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Sunday
May242009

What REALLY killed eBay?

Keith Rabois of Slide thinks that social networking sites killed Ebay. His premise is that eBay was visited more for its entertainment value than its e-commerce purpose.

eBay certainly is in bad shape, as we've discussed before. But why? Perhaps the thrill of competing in auctions had something to due with its popularity and now consumers are finding that excitement elsewhere, as Rabois suggests, but there is clearly something else going on.

eBay is good for two types of transactions: the rare and the cheap. You go there for things that just need to have but can't find anywhere else or to find steals on things that you easily can get elsewhere. The latter portion is what has killed the site for me. Being on the site just feels so cheap. 50% off!! signs are everywhere and I feel like I'm in a massive budget warehouse. The site is just unpleasant to peruse. Rather than the warm fuzzies of Etsy or the simple transaction of Amazon, eBay combines the worst of both to create a fake "community" where sellers are mostly "merchants" or "powersellers" rather than individuals, buyers don't even need to list their full names, and especially with the recent rule changes, sellers are treated like criminals. The whole place feels untrustworthy.

eBay is failing at becoming another Amazon. "Buy it Now" sales now compose half of all eBay transactions, but I am looking for a new camera or a bestseller book that has a clear current price, eBay is just about the last place that I would go. Sitting around in an auction is a waste of time for something that has a clear market value and even if it is "Buy It Now" the user experience on eBay is not nearly as good as it is elsewhere. On the other hand, if I am looking for a rare 60s-era Persian rug or a hard-to-find vinyl, eBay is great. The rare item that I'm looking for is likely there and I'm willing to put in the effort of the auction to get it and I'll take my chances on the seller.

CEO John Donahue is committed to transforming Ebay's business model away from auctions and towards fixed price sales of mainstream items. This is the wrong direction. Ebay used to be the best known e-commerce company, but with so many niche companies filling certain consumer demands (Zappos for shoes, Etsy for vintage jewelry, etc...), it will never regain its prominence.

Better to stick with what it does best: connecting buyers and sellers in auctions for items that are unique, rare, ultra-niche, hard-to-price or just hard-to-find. Leave the mass e-commerce to Amazon. It does it so much better.

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