A Few Thoughts About eBay’s Decline
Bambi Francisco, the best columnist covering internet stocks, announced some very surprising things this week about eBay’s traffic decline. For nine consecutive months, the internet giant has seen declines in traffic, year over year.
eBay is a great company, empowering millions of people to buy and sell. I love the original vision for eBay and the tremendous impact this company has on our economy. But I know of two serious problems that are likely getting in the way of future growth:
1. Greed. I wonder if eBay has gotten a little greedy and strayed from its founders original intent. Virtually everyone I know who sells on eBay has become increasingly frustrated over the years as eBays fees keep expanding. eBay, with its near monopoly on auctions has been squeezing and squeezing sells for quite some time. Of course, sellers keep looking for alternatives, whether that be launching their own ecommerce site and using Google AdWords to drive traffic, or even switching to Overstock’s new auctions. When Overstock launched its auction service, they were definitely in tune with the negative attitude towards eBay from sellers, and they are capitalizing on it.
In our increasingly open source and information-rich world, business models that are driven by greed are becoming obsolete. It’s harder to have a monopoly these days. The idea of owning customers and therefore being able and willing to keep raising prices until you are extracting unfair sums from customers who have no other choice should be discarded. Consumers have the power in an increasingly knowlege-rich, transparent economy. Companies that ignore customer sentiments for too long will find competition springing up quickly and from unexpected sources and customers fleeing.
2. Too Hard to Use. I am going to sound stupid admitting this, but I have the hardest time buying anything on eBay. I buy from Amazon several times a month, sometimes using 1-Click and sometimes filling a shopping cart with several items. I’ve never had a problem with Amazon. I love it. I go there for all kinds of products. But despite being an avid internet user since 1994, despite having used hundreds of sites and having built many, I struggle to complete a transaction on eBay. I think the main problem is that I have an eBay account and a separate PayPal account. I’m not a big PayPal user, so I struggle to remember my password. I’m confused whenever I get to the payment section. When I “win an auction” or click on “Buy It Now” I just want to pay for the dumb thing with my credit card and have it over with. I don’t want to have to figure out the PayPal thing everytime. Twice I’ve tried to purchase something from eBay in the past year and failed. Why keep trying? I don’t. I just go to Amazon now.And I’m not the only one with this problem. My wife thought she bought something for me for our anniversary on eBay, but it turns out she messed up on the PayPal step, so I didn’t get the Ty Detmer helmet after all.
I’m listening to an Audible book right now called The eBay Phenomenon, published in 2001 I think by the former editor of Upside magazine. (One of the best magazines during the bubble!). It’s a great story of the amazing growth of a truly internet-enabled business.
I want to believe that eBay will get back on a growth trajectory. I liked their investment in Craig’s List. I like their international expansion. But if they don’t solve these two problems and a related one which Bambi pointed out — that all the smartest people are flocking to Google and Yahoo — then I think eBay long term will continue to lose to the more efficient (speaking of the user experience) and less greedy (for the time being) Google and Amazon.