Ebay loses track of its product

If this analysis of eBay's current revenue slide is accurate, the basic problem of the world's premiere electronic garage sale is that it's trying to be a mini-mall instead. Sort of.

Ms. Steiner, in an interview, attributes the fall-off in audience to eBay’s “identity crisis.” At the highest level, the site has switched from trying to promote itself as a place for a full range of merchandise to one that emphasizes used and off-season goods. There are other changes as well, she notes, that are not only confusing buyers but also alienating many of the site’s sellers. EBay is increasingly changing its rules to favor bigger sellers over mom-and-pop dealers and individuals clearing out their attics. For example, items from high-volume dealers appear higher in search results.

In other words, they've lost focus on what sort of product or service they provide. The various ways in which eBay has tried to shift its attention to the small retailer are manifold, such as the "Buy It Now" feature.

It seems inevitable, in hindsight, that other online storefronts would emerge, making eBay's bet on the small retailer a bit risky. (Particularly since the user experience for the shopper on a site like Amazon can be a little easier to use, and a lot less cheesy-looking, than eBay).

Ebay is an amazing web application, handling millions of transactions every hour. That's not a formula for an enormous amount of flexibility, however, in what the application can do.

Here's where the product management function is critical. Yes, says the product manager, we might make money in a lot of different markets. However, our current product is very good for a particular market, and if we can't morph it into something that's going to capture and keep a lot of new business, it may not be worth pouring money into an inherently risky venture. (Or, if it's a risk worth taking, having a plan B is still a good idea.)

It seems weird that, if we're in the middle of a recession, and people are trying to scrape two nickels together, the place where they might sell a few spare items is not doing well. However, economics depend on more than just supply and demand.

Comments

[Saeed Khan]

Tom,

I'll speak only for myself, but I found eBay has priced itself out of the market for many lower priced items. When you add in all the fees that eBay charges, various listing fees, transactions fees, fees for Paypal etc. they add up to a big chunk of the selling price.

It's a lot cheaper to post on Craigslist or some other more local site for lower priced items and they seem to work pretty well. I sold an Apple TV recently (won in a trade show draw) on Craigslist. Cost to me... $0. The guy who bought it came to me, paid me in cash and took the product. How much easier does it get?

I think eBay is still good for products that may require their reach to find buyers -- e.g. more esoteric, collectables or larger items.

Saeed

[Livi]

I just would like to know who is running their affiliate program. They are running eBay into the ground. Ebay Partner Network is the most abusive and unfair affiliate network you could ever find out there. Their affiliates are the motor of that company and EPN treats them like crap. They have no respect for their affiliates. Their affiliates are scared to death of them. Somebody needs to fire the head of EPN but 911!

[Patricia013]

John Donahoe and his "disruptive innovation" has lost Ebay billions in revenue during the past 1 1/2 years. Sellers are outraged and Ebay's reputation has become so tarnished that even if they do possibly hit on a viable business model they simply won't get the buyers back. These are going to be hard-learned lessons for Ebay - perhaps lessons they can never recover from! Other venues are happy as clams. The tight monopoly Ebay had on the collectibles and vintage niche has been broken...and just like Humpty Dumpty, they'll never put Ebay back together again. This is what happens when you entrust a multi-billion dollar company to incompetents!