October 23, 2006, 10:33 PM — What bloggers are saying about the latest in information technology
One of the things I've always liked about the Internet is that it created a venue for small-time entrepreneurs who wouldn't otherwise be able to compete. For a few bucks a month, anyone can rent a little corner of cyberspace and set up shop. Companies like eBay came onto the scene early in the online retail picture, creating an infrastructure that allowed very small micro-businesses to flourish. But while it did create a lot of micro-businesses, eBay itself grew into a very large macro-business, and like larger businesses tend to do, they forgot about the little guy that made them so big in the first place.
One of the most common complaints about eBay is the ever-growing fee structure, which seems to nickel and dime everybody completely out of the market. In the early days of eBay, it was a great way to put something online, see if it would sell, and test the market. If it worked, you'd put on similar items. But higher and higher fees make this sort of experimentation impossible. If you don't sell what you put out there, the loss is becoming unacceptably large--often wiping out any profits made on the items that do sell.
And now, the fees went up again, in an effort to shift focus away from eBay stores and towards core auction listings. Curious? Definitely. Most eBay shoppers will tell you that they like the eBay store format most of all, and merchants appreciate the concept in that it allows them to create a more coherent presence. But is eBay listening to the folks who made them wealthy? Apparently not. Ebay merchant Mikes4X4andtruckrepair shut down his eBay store and lodged a unique protest of the fee hikes, posting what he called a "cost increase protest frog" in an auction listing. A surprising number of other merchants have also closed their eBay stores in protest of the fee hikes.
Steve Woda's blog tells us in plain words "what's wrong with eBay". Sellers are looking for more profitable channels. Buyers are shopping elsewhere. Fraud has become a major concern. In fact, and not surprisingly, eBay is growing slower than e-commerce in general, and Steve tells us that 41 percent of eBay users quit during 2006. And 100 of the top 1,000 sellers have either quit or gone out of business. Ebay's strategy in its fee hike is to push low-value products out of the marketplace, and thereby increase the value and attraction of eBay in general -- but it's not likely to work that way.
On the AuctionBytes blog Ina Steiner talks about the fee increase, and a lively reader discussion ensued, with the consensus being simply that eBay is out of touch with what eBay sellers want and need. Perhaps that's true--or perhaps it's precisely the opposite, eBay knows what they want and need, and are choosing to deny it to the lower value sellers in an effort to purge the world's largest auction site and turn it into something else entirely. EBay has "pulled the rug" out from under those eBay merchants who focus mainly on eBay stores as opposed to regular auctions.
Ebay's actions will almost definitely result in a lot fewer eBay stores, with eBay store owners operating on thin margins unable to keep up with the fees. It's brick-and-mortar retail all over again--small local merchants get put out of business by larger ones. Online commerce was supposed to be the saving grace here, giving smaller merchants a second chance--but Ebay, the last bastion of small-time entrepreneurship, is going the way of the shopping mall, letting in only those merchants who can afford to pay top dollar to participate. The old ideal of somebody starting an online eBay store presence by cleaning out their attic and then becoming successful--something which has happened time and again in the past--will be no longer. Only the well-established, high-profile, well-moneyed online retailers will remain, and Mom 'n Pop's Corner Cyber Store will be left out in the cold.
