Decay sets into eBay

INTERNET behemoth eBay is showing signs of decay. A planned strike by many of its sellers over higher fees and changes to feedback rules has competitors circling.

They are smelling blood and picking off sellers and buyers as they flee.

Although past boycotts by eBay sellers have flopped, there is considerably more desperation in the angry voices of those organising this latest week-long strike, planned from next Monday.

In a call to arms, seller Valerie Lennert has posted a YouTube video titled Feb 18-25th 2008: World Ebay Strike. It has had 27,800 hits as of yesterday morning. "My inbox is overflowing with people that are ticked off," she told Fortune magazine.

I'm not surprised, Val. What they're "ticked off" about is a series of changes being introduced by the company's new CEO John Donahoe to counteract lagging sales. They include a new fee structure to come into place this month that spells increases across the board but with discounts for "powersellers" who reach certain sales criteria levels; and a controversial change to the feedback protocol in May which will prevent sellers leaving negative feedback against buyers who misbehave. Which sounds dangerously like an open invitation for miscreant buyers to "go for it".

It is a way to drag buyers - who may have been stung or embarrassed by a previous negative comment - back to a "moderately safer" fold. And if there's something eBay needs right now it is more buyers - whatever their level of quality.

PC Authority reports that the number of active buyers increased 14 per cent in 2006, but only 2 per cent in 2007 "which suggests buyers are buying only once or twice and then leaving". Meanwhile, income growth was down to 4 per cent in 2006 compared to 76 per cent in 2004.

The figures are worrisome but the turnover is still incredible - there are something like 113 million items up for sale at any one time, and in 2007, according to departing CEO Meg Whitman, the eBay community of "hundreds of millions of people around the world" traded more than $60 billion in goods.

It is undeniable the company has been a massive success, but this latest user disgruntlement speaks volumes about what eBay has become.

The protesters in the main are sellers but we're not talking about Reginald from Runcorn who's selling off his golf clubs or Marg from Margate who's got a double-up in her Beanie doll collection we're talking about people who make a living from selling on eBay. People who have given up their day jobs and opened eBay shopfronts.

eBay is now one huge e-shop trading under the facade of an auction house.

Twelve years old in internet years, which relates, one expects, to something like 120 years in corporate reality years, eBay has degenerated into a homogeneous, price-predictable marketplace littered with dashed hopes.

What began as an exciting site where you could put almost anything up for auction and most times expect it to sell - sometimes at dazzlingly outrageous prices is now a source of flat auctions for sellers where if an item does sell it will usually go for, or close to, its expected market price.

For buyers, it's become the auction equivalent of Grand Central Station: if the train you want to board has too many other buyers competing for seats, don't worry, there'll be another one along in a few minutes. Just wait and you'll get your seat at a fair market price, if not considerably cheaper.

The result of this over recent years was that sellers ditched the auction process for opening eBay stores, often relying on the Buy It Now feature to bridge the two mediums.

The cause of this was that potentially evil little word - globalisation.

The bigger eBay grew, so did the "price knowledge" within its community and in particular and pertinent to the onset of decay - in the collectables community. Soon everyone around the world was trading on a level playing field with everyone knowing what everything predictably would sell for.

Antique stores across Queensland that traded in collectables during the late '90s and didn't make the move online suffered, badly. Their buyers were suddenly scarce, as was any decent stock. The solitude of late-night mouse clicking and a frantic last-minute thumping of the Enter button was putting them out of business.

The danger that a decayed eBay now faces is that it is starting to look more like its main competitor - which isn't an auction house at all, but an online department store - Amazon.

Meanwhile, smaller online auction sites such as OnlineAuction.com, eCarter.com, Bidville and bidmate.com.au, are picking up disgruntled eBay deserters. OnlineAuction reportedly scored 7500 new sellers in the week after eBay announced its policy changes on January 30.

And they're likely to be the sort of sellers eBay cannot afford to lose - the honest small player dealing in one-off items, collectables and the general muck and rake that usually comprises garage sales.

Amazon just needs to invest in even a gimmick auction option and the decay within eBay will turn septic.

They still call themselves an auction house, but I don't Buy It Now.