eBay's Weakening Bid

by: Geezeo November 19, 2008 | about stocks: EBAY    

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Monthly spending at eBay (NASDAQ: EBAY) is down 30% from January through October 2008. Geezeo customers spent an average of $163.56 during October, compared to $232.50 spent in January 2008.

This data is according to the new Main Street Spending Index (MSSI) compiled by Geezeo, a personal finance Web site that helps consumers track their spending.

 

The number of transactions has remained strong at approximately 2.5 purchases per month. However, the amount spent per transaction has decreased significantly from $95.05 in January, to $63.92.

 
 
Although eBay’s customers are spending less, the overall market for second-hand goods has recently risen as consumers tighten their belts.

Sales are up at local resale shops nationwide. According to the national Association of Resale & Thrift Shops, 62.5% of its members reported higher sales in August. Goodwill has seen a 6% increase in retail sales for the first seven months of 2008 versus the same period in 2007.

With more people searching for a bargain, customer spend at eBay may stay at deflated levels until the economy turns. However, given their strong customer loyalty and retention, eBay is poised to make a comeback once the economy turns.

Disclosure: no positions

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This article has 64 comments:

  •  
    Nov 19 05:57 AM
    Pretty charts - too bad they don't tell the story.

    How can people buy IT if they can't find IT? And if they do find IT then they have to wait forever for IT to arrive due to the insane 21+ day holds Paypal places on seller accounts while they earn money on the float.

    Pretty soon buyers won't be able to find IT at all because sellers are leaving in droves as a direct result of Donahoe's disruptive innovations.
    Reply | Link to Comment
  •  
    Nov 19 06:24 AM
    Another worthless post bashing Ebay.

    Anyone with additional funds should be buying up EBAY at these levels. Even though EBAY’s growth has slowed, they’re still tremendously profitable; have tons of cash; doing stock buybacks; the paypal is really profitable; skype should become more profitable and keeps growing tremendously; etc... etc... Also, with Craigslist, you’re taking your chances that the seller is legite. You have no protections. So EBAY is really the best place in many respects. Stock closed @ $12.36
    Reply | Link to Comment
  •  
    Nov 19 09:13 AM
    "However, given their strong customer loyalty and retention, eBay is poised to make a comeback once the economy turns"

    Blah, blah, blah......

    Customer loyalty? Are you kidding? What desert do you have your head buried in? Have you seen the “customer loyalty” on the discussion boards? Not one person has anything good to say about eBay. NOBODY!

    Here’s a link to “customer loyalty”, it’s called Seller Central: forums.ebay.com/db2/fo...


    I’m assuming that you are referring to the sellers being eBay’s customers? You must be, since eBay carrys no inventory the buyers are the sellers customers, and eBay’s customers are the sellers, who pay the all the fees.

    If eBay were anything like the "great deal" marketplace it once was, people would have never stopped spending, regardless of market trends. The sad fact is eBay is simply TOO GREEDY and therefore TOO EXPENSIVE!

    The sellers have been forced to accept PayPal ONLY (an eBay company which benefits tremendously from the no paper payments policy, ex; NO checks, money orders, etc...), and that means an additional 2.9% or more added to the Buyers price. Add a 15% Final Value Fee to items sold and that equates to a near 18% hike in prices for the buyer, and this is not including listing fees, store fees, picture fees, conversion fees etc... the list goes on and on....

    Also, the way eBay's "Best Match" search is set -up, it is designed to favor the larger top sellers on the site, further decreasing sales for the small/ medium sellers. They are "paying" to have their items advertised, but they are being buried or not being seen at all, that's called a loss for all you cheerleaders.

    In turn sellers must recovery those hundreds of dollars in listings fees, for items that did NOT sell because they were buried in eBay's "Best Match" search engine. These paid listings have never been seen, therefore they’ve never had a chance of selling. How will sellers recover those hundreds of dollars in listing losses? RAISE THEIR PRICES, naturally, and pass it on the buyer. They have no choice.

    This is the domino effect. The more sellers lose, due to “Best Match” the more they have to recover in the form of higher prices. Ultimately the buyer will absorb these higher fees.

    eBay has carefully thought out their solution to eliminating the small/medium/ Mom & Pop sellers, without being the "bad guy" so to speak. They’ll just call it non-seller performance and exterminate them. The only survivors on the site will be the diamond powersellers that receive special pricing and favored search results.

    @ Lucky Lenny:

    You say at the end of your post that eBay stock closed at $12.36 like your proud of it. Is that minuscule figure supposed to good? It’s a joke!

    You also say: “Skype should become more profitable and keeps growing tremendously”

    Where do you get your information? Skype was one of the biggest blunders in history. And good luck keeping the Skype tugboat afloat with Google’s new FREE Video Chat. Yes, FREE is something everybody wants to hear during bad economic times. That’s a word eBay removed from it’s vocabulary a long time ago. Something tells me eBay should of been a bit more professional with Google, instead of blocking google check-out on the site and alienating them like they did the sellers who made eBay the giant it once was.

    Watch the stocks fall simultaneously with the changes: www.youtube.com/watch?...
    Reply | Link to Comment
  •  
    Nov 19 09:26 AM
    Talk about convoluted logic!!! Yes the poor ecomony drives people to look for bargains. That is why the ever increasing number of eBay wannabes are seeing explosive growth. Ebay should be thriving but is faltering.
    You speak of eBays turnaround when the ecomony rebounds!!!!! Taht is when it will plummet. No one will need it anymore.
    Reply | Link to Comment
  •  
    Nov 19 09:35 AM
    Am leaving Ebay for Biblio regardless of whether they raise their media rates from .05 to .15 January 2009. They're ridiculously expensive, user interface lousy, management worse. There are so many options out there, it's obvious Ebay is committing slow suicide, they'll have to drastically revamp fees and policies, again, in the seller's favor if they hope to survive.
    Reply | Link to Comment
  •  
    Nov 19 09:40 AM
    Why do Ebay's sellers seem so angry all the time? C'mon - if there was a better platform - combining exposure, ease of use, cost, etc... it would have materialized already. I never even heard of Biblio. Ebay isn't perfect. Ebay continues to rack up record sales & profits b/c the vast majority of people like Ebay a lot.
    Reply | Link to Comment
  •  
    Nov 19 10:39 AM
    lucky lenny asks: "Why do Ebay's sellers seem so angry all the time?"

    Read the Wake-Up! post, a couple above yours, for starters.

    In truth, a vast majority of people are finding out they can purchase items for less, with less hassle, at other venues.
    Google searches for products are replacing the heavily manipulated eBay search engines.

    Business 101: Competition lowers prices.
    eBay's new policy? Eliminate much of the on-site competition between sellers.
    Reply | Link to Comment
  •  
    Nov 19 10:46 AM
    LOL buy Ebay stock? Maybe I should buy Ford too - I hear its down to 1.97 a share! I'll wait till end of first quarter next year when I expect Ebay to be down past 9.00 a share and the company is seriously looking to change management or die! So, if you have money to toss in the trash - then buy Ebay now.

    Dinah is right and its something we've been saying ALL THIS YEAR - ebay is headed down the toilet. No...you won't see it suddenly but you will see it gradually the way we've been seeing it this year. Get real folks - face reality! Donahoe and his crew needs to go before its too late. As for the economy....all I can say is my website is doing well because there, customer is truly king and they don't even have to leave feedback or stars :-)
    Reply | Link to Comment
  •  
    Nov 19 10:55 AM
    I do still trade on eBay, but it seems that when I sell something I don't get to keep much of the money, what with all the fees, rising postage, etc.
    Reply | Link to Comment
  •  
    Nov 19 11:20 AM
    Now to comment on one of the articles statements:
    "With more people searching for a bargain, customer spend at eBay may stay at deflated levels until the economy turns"

    Huh? I thought eBay was the bargain hunters dream.
    Could it just be that the sellers offering the best bargains are no longer on eBay?

    Pick an item, such as a cd, dvd, book, electronic gadget, etc, and do a search on eBay.
    9 times out of 10 eBay will direct you to the seller Buy.
    Buy is Buy.com, they have their own website selling the same items.
    They raise the price on eBay for most items to offer free shipping.
    Their own site adds shipping. Bottom line: same total cost, it just makes it look like a deal with the so called "free shipping."
    Reply | Link to Comment
  •  
    Nov 19 11:21 AM
    60m people visiting eBay every month - sellers do not want to give up that base.
    Reply | Link to Comment
  •  
    Nov 19 11:40 AM
    This reporter did a great job EXCEPT when they wrote, "However, given their strong customer loyalty and retention, eBay is poised to make a comeback once the economy turns". NOTHING could be further from the truth. Ebay LOST it's " strong customer loyalty and retention" when Donahoe & Whitman began forcing their "Disruptive Innovation" scheme against their users.


    FIRE JOHN DONAHOE!

    www.petitiononline.com...


    PLEASE pass this petition to others!!!
    Reply | Link to Comment
  •  
    Nov 19 11:42 AM
    To sign the petition to FIRE DONAHOE, please search the internet for

    "Ebay Stockholders and Sellers Calling For Immediate Termination of John
    Donohoe CEO”

    found at petitiononline.com
    Reply | Link to Comment
  •  
    Nov 19 12:11 PM
    Customer loyalty? I can't tell you how many sellers who have been on eBay for 10+ years have left them. Remember emovieposters (Bruce Hershenson)? I won't sell on eBay anymore, and I WAS a long time, loyal seller and buyer, but no more. Anyone who asks, (and sometimes even if they don't ask), I steer them away from eBay. Hell hath no fury like an eBay seller scorned.
    Reply | Link to Comment
  •  
    Nov 19 12:13 PM
    Good morning! Wanna hear a good one?

    eBay wants sellers to lower prices so eBay can be more competitive, lol.

    Let's recap here. Donahoe killed eBay's search engine; got rid of FREE keyword advertising for premium stores; added a ton of advertising; took away seller feedback, checks & money orders; added dsrs; made Paypal mandatory; and conducted at least 2 years worth of guinea pig tests all of which drove buyers & sellers off the site.

    eBay had no competition until Donahoe created it because eBay used to be the world's biggest online auction site. Now it's a text book example of how to wreck a company - just hire a Baine consultant, lol.
    Reply | Link to Comment
  •  
    Nov 19 12:27 PM
    Bob, Google’s shopping site is good for a lot of things & I do use it. However, if i want to buy something fast - and it’s on ebay for about the same price as the myriad of hits that come up on Google’s shopping site - i’m just going to get it from ebay. This way they have my paypal & other info. I can check the seller’s rating. It’s less risky than going to a no-name site that’s linked to Google’s shopping. If Google shopping was superior to Ebay, Ebay’s sales & profits wouldn’t be going up every quarter.
    Reply | Link to Comment
  •  
    Nov 19 12:31 PM

    @Shawn Ward who states:

    "60m people visiting eBay every month - sellers do not want to give up that base."

    60m people visiting eBay every month does NOT translate into conversions. What it means is "window shopping" and price comparisons.

    I think your being bias to the number of people visiting eBay each month as well.

    Here's eBay's reach as of November 19th according to Alexa.com:

    Yesterday 1 wk. Avg. 3 mos. Avg. 3 mos. Change
    21.04% 1.995% 172.1359598% down 18%

    3 months change

    D
    O
    W
    N

    18% ???

    The number of unique pages viewed per user per day for this site is down 2% over a 3 month period as well.

    The old eBay would have bustling with holiday shoppers in September, regardless of market trends. Not anymore.

    I'm afraid eBay has hit a main artery, and in turn, (out of necessity to save money), has given the average buyer the means and the will to shop elsewhere. Please try to remember, a large portion of eBay's sales came from it's sellers, who were also buyers. When they screwed the sellers, they screwed themselves. Greed will always blind you to the obvious.

    Join the exodus! Bonanzle.com

    My opinion of course :)
    Reply | Link to Comment
  •  
    Nov 19 12:33 PM
    Lucky Lenny is probably Jose, an Ebay plant! On auctionbytes, after insulting Ina, the owners logged his IP and discovered an Ebay employee (Jose') Same thing with "Lucky Lenny".

    I would not buy ebay stock as it has not hit the bottom. No where near it. When the 4Q results come out it will be a no brainer. You'd have to be insane to buy it until way into 2009 or maybe even never!
    Reply | Link to Comment
  •  
    Nov 19 01:45 PM
    Bottom line is, the author of this article is correct, the "users" of ebay are actually the customers because eBay allows sellers access to exponentially more people than these smaller mom and pop auction sites cropping up across the net. There have been smaller auction sites for years and they never really get anywhere because they have to deal with the behemoth that eBay has become.

    Whether the sellers like it or not, eBay has become a household name. You could take a list of auction sites and test 100 people on the name recognition and eBay would win in a landslide. Bottom line, buyers have to know where to go to buy goods...and right now that place is eBay.

    Unless these smaller sites decide to work together to build one legit competitor, you will always have the giant (eBay) and the peasants (all other sites) scrambling around to collect the crumbs that have fallen off the giant's dinner plate.

    eBay currently sits at $11.86/share. At these prices, I know I'll be stocking up on eBay stock. Come talk to me in a year or two and I'll let you know what I did with double/triple my money back.
    Reply | Link to Comment
  •  
    Nov 19 01:53 PM
    "eBay currently sits at $11.86/share. At these prices, I know I'll be stocking up on eBay stock. Come talk to me in a year or two and I'll let you know what I did with double/triple my money back"

    It was $40 a year ago. Seems to be headed the wrong way to me.
    But go ahead, buy away. Grab some GM shares while you're at!
    Bet you bought Enron too!
    Reply | Link to Comment
  •  
    Nov 19 02:01 PM
    It was at $25 3 months ago, so in my determination, this artificial decline is due to the overall ecomony which is down right now. Pretty much every stock is down from where it was a year ago, what's your point?

    Bottom line is, eBay is likely to reach at least $20 a share again, with the potential to be a huge moneymaker if held longer term.

    You can't replace name recognition and for the foreseeable future, eBay will be one of the primary internet hubs of commerce. $11.86/share is a steal.
    Reply | Link to Comment
  •  
    Nov 19 03:11 PM
    @HeadHunter who stated:

    "Whether the sellers like it or not, eBay has become a household name."

    Enron was a household name at one point in time too.

    @HeadHunter again who stated:

    "Unless these smaller sites decide to work together to build one legit competitor, you will always have the giant (eBay) and the peasants (all other sites) scrambling around to collect the crumbs that have fallen off the giant's dinner plate."

    Never underestimate the will of honest Mom & Pop sellers who MADE eBay the household name it is today. Small/medium and Mom & Pop sellers HAVE been scrambling around to collect the crumbs that have fallen off the giant's dinner plate. And guess what? They don't like it!!!

    eBay was an infant in the marketplace at one point too. So look out eBay and it's cheerleaders! Hell hath no fury like an eBay seller deceived used, abused and scorned!

    Join the Revolution: www.Bonanzle.com
    Reply | Link to Comment
  •  
    Nov 19 03:17 PM
    In case anybody missed the headlines November 19th 2008

    "e-Commerce Growth Screeches to a Halt"

    finance.yahoo.com/tech...
    Reply | Link to Comment
  •  
    Nov 19 04:00 PM
    Ebay may be a household name but that in not necessarily a good thing. Not too long ago I was proud of my association with eBay and bragged about it. Now the eBay brand is associated only with corporate greed and gross mistreatment of its customers (ie the sellers that built the site and provide its revenue). As a respected member of the society I rapidly became ashamed of my association with such an unethical "household name". It was not easy to give up the $100,000 in annual gross sales I generated on the eBay site but I felt strongly motivated by my principles and sense of moral integrity. As a result I was able to reduce by prices as I was relieved of the burder of paying thousands of dollars in monthly fees to eBay. My reward for having scruples and separating myself from an amoral corporation is skyrocketing sales on alternative sites.
    I know that I am not alone as I am finding shopping fun again. Independent Mom and Pop sellers have a personal vested interest in providing good service and keeping their customers happy. Business seems to flourishe under those condition rather than stagnate as it does under the whip of a greedy corporation.
    Ebays dismal sales are only of their own making and have nothing to do with the economy - just look at the double digit growth of the eBay alternatives in this very same economy
    Reply | Link to Comment
  •  
    Nov 19 05:55 PM
    Note to Wake-Up!,
    I have decided to move most of my sales to Bonanzle from eBay.
    I had a couple of questions, and sent them to their site contact.
    Two (2) hours later I had the answers by a real live friendly Rep.

    Send a question to eBay and it can take days, if they even reply with one of their standard, one size fits all answers.

    If anyone thinks that the likes of Amazon or Google is not keeping tabs on the looming downfall of eBay, better think again.
    Reply | Link to Comment
  •  
    Nov 19 06:15 PM
    Not to say I'm happy, but, you could see this coming, from the no negative feedback changes to Paypals holding of funds while sellers are out for fees and postage to the buyer! Come on, this stupidity will put'em all in the poor house if Ebay/Paypal & (need I say) Skype (what a joke) , continue to chase away need sellers/members faster than they're spending the money/fees elsewhere, I say where is Google or some real competition for a market that is surely there but being black listed by guidelines rougher than nazism!!
    Reply | Link to Comment
  •  
    Nov 19 08:14 PM
    WhooHoo! Way 2 go Bob C!!

    Bonanzle.com is a wonderful place! Full of great people, buyers and sellers. Mark and Bill from Bonanzle.com are two remarkable and exceptional individuals who believe that shopping and selling should be fun and not terrifying. Sellers should embrace their buyers, not fear them. Bonanzle.com is bringing true fun and excitement back to the marketplace again.

    I have spoken with them several times via email, and never did I wait more than an hour or so for a response. And you know what the best part is? A real human emailed me back! With helpful answers, a wonderful attitude and a sense of humor to boot. Yes, that's right - it's OK to smile again!

    You see, sellers and buyers are symbiotic, without each other, both will fail, and neither will survive. I have never seen a company pit there buyers and sellers against one another. eBay accomplished this feat quite easily and it spells utter disaster for the marketplace (at least eBay's Marketplace).

    Sellers dread receiving feedback anymore, as they skip a heartbeat opening the DSR's praying and hoping that this will not be the day they go out of business. eBay is NOT fun. It's down right deadly if you ask me. Too much stress never increased a persons lifespan. But hey, we're replaceable, right?

    I have a great feeling about Bonanzle.com. Imagine... Having fun shopping and fun selling again! What a much needed breath of fresh air!
    Reply | Link to Comment
  •  
    Nov 19 10:01 PM
    Purchased out of print CD for $7.98
    Plus tax = $8.73
    Cost of listing on eBay = $.15
    Final value fees = $3.80
    Paypal fees (including flat $.35 fee) = $1.79
    Total cost of CD to seller: $14.47

    Item sold for $19.99

    Total profit of: $5.52

    Unless you can come across tons of rare CD's each day, $5 is barely worth your time and effort.

    If you're selling something that has minimal demand, best donate to charity and get the tax write-off rather than p*ss your money away on feEpay.

    Not to mention everything the other posters mentioned was spot-on regarding the ridiculous changes in the past 2 years.

    If someone would make an online auction site like feEpay 2 YEARS AGO, they'd make a killing... kinda like feEpay was doing.
    Reply | Link to Comment
  •  
    Nov 20 01:55 AM
    they think they can bring down $9 bln business by posting on these blogs negative messages and crypto-commercials for wannabes. "Bonanzle" customer support called you back? That's because you are one of 7 customers they have! (of course, much more probably is that you all made up the story :)

    ok, take this:
    www.medved.net/cgi-bin...
    vs
    www.medved.net/cgi-bin...
    (independent source) shows the number of items almost doubled YoY.

    Now, $64K question - how many items are there on Bonanzle.com? Answer: www.powersellersunite.... doesn't even LIST it as a player. How low...

    It's OBVIOUS the current stock price of $12 - which is 1/5th of the stock price when eBay's revenue was actually 5x lower - is a joke. People over-react (and not only in case of eBay stock, of course). It'll be back to normal - I'll then log bak to see if these people have "waken up".

    As to the business, well, it may slow down this holiday season (just like for amazon, overstock and such), guess what? all the wannabes will die, and eBay will emerge even stronger.

    Stay warm... Happy eBay buyer :)
    Reply | Link to Comment
  •  
    Nov 20 02:49 AM
    @Wake-Up!

    Skype has FREE video chat supported for years now - millions of people have been using it - looks like you are not one of them :-/ (actually, if you were, you'd never switch to any google rubbish).

    Read the whole "discussion" - and it becomes apparent... there's a bunch of bitter dudes - who - regardless of facts & circumstances - go out of their way to slander eBay. It doesn't matter that the whole e-commerce, the whole commerce, the whole country and the whole world is in crisis - these "intellectuals&qu... see nothing but eBay's doom and gloom. Car companies go down, weather gets colder, car blows up half globe away - it's eBay to blame! It reminds me of good old primitive communist propaganda - who would ever fall for it?

    Get a life folks!
    Reply | Link to Comment