How eBay lost its mojo…

…and how to get it back.

I have been using eBay for ten years as a bidder; eight of those as a seller. I have an all-positive feedback above 600. I have even written my own guide to eBay. One might almost consider me an expert on the subject.

These days, however, I don’t use eBay as much as I used to. I check out the site once or twice a week, and bid on something maybe once or twice a month. Instead, I frequent Craigslist a lot more, and also frequent several of the zillions of Bargains websites out there.

So why the change? Why has eBay lost the edge that made it an exciting place to go? I can think of a few obvious reasons.

First, eBay has become predictable. The same stuff is there every day. This is because the sellers are mostly “MegaSellers” – my pet term for businesses selling large quantities of the same products day in, day out, at predictable slightly-less-than-retail prices, most of which do not sell. The small sellers – people like you and me, cleaning out their attics and basements, and posting odd and unique items at absurdly low prices – are gone.

Second, eBay’s fee structure is ridiculous. eBay is one of the most fabulously profitable business models I can think of: Minimal liability, minimal physical investment, no stock, no shipping, no storefront. eBay is the ultimate middleman.

It occurs to me that it requires the same number of electrons to serve up web page for a ten-cent item as a thousand-dollar item – so why is the cost of the listing tied to the cost of the item? And it doesn’t end there… as well as listing fees, there are final-value fees, which are calculated as a percentage of the final bid amount. This encourages sellers to pad the shipping to make a few dollars that eBay does not “tax”. There are extreme examples of this – ever seen a small 99c item with a $15 shipping fee? eBay fees, that’s why. And while I don’t like it (and eBay is looking for ways to crack down on this) I can’t say I blame ’em. As if that is not enough, there are Paypal fees as well…

Third, eBay is suffering from an identity crisis. Nobody buys stuff from eBay; we really buy stuff from eBay sellers. When eBay started all those years ago, it was a “bazaar”, where virtual street-vendors with virtual handcarts hawked their wares to virtual passers-by. eBay is, and always has been, a venue. Now they are trying to pretend that they are a supermarket – except that they aren’t one. I am not sure what eBay is today, and I’m not sure it does either. They are trying to be an “Amazon”, without actually doing any of the work that Amazon does. Personally, I prefer the bazaar…

Gone are those basement-and-attic gems that made surfing eBay such an intriguing experience – what’s left is an infestation of mega-sellers hawking cookie-cutter items stuff just a little cheaper than retail (or selling them at low prices and then tacking on outrageous shipping charges). Often the same item will stay on eBay at the same ridiculous price, getting re-listed again and again for months on end.

Their acquisition of PayPal did not help at all. The combination of these two neo-monopolies makes for what I believe to be the most arrogant business on the Internet (and I am including Microsoft here).

So… what would I do to revive eBay?

  • Rethink the fee structure to reflect the  listing, not the item – flatten listing fees by having a basic listing fee, with additional charges for pictures and additional features.
  • Get rid of the final value fee.
  • Bring the small sellers back – make the first (say) ten items per month free, then next ten at half-price. This would bring back low-volume sellers (note, since I wrote this, eBay started doing something similar, offering ten free listings per month).
  • Get rid of bulk-discounts for big sellers. MegaSellers – businesses that list huge quantities of items that mostly don’t sell – are the bane of eBay, as they turn an interesting bazaar into a boring and predictable MegaMall.
  • Remove the “all-you-can-eat” eBay stores (where you can list a large number of items for a set fee) would encourage sellers to “price to sell”, rather than the current “throw-a-thousand-against-the-wall-and-see-what-sticks” model.
  • Get rid of the banner ads. eBay has gone through many redesigns in order to make best use of the space available. But they keep holding on to the banner ads – and some of the worst-of-breed at that. In the past those ads have included the exceptionally odious “dancing baloney” ads of lowermybills.com and their ilk (the first “punch-the-monkey” ad I saw was on eBay). And I still see Classmates (who recently got sued when their “somebody is looking for you!” claim proved untrue) ads daily. Get rid of that crap. Please. It’s not like you need the money…
  • Leverage the user community to settle disputes. eBay has a really bad reputation for handling disputes. Instead, why not let the user community handle it? It would be easy enough to allow users in good standing to opt-in to a panel where they can be the “jury” in a dispute, and have eBay give them a credit for their time and a little logo that they can use. They could also police or report some of the more aggravating abuses that go on. Craigslist does something similar, allowing users to flag and remove bad listings. This would also allow them to reduce the cost of the joke that they call Customer Service.
  • Stop restricting payment methods. Ever since eBay acquired PayPal their universe has been contracting to the point that you can no longer accept a check or money order. If they could outlaw cash, the probably would. They have stubbornly resisted any real competition (Google Checkout is not allowed because it is “not secure”). eBay may recommend PayPal as their soup-to-nuts secure solution, but if the users agree to use a different payment method, eBay should not get in the way. They are, after all, only a venue. It’s about time they started acting like one…
  • Admit that PayPal is a bank. PayPal, for those who did not know, is the “online payments processor” that  looks like a bank, walks like a bank and quacks like a bank – but it ain’t a bank… cos that would mean having to obey laws and regulations that they would desperately rather avoid. It is time to put an end to this incestuous relationship and spin-off PayPal as the bank that it always has been.

Yes, the money-men will tell you that this represents a huge dent in cashflow, but the money-men don’t “get” what eBay was and has become. eBay has stopped being a fun place to visit; their top priority should be to get that “mojo” back.

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