short space of time, the marketplace could easily find itself sold to the highest bidder. While the owners of NYSE might not have been that serious in their approach, once one potential buyer comes to the table more normally follow and if someone makes an eBay Best Offer that’s attractive to shareholders clicking that accept offer button will be all that’s left for the eBay Board to do.