Bigger is Better But Only for Some. Anyone tracking online auctions recognized the bottom-line benefits of eBay’s change of strategy: By cutting auction listing charges for multiple offerings of the same items, eBay’s new fee structure would offer more “flat-fee” and “fixed-price” sales opportunities that would provide more listings; which, in turn, should pull more buyers. The fee change was supposed to benefit all buyers and sellers. In practice, eBay’s reduced listing fees worked only for volume (power) sellers; while eBay’s hike in commission or final-value charges (the cut from final sales) worked mostly for eBay’s bottom line. 

The new and improved example eBay announced would take effect offered up socks . In the Bad Old Days, a sock seller paid a fee to list each and every item, whether one package of socks (35-cent listing), or the required separate listings for 100 packages of socks (35 dollars worth of listings). Under the new, improved eBay fee structure, a power sock seller could list all 100 packages together, under the same listing, for only 35 cents. 

This worked cost-effectively for large volume quantity sellers at eBay. (‘Course, no-charge works even better for big quantity sellers, like the July listing of millions of items on eBay by Buy.com without any listing fee at all.) But the new flat-fee listings policy offered little savings to smaller online auctioneers who were selling in lots of far less than 100 packages of the same item. The change offered less to sellers of limited numbers of specialty items. And, when eBay kicked up its money-maker – the rate of commission on final sale – the change offered less than nothing to smaller retailers and online sellers who carried low-priced items.  

Hurt By Its Own Success? Some argue that eBay grew from start-up in 1995 to the dominant auction marketplace in the world, building mainly on small entrepreneurial and independent commercial auction needs … the so-called “Mom-and-Pop Store” level of the game. And now that eBay is successful, it is turning away from its roots. Analyst Charles King told E-Commerce Times that the new strategy is sound because “ … it makes a great deal more sense for [eBay] to work closely with larger, more organized e-tailers that are selling a higher-priced or larger-volume product, than [with] mom-and-pop shops that are selling at a lower price or half a dozen items at a time.”  

If profitability has no sweethearts, then the defection of smaller sellers and buyers to alternative auction and listing sites should cause no regrets. Unless, of course, there are other reasons – structural and targeting reasons – for original customer base defections. 

Going Local and Specialized; Plus Fraud and Feedback Busters. On October 6, eBay announced 1,000 layoffs (about 10 percent of its total workforce mostly based in San Jose, California) due to “a decline in overall consumer spending and increased competition.” 

While no one questions the currently slowing economy and lower consumer spending as causes of restructuring, some market watchers say eBay has been losing market share over several years, and the losses have occurred across the board. Those losses may have other causes, such as competition from both smaller and larger auction and listings players. 

·  Low End and Local – Those smaller entrepreneurs who don’t sell in large-volume lots or who focus on low-priced, low-margin merchandise cannot pay the listings fees (only lowered by eBay in the past few months) or the sale commissions. Many already defected to “low-end” services like Craigslist and local newspapers, some offering free listings. 

A global impact of higher energy prices is higher shipping costs; and that, plus a preference of smaller buy-sell operations to stay local, has led to switches to the local Craigslist. In addition to lower transactions costs compared to eBay, such defectors also pointed to working with local buyer pools, in cash, without shipping and logistics headaches.  

·   Specialized Competitors – One big competitor that has picked up market share from eBay, even before the economy went south, is online retailing giant Amazon.com. It has offered an online marketplace for user sales for several years; it offers new and used products; and Amazon charges no listing fees. While Amazon’s buy-sell marketplace specializes in certain product lines, and it also charges higher commission fees than eBay, Amazon is also a trusted site. And, according to Internet analyst Greg Sterling, Amazon has worked hard to expand product lines and gain buzz in the marketplace through new products like Kindle, the e-book reader. In some categories, those are products that used to sell only on eBay. 

Handcrafted and specialty items are available at Etsy.com for a 20-cent listing fee and flat-rate commission of 3.5 percent of the sale price. 

Smaller entrepreneurial buyers and sellers who specialize in categories of merchandise and who are more flexible in breaking lots to smaller minimum orders (rather than by the pallet or truckload only) are better off at vertical search and trade directory sites. For example, sellers of low-volume designer-inspired handbags could drill down to pinpoint targets on search or trade sites that specialize in Handbags or Women’s Accessories .  

·   Of Fraud and Feedback Ratings – One defector from the ranks of eBay commented at E-Commerce Times that high fees (commission on sale) and eBay’s new feedback system were the last straws. The commenter, who claimed an eBay power-seller feedback rating of 5340, also claimed that eBay changed its User Feedback system, too, in a way that was unfair to Sellers. (Sellers can not leave Negative feedback if the buyer does not pay, which limits ability to warn other sellers. The Buyer, however, can leave Negative feedback for any or no reason.) This former eBay power-seller went to an alt listing site, www.ioffer.com, and also listed a Seller Support Group at www.powersellersunite.com. 

Another commenter at this same E-Commerce Times eBay series claimed that fraudulent listings and sales at eBay’s site (listing reproductions or fakes as “originals”; unreasonable prices for specialized categories of goods) were entirely unmonitored. This commenter complained that there is no way to notify eBay of fraudulent transactions; and any attempts to reach Customer Service with fraud claims were ignored. This specialty goods seller had defected to other sites that demanded no listing fees and only a 3% sales commission. 

Other Fish in the Auction Site Sea.  In addition to the Amazon, Craigslist, vertical search trade site listings above, other listing and auction sites competing with eBay are: 

·  Bidville (No listing fee for merchandise that does not sell; 5% commission on items less than $25; variable for higher prices.)

·  EBid (No listing fees or commissions)

·  UBid, Bidz.com, AuctionWeiser, The Free Auction, AuctionAddict.