As an active eBay (NASDAQ:EBAY) seller I've been monitoring the company's massive overhaul scrutinously over the past year. Given eBay's frequently dubious approach to its sellers I fear any small announcement as I know from past history that it's usually bad for me. eBay loves to announce and champion a reduction in one set of fees while whispering siumultaneously about much more egregious raises. I suppose they expect sellers feel the glass is always half-full.
Like most, I began on eBay as a buyer, dabbling in trading cards that had always been a hobby. But the liquidity on eBay intrigued me and I found myself flipping cards on which I had speculated at a profit. From there I began an aggressive 'side biz' on eBay that at one point saw gross revenues pushing $40k a month. Those days, however, have long been gone and I think that I have been kidding myself that the attrition in sales was sportscard related, not eBay related. I attributed the decline in revenue to the lack of heroes in The Steroids Era or amid the Patriots film scandal. Nonetheless, when Vikings rookie Adrian Peterson had one of the best rookie seasons ever in the league and sales only jumped a little, I realized there was an organic/intrinsic problem on eBay.
From this perspective I began to notice how much cheaper things were on eBay than before and how many sellers were having to protect themselves on eBay with high minimum bids instead of letting the auction flow from a cheap starting point. All the while, eBay just kept raising and raising fees. Meanwhile, they acquired payment facilitator PayPal and now own even more of the transaction.
Couple this lack of buying volume and fee hikes with insane postal rate increases and one can see how a once prominent Gold Level Power Seller can't stand it anymore. By the way, the postal service seems to subscribe to eBay's intellectually offensive manner in announcing rate changes. For example, last year when the USPS trumpeted the tiny .1 cent change in the price of a stamp it was simultaneously changing the price for me to send one well-protected trading card from .62 to $1.34. Amazingly, it is actually cheaper for me to send one trading card from Los Angeles to Nova Scotia, Canada than it is for me to mail it to my father two blocks away.
Earlier this year eBay dropped the bombshell of a massive change in feedback that sent sellers into a tizzy and a boycott. Oddly enough, I thought it made sense (the changes) and looked forward to the implementation. eBay's argument was/is that buyer's were fleeing the site after initial purchases and not returning because of unpleasant feedback experiences. So, they blamed the receipt of negative feedback as a buyer as the causal factor and now disallow seller's from leaving negative or neutral feedback for any reason.
And while I saw this move as being unjust in its application having been tortured by truly disturbed buyers over the years, I welcomed the return of buyers to the marketplace. If eBay in all its wisdom thought that making feedback a one way street created more profits for my business then let them call me a monkey's uncle without reprisal.
I assumed that the swing in feedback would cause more adverse feedback for me - and it instantly did- but what I never expected was that eBay would SIMULTANEOUSLY deploy ludicrous seller standards that gave far greater weight to buyer complaints and feedback. Despite having over 99% positive feedback our company was search lowered. Worse yet, part of their undefined algorithm for rating sellers in search has to do with Item Not Received complaints. We had several at the time that we rated "Search Lowered" and infuriatingly, they came from International buyers who had provided incorrect shipping information, making the items they ordered impossible to deliver.
Of course, my sales dropped precipitously as I was Search Lowered though I got no discount on my $4,000+ monthly listing fees for getting a fraction of the advertising for which I'm paying. eBay in turn, got less Final Value Fees from my enterprise.
And this is my point. eBay, which knew it was in trouble, focused on the buyer, thinking that solving that side of the equation would fix everything. They clearly had forgotten their oft-uttered mantra of Power Sellers being "The Pillars of the Community." They forgot about the seller, the guys that bring the products to the market. With no sellers, there are no buyers, and there are no listings or final value fees.
eBay didn't seem to calculate that many sellers like myself were growing increasingly disenchanted with eBay. Our profits were down, PayPal fees and policies were frustrating, and eBay and the post office cut deeply into profits. I had begun looking at the hours we were putting in for the return we were getting. It wasn't looking good.
And then the feedback change and the search standing issues came into play like a straw on the proverbial camel's back. Sadly, eBay just isn't economically viable anymore. I'm tired of getting harassed by buyers (and then eBay) over postal delays. I'm tired of the entity making the most money from my business being eBay. Most of all, I'm tired of being eBay's guinea pig and wondering from what day to the next what their whims will change in my daily life.
So, I'll focus more on selling at Amazon.com (NASDAQ: AMZN), which seems to have figured it out based on what eBay was doing wrong. In a fantastic article by this blogger, he makes a profound statement about eBay being reactive while Amazon is proactive. I couldn't agree more. Other than Home Depot (NYSE:HD), I've never seen a company screw up market dominance faster than eBay has.
Additionally, I wonder if eBay ever considered how many sellers like myself are also high dollar buyers? Most of my inventory comes from eBay and in May alone we spent over $10,000 through PayPal. Think that's likely to replicate itself if I'm not selling on eBay anymore?
From an investor's standpoint, you have to be terrified of eBay right now. Uncertainty is always a bad thing and even if you think my experience is unusual (it's not) or sour grapes (probably) you can't ignore some of the data coming in as to the reduction in the number of listings on the site. I've seen numerous quotations of a reduction in eBay listings on the eBay community message boards and started googling the issue today. According to PowerSellersUnite.com, an eBay seller refugee site whose mission statement is "helping sellers and buyers find the best alternative auction site(s) for their needs" auction totals have dropped precipitously as the charts below indicate. Forget, the peaks and valleys in the charts. Each square is a daily total. Look at where the mean average lies.
With eBay's revenue reliant on listing fees and subsequent commissions, this has to be alarming. Quarterlies will eventually tell and I'm guessing major funds are doing the same work I've thrown together here and you'll see some predictive decline in share price. No one likes uncertainty in a stock to start off with and these trends make me want to pick up some Amazon shares.
A quick review of Amazon and eBay's 52 Week Charts expresses some real separation in stock performance as well. Take a look at this side-by-side comparison courtesy of Yahoo Finance. And remember, this chart doesn't reflect what I expect will be a seller exodus from eBay and subsequent decline in listing revenue when reported.
If eBay is to survive in a profitable form, it had best reel sellers back in soon. This will probably require some person-to-person calling from eBay's Top Selling team who seem to always be the unfortunate messenger of eBay's often-drastic policy tweaks. Is it too late? Maybe so, especially if you consider the dire forecasts offered by Business Week, which declared "Auctions, A Dying Breed" here and the dark reports coming out of eBay Live, the company's formerly annual convention of staff, top sellers, etc. (See this video on the subject."
But perhaps the most disconcerting forecast came from eBay's resident cheerleader and educator, "Griff" who when put on the dais with eBay Director of Global Feedback Policy Brian Burke to defend the changes, uttered an unplanned remark in support of the troubled company, stating, "We had to make these changes because, without buyers, there will be no eBay in two years"
I'm not so sure they wanted Griff to say that and moreover, I believe this might be an internal sentiment voiced behind closed doors at eBay as they make these massive changes. I think they have looked at their growth and said, "We might not be around in two years if we don't make some changes." Nonetheless, I believe that eBay has alienated sellers for good as there are a vast variety of choices for fellas like me to shop our wares.
Hmmmn... I wonder what I'd make if I built an e-commerce enabled web site using off-the-shelf software and then used the $4,000 a month I'm paying eBay to buy Google search terms????
I also wonder out loud what eBay's feedback from its buyers - guys like me- would be now? Think it's 99%? And they don't have to worry about the post office doing the job.
