Ebay shares are down 15% today which I think is indicative of a steady decline in the overall Ebay experience.
The market is smart: analysts at Merrill Lynch and Goldman Sachs cut eBay to “Neutral” from “Buy,” while Lehman and Jefferies both lowered their price target.
Why eBay is Falling Apart at the Seams…
The internet has changed. In the late 90′s and early 00′s, the internet was still relatively new and there was a large degree of novelty. It’s good to understand the two demographics that sell on eBay: (1) legitimate businesses looking for a new avenue of sales, and (2) people attempting to sell their own out-of-favor items.
Ebay hasn’t managed either category well.
The business aspect of selling on eBay has simply become more expensive. Plus, as it’s grown, it is harder and harder to reach the exact right demographic. The web is moving toward smaller and smaller niche markets. Ebay also has trouble resolving conflicts. By now, most serious users have had a bad transaction and it has soured them on the experience somewhat.
As for the large number of people who used it to clear out their garage: they still use it, but they’re aware of other, cheaper alternatives as well – such as Craigslist. Early on, People flocked to eBay just to prove they “got it” and used it in place of traditional avenues – garage sales, donations and trash dumps…
Simply put, eBay is failing to respond to the changing face of the internet.
Ebay is Not Creatively managing their Business.
Okay, so you’re in charge of eBay – what do you do? Revenue is decreasing, you’re getting tons of bad press and the overall experience is suffering. The current answer: “Let’s raise prices!”
Here’s a quote from the stock’s message board:
I am a seller who has pulled back 75% of our sales and have told our account rep it would remain that way until the changed back. MANY SELLERS have pulled back or closed shop all together. Still time to short this as IT WILL go to $20 or less in my opinion.
Go to eBay and click on COMMUNITY and then NEWS. The go to JULY 10th and click on the Line “A Message from Lorrie Norrington: Updates on Feedback”
Two QUOTES from that News Release: (1) When we get something wrong, we want to make it right & (2) Finally, we’re working to resolve other important issues that eBay sellers have raised over the past several months.
Wise Man Say, “Losing customers not good way to make money.”
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