posted on February 25, 2008 02:15:16 PM
SAN FRANCISCO -- A weeklong boycott against eBay's(EBAY - Cramer's Take - Stockpickr) revised fee structure ends Monday. But some sellers on the auction site still may be holding a grudge, and that could have a lasting effect on the company.
Sellers initiated the boycott in retaliation against eBay's new fees, which took effect Feb. 20. Late last month, eBay announced that it would charge a smaller fee for sellers to list their items for auction. In turn, sellers would have to pay eBay a higher commission if they made a sale.
eBay touted the change as a benefit to sellers, but not all of them are happy. Some even claim they are paying more in fees now than they had before.
Spokesman Jose Mallabo says the company has felt no impact from the boycott so far. Those participating in the boycott are passionate sellers, he says, but they represent only a small fraction of eBay sellers around the globe. No estimates are available on the number of sellers backing the boycott.
According to David Steiner, president of AuctionBytes, an independent trade publication for online merchants, eBay's listings totaled just over 12 million before the fee change. But then the company offered a listings promotion that helped drive up the number to just under 16 million on Feb. 13. Now that the promotion has expired, listings have fallen below 12 million.
Steiner says the drop can be attributed to any number of factors that might have nothing to do with the boycott. And analysts agree that the effects of the fee changes beyond the boycott have yet to play out.
"My suspicion is that the full impact won't start to be obvious until mid-April," says Derek Brown, an analyst for Cantor Fitzgerald, which makes a market in eBay. "You need to have enough time for sellers to have the changes in front of them, run through a cycle of their listings, and see what the final tallies are to understand what they'll do in the next cycle."
eBay introduced the new fees to boost growth at its sagging auction business, which accounts for 70% of the company's revenue. Its marketplaces division in particular has slowed, with revenue growth falling to 21% in the fourth quarter from 26% during the prior quarter.
eBay's shares have slipped 33% from their 52-week high.
"They're doing what they have to do," says Tim Boyd, an analyst for American Technology Research. "Their core business was getting sluggish. This was two years overdue."
Steiner says those who stand to benefit from the fee change include commodity sellers who tend to have low sell-through rates and end up listing their items multiple times. Those who might lose out are people with high sell-through rates and high final prices on items like antiques and collectibles.
Steiner notes that sellers have boycotted eBay in the past because of fee hikes or policy changes. But this may be the last straw for some of them.
"There's a cumulative effect that erodes eBay's image," Steiner says.
During the last big boycott in 2005, sellers had little choice but to crawl back to eBay. Now, however, the marketplace is much broader, and sellers can push their wares on sites like Amazon(AMZN - Cramer's Take - Stockpickr) or Google(GOOG - Cramer's Take - Stockpickr).
"There weren't a lot of second- or third-tier platforms but Amazon has now opened up and they've cherry-picked top sellers from eBay," Steiner says.
Still, that's not to say that sellers will leave eBay en masse just because they can. Boyd says the site continues to offer more opportunity for small players than its competitors.
eBay is still the best place for sellers who have not achieved scale (required) for Amazon or Google," he says.
Beyond the fee change, eBay is also imposing a new rating system, which will influence the order in which sellers show up in searches on the site and that too could affect eBay's total listings.
A few months ago, eBay began allowing buyers to anonymously rank sellers based on their level of communication, shipping times, shipping and handling charges and the accuracy of their auctioned items' descriptions.
Next month, the company will use those rankings to sort which sellers should appear first in the site's search results. High-ranking sellers will rise to the top while low-ranking sellers will fall to the bottom.
But Brown points out that high-ranking sellers aren't necessarily eBay's biggest sellers, so listings have a potential to fall.
"One of our concerns around the stock right now is the tremendous amount of uncertainty," he says.
Boyd agrees that there is still a lot of unknowns about eBay right now. But at the same time, the company had no choice but to make a move, given the rising competition
posted on February 25, 2008 02:55:57 PM
"Boyd agrees that there is still a lot of unknowns about eBay right now. But at the same time, the company had no choice but to make a move, given the rising competition"
The real question is whether this was the right move... according to us sellers the most obvious answer is NO!
The reality is that ebay survives off of sellers that bring buyers to their forum. The more they screw sellers, the more they screw buyers. Harsh reality, but it is true.
posted on February 25, 2008 03:09:31 PM
Thank you for posting the article! I think what it boils down to is this line:
eBay's shares have slipped 33% from their 52-week high.
posted on February 26, 2008 05:04:28 AM
It will be a while before any impact is felt. My Ebay bill is usually almost $300/mo. I've closed my store and am listing far less. So far my fees for this month are just over $20. My billing period ends on the 15th. If enough sellers' fees are this much lower, eBay will feel an impact. In the grand scheme of things, however, I don't think it will make a big enough impact.
Ebay is turning into a giant online mall. I think that's what they want. Ken made the comment that he only shopped on Ebay because of the smaller sellers. He could find things much cheaper than going out to the B&M stores around here and he could find things related to his music that aren't being sold any longer. If the small sellers are gone, he will be, too. I suspect a lot of buyers will leave. Why would I buy from Sears on Ebay when I can go directly into one of their stores and forgo the shipping charges and the uncertainty of what I might be buying?
posted on March 8, 2008 07:25:36 PM
once sellers start to feel the impact from the higher final value fee on their monthly bills, they really will start looking around for other cheaper platforms. I believe that the unrest we see now is only the beginning.
If one of Ebay's competitors can create a hype around their site, we will see sellers joining them en-masse. Buyers will follow the product and the bargains (thats why they all went to Ebay years ago!)
The biggest challenge for Ebay will be to stay attractive for the buyers.
The fun of the auction with it's bidding wars has been gone due to the growing amount of 'buy it now' items and the 'sniping'. Ebay has become a huge shopping mall like the old mail order catalogs. If Google or Yahoo (again) will come into the market with an auction-only system where 'sniping' will not be possible, they might take a huge chunk out of Ebay's business with lightning speed. Those giants can attract enough sellers right away, and the excitement of bidding at a real auction will be far more attractive than the shopping mall.
posted on March 8, 2008 07:44:51 PM
really dislike the sniping and programs that relate to it.
I purchase from a couple of online sites that have a system where if there is a BID(legit) within the last 5 minutes...the auction is EXTENDED for that amount of time. Some say that would interfere with the LENGTH, but BOTH the seller and EBAY would win. With the BIDDING extended, the final price would go up. It would eliminate the sniping, because then they would have to bid again and everyone would have a chance.
posted on March 9, 2008 09:10:48 AM
I look at it this way... play by the rules. With eBay's system, sniping is part of the game. Deal with it, use it, who cares...
As a Seller I like the idea of an auction that extends time at the end if a bid is placed. More bids=more money.
As a Buyer, I have used sniping software to pick off a few auction here and there. I have always preferred bidding at the end of auctions as my win rate is higher than if I bid early. Sure there are exceptions. At the same time, I have lost a few auctions that time ran out and if it had been extended I might have won it.
Personally, sniping is nothing more to me than a last minute bidder... raising the price and buying an item. Nothing more, nothing less.
In reality, extending time at the end of an auction that receives bids is no different than a standard live auction. The bidding at your local auction house doesn't end at a specific time, it goes on until the bidding stops.
posted on March 9, 2008 09:18:47 AM
Stores seem to pulling all the old artist off their shelves, I am starting to sell CDs like never before. I am seeing songs being recorded by artist I haven't seen before also.
**********************************
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posted on March 9, 2008 09:23:10 AM
As a buyer, I like BIN, especially for essential items I need to buy- it takes away the uncertainty of if I will win an item or not. As a seller, I like auctions, they offer the possibility of a bidding war that could send the price sky high. That being said, I have gone from all auctions to 50% BIN. I know my products well enough to know which ones will go at opening bid (if I'm lucky) and which ones have higher potential.
posted on March 9, 2008 09:53:44 AM
I think that article TOTALLY MISSED THE MARK!
YES, we've had boycotts before...
And YES, they have ALWAYS FAILED in the past...
BUT: there is a BIG difference this time around...A difference that will dramatically change (ruin?) eBay 12 months down the road?
And, WHAT is the DIFFERENCE this time around?
THIS IS THE DIFFERENCE:
For the FIRST time in feeBay history, you have THOUSANDS upon THOUSANDS of little sellers (the BACKBONE of feeBay) who are scrambling all over each other, trying to OPEN A NON-EBAY STORE -- whether a VD STORE or ECRATER STORE or BUYITSELLIT STORE...
You now have folks who have been with feeBay since '98 or '99 who are PETRIFIED over the new changes (and, rightly so), and are feverishly learning SEO and AD WORDS, etc...
While feeBay keeps its head in the sand & craps all over its sellers, in about 12 months, the proverbial kaakaa-poopoo will hit the proverbial fan!
posted on March 9, 2008 02:42:51 PMFor the FIRST time in feeBay history, you have THOUSANDS upon THOUSANDS of little sellers (the BACKBONE of feeBay) who are scrambling all over each other, trying to OPEN A NON-EBAY STORE -- whether a VD STORE or ECRATER STORE or BUYITSELLIT STORE...
posted on March 9, 2008 03:26:50 PM
I still prefer the auctions as stores limit you on what you can get form sometimes a priceless object. The fun is when you get more than you ever hoped for. Give me auctions anytime, but do I have a choice?
posted on March 10, 2008 07:01:22 AM
I wish anyone well that buys stock in this climate, even Ebay stock. If I had a crystal ball or a time machine I might buy some more, but right now, for me, cash is king and queen until they stop talking about the R word and subprime mortgages.
You're very brave. I hope that you're right (not necessarily about eBay, but in general).
I have held the line in not selling anything. I can't quite get myself to buy.
Given our ages, our assets are a multiple of our annual income (been saving for years). I figure that the past few months have added an additional year of employment required before Sarah retires. Unless, of course, markets rebound like crazy. FWIW, we were relatively diversified with the exception of commodities, which we don't own outright.
My fear, given our desire to retire sooner rather than later, is if we go into a Japan-style decade or two of decline.
Caroline 
