The recession is making it hard for retailers right now, but online auction site ebay is especially hurting from efforts to diversify its core business.
For over a year now, eBay has been expanding its offerings to include retail items, and putting itself in closer competition with retail giant Amazon. But that has come at the expense of its core business.
Ina Steiner, the editor of AuctionBytes, a news service for eBay sellers, has found that eBay’s Web traffic has been steadily falling since last fall. She attributes that drop to the company's current “identity crisis.”
EBay efforts to diversify have started to confuse consumers. In addition to the site's user generated auctions, eBayhas started to include more direct "Buy it Now" options and links to professional sellers.
According to The New York Times:
"At the highest level, the site has switched from trying to promote itself as a place for a full range of merchandise to one that emphasizes used and off-season goods."
But that hasn't proven good for business. In the first quarter of 2009, revenue fell 18%, to $1.22 billion. Gross merchandise volume (the total value of goods listed on the site) slid by 16% during the quarter.
eBay's page views in May 2009 dropped 32% compared to May 2008, and compared to May 2005, page views were down by 40%, with a 7% drop from May 2008 to May 2009.
Since March, the online auction site has tried to refocus itself on its core auction business, and there have been some early signs of rebound with those efforts. The Wall Street Journal thinks the company's stock is currently undervalued, but eBay's wobbily year proves that expansion cannot come at the cost of confusing users.
Image: ActionBytes
Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.
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2:48PM on 11th July 2009
I think in all honesty, Ebay have been too greedy and have completely lost the trust of their customers. This is one of the companies I expected to do well during a recession but it's own greed has killed itself. I can only see this company going down due to bad decisions made from upper management and upcoming competition from rival sites.
9:43AM on 13th July 2009
I agree with Jaydeo's comment. Ebay has been trying to change it's skin for more profit. All of the hardcore eBayers getting hurt seeing eBay prefers to keep big players and allowing them to list items for free. Which obviously has a direct impact on non-professional sellers who is trying to get rid of the junks from his/her home. But strangely eBay completely forgot that the these non-professional sellers are the major buyers. Wake up eBay, get the same identity as you had 5/10 years ago before you lose it to someone else.
6:46PM on 15th July 2009
the article is completely correct.
personally i won't use ebay or visit their site again, ever,until they abandoned the idea they can force me to accept paypal (and the liabilities that come with it) or use paypal (which they also own) to make a payment.