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EBay's changing auction strategy

Posted Jun 03 2008, 12:56 PM by Kim Peterson
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Auctions are disappearing on eBay and being replaced by fixed-price item sales. BusinessWeek says that's due to the changing needs of the consumer, who thinks bidding is too much hassle. Nope. Don't blame the bidder. EBay is doing everything it can to choke the life out of its own auction business -- and that's a big gamble.

Yes, time is precious. And yes, there are people who would rather "buy it now" on eBay at a higher price than spend days in a prolonged bidding war. About 42% of eBay auctions have a "buy it now" option, a figure that has grown 22% in the last year, according to BusinessWeek. EBay shares are up nearly 1% today to $29.59.

There's no question that fixed-price auctions work. But eBay is sacrificing its core auction business to fuel fixed-price transactions. It implemented fee changes this year that favor sellers with fixed prices and who sell more expensive goods. The sellers that helped make eBay what it is today -- the ones getting rid of baby clothes or old records -- are being pushed to the fringe. Add to this a new rule that limits the feedback sellers can give buyers, and it's no wonder they're abandoning eBay for Craigslist or other alternatives.

One seller told BusinessWeek he decided to leave eBay after realizing his annual fees would go to $180,000 from $120,000. He's going to start selling on his own Web site. He may not get eBay's traffic levels there, but he won't be paying eBay-caliber fees either. 

So where does this leave eBay? It clearly wants to be more of an Amazon-style retailer, with more dependable transaction revenue rather than relying on wild-card auctions. It expects to increase global listings that way, and said that its listings improved after implementing the pricing changes. It's paying a lot of attention these days to its PayPal unit, which is seeing great traction as a payment option on numerous Web sites. (PayPal brought in $582 million in Q1 revenue, a 32% increase year-over-year).

The traditional auction business is becoming an afterthought at the company, and honestly, who can blame eBay for trying to move beyond its roots? Its share price has tanked since the end of 2005, and a new strategy was in order. So yeah, things are changing at eBay. But don't blame buyers who are short on time and patience. EBay is doing this all on its own, and deserves total credit for whatever success or failure lies in its future.

Related reading:

Did the eBay boycott work? 

Ebay nails Q1, but questions remain 

Why eBay offers cheap long-distance calling

Ebay CEO to step down

Ebay tries to wash away mistakes with new service

Comments

 

Thanks to Ebay's new feedback system i can not even leave negative feedback. Been waiting 27 days for the seller to ship the item. No reply to emails or anything. Is the reason you changed the feedback system? Sellers can do what they want with no fear of negative feedback. How are people to know about the sellers past dealings if you can not give  honest feedback! I got boned but you cant say anything bad about the guy! And forget Paypal they do nothing to help you. FEEDBACK TO EBAY: SCREW ME ONCE SHAME ON ME SCREW ME TWICE SCREW YOU! And yes this is my second screw on EBAY. I am out 50.00 bucks so far and only emails from EBAY.

I've used e-bay for about 4 years exclusively for buying. I was turned off by their high fees for automobile listings, so I use Craigslist to sell, and only charge the actual shipping costs. All the people I deal with seem to like it this way. Now, I basically use e-bay and amazon for price comparisons, and frequently wind up buying local, even if it costs a little more. At least I can actually assess the items I'm buying phisically, rather than trust a sellers description, which at times hasn't been very accurate on ebay. If ebay continues to push out the little guy, then I'll stop using paypal too, but they won't even notice I'm gone, because I AM just a little guy. I too agree that shipping charges are ridiculous on most ebay items, which takes away a good portion of the savings I was about to obtain.

Ever since eBay went public, it seems to have progressively lost touch with the public. No wonder they can’t figure out what buyers and seller’s want. eBay management goes out of its way to avoid serious dialogue with customers about how their system could work better. I think eBay is rapidly becoming the Sears of the online world.

I would like to see eBay come up with a true barter format, much like the stock market and other real time exchanges. As a buyer, I should be able to post and change prices I am willing to pay for any item at any time. I should be able to bid on multiple like-items at the same time, and if I win one, the rest of my bids are automatically cancelled. Similarly, sellers should be able to change their prices and offers whenever they choose. If a seller offers a special discount price, they can limit the time it’s available. So, you had better grab it Mr. Buyer, it may not be there 10 minutes from now.

I think a barter style format on eBay would greatly accelerate the speed of transactions, and increase the percentage of listings that actually result in a trade. Is that really too much to ask from the so-called state-of-the-art online market place?

I am a double platinum power seller, which means that I have two platinum (power seller accounts) in ebay. Each selling more than $30k /month.  I have enjoyed ebay's freedom and reasonably safe enviroment for the last 5 years.  I feel so sorry for ebay now.  They are digging their own grave!

One of the most important principels in commerce is freedom (any country, community).  eBay changes are making the community into a dictatorship or a communist country.  I supposed is because they selected an ex-paypal director as their president.  The changes I see are exactly what I would expect in a financial institution to promote safety (BTE paypal obligated me to raise shipping prices due to anti-seller security measurements).  

Ebay has forgotten of their partners (power-sellers), and is trying to attract more buyers by becoming a "safer" community, tackling the bad reputation on shiping costs, and other problems --  They are doing it the wrong way!  If I were an investor I would do a put on their stock because it will sink very soon.  Although the changes were very positive for me (because of my feedback and best match), they do not allow me to grow my business and therefore, I am looking into other channels like amazon or eBid.  The biggest problem is lack of equality between sellers and buyers under the new ebay.  Long gone are the times, when ebay was the only selling channel in the internet.  Now it is easier than ever to have your own webstore, and compared to 12% average sales fees on ebay PLUS listing fees, which along with the other transaction fees become around 35% on the cost of the product making my ROI very bad compare to amazon who only charge 8% that would be close to 15% on the cost of product (because there is no listing fees).  This makes ebay a less attractive place for bargain shoppers, that is what ebay has.  They are smart and will soon realize that ebay is more expensive than other players.  On ebay I can only make as much as they do, if I make 20% they make 30%, it I make 32% they make 35%, only if I make 40%, they make less than I make (36%).  But as you can imagine, I am more interested in passing those savings to my buyers because we compete also agaist the non-internet retailers and all the other internet channels.

Ebay made another huge mistake, they are trying to push Buy It Now items to make the purchase flow faster through their new best match.  First this takes all the fun out of ebay, making the ebay experience disappear on the buyer's mind, they are not getting the best deal because it is not starting price.  On the sellers mind (who will start posting more and more BIN), the customer could be paying a lot more for it.  This is a lose lose situation, since buyers will now see ebay as an awkward platform, with losts of rip-offs instead of the fun hunt for low and win experience.  I say awkward because the platform was never designed for a shopping cart type site.  eBay express was an attempt but still falls short and carries ebay's name (a branding disaster).  Allow me to explain:  Under best match the flexibility and equality of the site are gone.  No single seller has the answer for every question (no matter how good the algorithm is made).  Which means that they will keep doing things their way )(the old way soon), and there is nothing ebay can do but observe their product portafolio become obsolete.  There is no way a new player can come and take advantage of the same visibility than their huge competitors in a plain level field.  It is back to the old route of over the hill before you can even enter the market (sharper image should have stayed in business a little longer lol).

I am runing out of time, but I definetely see ebay going down down down...

Get your own conclusions!

I am a double platinum power seller, which means that I have two platinum (power seller accounts) in ebay. Each selling more than $30k /month.  I have enjoyed ebay's freedom and reasonably safe enviroment for the last 5 years.  I feel so sorry for ebay now.  They are digging their own grave!

One of the most important principels in commerce is freedom (any country, community).  eBay changes are making the community into a dictatorship or a communist country.  I supposed is because they selected an ex-paypal director as their president.  The changes I see are exactly what I would expect in a financial institution to promote safety (BTE paypal obligated me to raise shipping prices due to anti-seller security measurements).  

Ebay has forgotten of their partners (power-sellers), and is trying to attract more buyers by becoming a "safer" community, tackling the bad reputation on shiping costs, and other problems --  They are doing it the wrong way!  If I were an investor I would do a put on their stock because it will sink very soon.  Although the changes were very positive for me (because of my feedback and best match), they do not allow me to grow my business and therefore, I am looking into other channels like amazon or eBid.  The biggest problem is lack of equality between sellers and buyers under the new ebay.  Long gone are the times, when ebay was the only selling channel in the internet.  Now it is easier than ever to have your own webstore, and compared to 12% average sales fees on ebay PLUS listing fees, which along with the other transaction fees become around 35% on the cost of the product making my ROI very bad compare to amazon who only charge 8% that would be close to 15% on the cost of product (because there is no listing fees).  This makes ebay a less attractive place for bargain shoppers, that is what ebay has.  They are smart and will soon realize that ebay is more expensive than other players.  On ebay I can only make as much as they do, if I make 20% they make 30%, it I make 32% they make 35%, only if I make 40%, they make less than I make (36%).  But as you can imagine, I am more interested in passing those savings to my buyers because we compete also agaist the non-internet retailers and all the other internet channels.

Ebay made another huge mistake, they are trying to push Buy It Now items to make the purchase flow faster through their new best match.  First this takes all the fun out of ebay, making the ebay experience disappear on the buyer's mind, they are not getting the best deal because it is not starting price.  On the sellers mind (who will start posting more and more BIN), the customer could be paying a lot more for it.  This is a lose lose situation, since buyers will now see ebay as an awkward platform, with losts of rip-offs instead of the fun hunt for low and win experience.  I say awkward because the platform was never designed for a shopping cart type site.  eBay express was an attempt but still falls short and carries ebay's name (a branding disaster).  Allow me to explain:  Under best match the flexibility and equality of the site are gone.  No single seller has the answer for every question (no matter how good the algorithm is made).  Which means that they will keep doing things their way )(the old way soon), and there is nothing ebay can do but observe their product portafolio become obsolete.  There is no way a new player can come and take advantage of the same visibility than their huge competitors in a plain level field.  It is back to the old route of over the hill before you can even enter the market (sharper image should have stayed in business a little longer lol).

I am runing out of time, but I definetely see ebay going down down down...

Get your own conclusions!

another common example of what happens when u take a good idea and corporatize it.

I agree, several years ago selling on Ebay was profitable and fun! Not anymore, Ebay fees are high, and Paypal is pushed but a learned lesson will tell you it does NOT protect a seller, and, if a seller is offering only payment option (paypal), I move on, they lost a sale from me. Its all become a hassle and not worth it.

I know what makes using eBay fun. QuickSnipe(dot)com - they are bringing excitement and fun back to the buyers of eBay.

YOU HIT IS ON THE HEAD SHAREHOLDERS ARE THE PROBLEM WITH EVERY COMPANY, JUST LOOK AT BUD, HERSHEYS, DISNEY ,THANKS AMERICAN SHAREHOLDERS FOR SELLING OUT YOUR COUNTRY.-EBAY AND PAYPAL PAVING A WAY TO A SOCIALIST NATION ADD OBAMA AND WE WILL SOON HAVE A LITTLE RUSSIA TO LIVE IN.

Thanks for the insight to buying only under auctions. I'm a seller and a buyer, but I went to the buy it now to sell my items because of the fee's and no sales.

When a person has a buy itnow and someone puts it up on their watch list, why???

The seller keeps listing this item, praying that you buy it. And another item will be out of their inventory. This way I can go find more to sell. I'm a small seller, don't charge handling fee's and I try and send for the correct shipping. I really don't make much, but if I can help someone find what they need I will. Using PayPal makes sense to me. I don't have to give my card number to anyone but them. And this keeps my security in one place. And a fee is attached to pay for this service. I can live with this. On craigslist.com, you don't have this security. You have no feedback to know if you are buying from a good seller or ??

So, I will keep selling and I pray you will give us a chance. Soon as my PC is fixed, I'll go back to the auction type auction and get rid of my store. It doesn't let me be myself anymore. And I know I will have fee's to be paid. But, it will be mine, not a company store that wants to charge me fee's every month when I don't get any sales. This summer hurt, but I'm still learning and still will. This is called progress. If you want eBay to get better, let the sellers that are small how you feel. Give better feedback and get discussions going or write the higher ups and keep a copy of your letters. Then send it to the papers if you don't see anything come from it. Or blog here. Walking away won't change for the better. These other sites will start doing the same thing, unless we stop this one now. And this could be done with your boycott, but this only hurts the small sellers that have to make money to stay alive. The emails and letters that overflow the offices would make more of a statement on how you would like to see the company run. And can we go back to auction only. One item at a time. This would increase sales I believe. This would make the demand higher than the supply. And this makes the price go up. I usually make .50 out of my shipping. Sometimes I lose money, since I haven't charged any handling fee's. I pack better than some, because I'm a customer sometimes and sometimes we include a gift. I figuare the shipping before we put it in, then we pay the difference from our profit(s?)

The fee's that people get charged could be more in reason, but when you go shopping you pay fee's that you don't see. In any item, the shipping  and the labor is part of the price. Taxes could be lower for gas, goods, and food. But, we all want to blame someone else. Who is who?

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