So Over It: eBay Eats Itself


If eBay were an item the online auction site sells, the product listing might read: "shows signs of age, wear and tear." Buyer feedback wouldn't instill much confidence.

EBay, once-ubiquitous, doesn't generate the "must see" buzz it once did. We just aren't rushing back each morning like we used to, and we are not alone. According to the auction industry Web site, which crunched Nielsen data, eBay traffic declined in April and May, both sequentially and year over year. Page views for May were down 32% from a year earlier.

EBay will release second-quarter earnings Wednesday. The company posted revenue of $2.02 billion in the first three months of the year, a $171.6 million decrease due to "difficult macroeconomic conditions."

The news is not all bad for eBay. Revenue increased 12% last year, and free cash flow of $2.3 billion set a company milestone. On the user end, the site still collects more clicks than rival

In a July 6 advisory by Sandeep Aggarwal of Collins Stewart, the analyst sounded an optimistic note about the company.

"The changes eBay has been implementing to transform its Marketplaces business for the past 18 months are working now and beginning to bear fruit," he wrote, specifically citing improvements to the site's search function and increased selection.

All well and good, but will customers be reinvigorated?

For better or worse, eBay is built on a business model that is very much dependent on its network of sellers. They are a disgruntled lot, prolific at flame-throwing. Visit any blog or message board related to eBay and you'll find post after post of vitriol. Many of the complainants are immediately dismissible -- there seems to be a trend of posters who, despite claiming to be multi-million dollar business interests, write with the literacy of a Nigerian scammer. But some of the posted gripes cut to the heart of the matter.

New fees and policies have led defectors to such sites as and everybody's favorite scapegoat, Craigslist, the new king of the gray market.

"China" is a dirty word to this core constituency, many of whom allege that cheap goods and counterfeits from that country are flooding the site. The ongoing effort to attract larger retailers is seen as a threat to those mom-and-pop users who initially built the site into a powerhouse. The very sellers who made eBay such an addiction are now being pushed to the background.

As for blaming recent losses on the downturn and scaled-back spending, one might agree that a recently unemployed auto worker would wisely resist the urge to enter into a bidding war over a Mrs. Beasley doll. You could counter-argue, however, that the same forces might just as easily drive folks to the cheaper goods, gently used items and spare parts that the site provides.

But that didn't happen and, compounding the missed opportunity, the site seems to be moving its focus from that sort of merchandise. The home page no longer looks like an auction site, so much as a retail portal or online infomercial. Consider a recent featured item, the Pop-Up Hot Dog Toaster, pitched with breathless prose: "As quick and easy as you can make toast, you can make hot, tasty hot dogs!"

If only it were that easy to heat up our interest again.


—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at

Show Comments

Back to Top