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Yesterday, eBay reported its Q3 2010 earnings.

The good news for investors: PayPal is going strong, with net revenue up 23% year-over-year. The bad news for investors: auction revenue has all but stalled, increasing just three percent year-over-year.

The latter is not just bad news for eBay investors, it's bad news for sellers, some of whom may already be feeling the pinch.

On Monday, a letter from Ina Steiner, who has been selling on eBay for ten years, was published on AuctionBytes. It read in part:

I have been on eBay for over 10 years and the sales have dropped to an all time low. I was wondering if your readers, who are sellers on eBay have dropped this low also.

My sales are down 80% on eBay from the same period last year October 9th, through October 16th. This is really and truly a sign that eBay has a major problem with traffic on the site and their policy changes have created this problem.

While some responding to Steiner's letter stated that their eBay sales were up, more than a few indicated that they had seen declines similar in nature to Steiner.

Obviously, there are a number of reasons why an individual seller's sales might go up or down, even considerably. But coupled with eBay's Q3 results, stories like Steiner's seem to provide some evidence that eBay's auction business is stalling out.

Many would blame this on eBay's fee increases. And they do have a point. In February, one blogger explained succinctly the implications of eBay's 2010 Spring Seller Update:

Expect to see fewer people using auction style listings since there is no way to cover the increase in selling fees. More fixed price (immediate purchase) listings will be used and prices will be raised moderately to cover the increased final value fees. New users who don’t notice the hidden final value fees will be shocked when they are billed $35.00 for selling their Playstation 3 (or whatever), have to pay $25.00 in shipping, and another $9.00 in PayPal fees. Suddenly that $300 they got from their sale has dropped down to around $225.

Of course, auctions made eBay what it is (or more appropriately, what it once was). Fixed price listings simply aren't as appealing. But more important is this fact: eBay's increase of final value fees is a tax. Taxes go up, sellers increase their prices as a result, and in turn sales go down. This isn't rocket science.

If eBay's Q3 results are any indication, eBay may be pushing the limits of what the market can bear. Obviously, companies can't grow rapidly forever, but if eBay is serious about growing its top line again, it would be wise to consider that it has to decrease 'taxes.'

Correction: Ina Steiner is the editor of Auction Bytes, not the eBay seller who wrote the letter published in Auction Bytes. At the request of the author of the letter, Auction Bytes published the letter anonymously. 

Photo credit: liewcf via Flickr.

Patricio Robles

Published 21 October, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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rory

its sounds like eBay are going down, down to bargain town! Never bought anything on ebay I really don't like the site. And I have heard from other friends who sell, that either sales have hit an all time low.

about 6 years ago

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Walter

My Sales on eBay are not as strong as they have been. However, they could be a lot worse.

Blessings, success and prosperity to all.

Walter

about 6 years ago

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Arch Stanton

This article cuts straight to the point of the current problems that are plague ebay and the online auction business. I was recently shocked to see a NIGHTLINE 15min puff-piece on how amazing ebay was to the current economic down-turn and how well it was attracting customers. No mention in this news program about the complete downturn in profits and traffic to the ebay site. I have been selling on ebay since 1998. After after about 3 year break from constant selling on ebay I decided to come back to ebay in the beginning of this year, just and see whats going on the site. Having been turned-off by the FEES on EBAY I had instead mostly been selling direct or through AMAZON MARKETPLACE. I quickly realized that ebay had changed a lot. Mostly for the worse. The site is as perplexing as ever. Both difficult to navigate as a buyer or seller. Little progress has been made at all in easing the experience of listing items on ebay. More steps and seller requirements for listing added. More hoops to jump through in order to get certain price-breaks on listing fees. Most shocking of all is how many of these changes were made in an exacting attempt to be much more like AMAZON. I started to feel as if I was selling on amazon.com NOT ebay. Except that is was more difficult and the buyers weren't there. Not to mention more expensive. If I sell fixed price on AMAZON it cost me 15 % plus .80cents closing fee ( i.e. cc processing fee ). Selling on Fixed Price EBAY cost me the same FVF fee %15.00 but then add on anywhere to .50cents listing. .30cents Paypal fee and 3% Paypal commission. Also, total lose of business to buyers who don't pay or scam for charge-backs. You are likely to lose 20% of your sale price selling on eBay. Not a small amount at all. And where do you go from there.... 25%??? How high can they take it. Many... Many bloggers and Chat Room freaks on ebay have always explained away the fees by simply stating that one could raise the prices. As IF eBay had its own market price different from the rest of the market place that you can set at your own desire. This is no longer true. The price of products sold on ebay now are exactly won't the online market can bear. No more... no less. This is true for either auction or fixed price. So the auction experience is really there. Yes, sometimes you might get a good amount more than you hoped for the item on auction. But in the end its like vegas odds. The more you stick around on auction with the same or similar items the less and less you will make. Even with a great product at a good price on eBay you can quickly exhaust the number of buyers they have there. I have found the about half of my buyers on ebay are just other online sellers looking to score cheap product to turn around and sell online... most likely amazon.com. eBay has become a place for Penny auctions with buyers looking to spend pennies.

about 6 years ago

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norm

I don't necessarily disagree with the conclusions reached above, but the article makes a basic error which I hope will be corrected:

If you read ebay's earnings statement, it says that marketplace revenue has grown 3% year on year.  I hope someone will correct me if I'm wrong, but doesn't marketplaces include ebay's fixed price (and classified ad?) business as well as auctions?  Therefore it's wrong to say that auctions have stagnated, or that there's no demand for fixed price, on the basis of this statement.  For all you know, auctions are down 20% and fixed price / classifieds revenue is up slightly more.  Or vice versa.

My guess is that ebay's auction business has reached saturation here in the UK, that they've run out of easy international markets to move into, and that they're looking to other parts of their business to deliver growth (paypal, fixed price etc). ebay's user experience is messy, and doesn't lend itself to fixed price retail anyway, but you could argue that even if ebay fixes the site's shortcomings, there's still a natural limit on how many people are prepared to buy and sell using auctions.  If that's the case, I'm not surprised they they'd look for other ways to grow.

about 6 years ago

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Anonymous

Yes, this is my experience too and it's eBay/Paypal's own fault. The fees are way to high. Plus they get two bites of the cherry with eBay fees and eBay owned (compulsary for some sellers) Paypal fees eating into ever-tightening margins.

I myself had traded privately on eBay for 8 years with over 1000 problem free transactions. Lately it's just not viable anymore. 

If something goes wrong, eBay's advice is to factor those losses into your business model!

Too many people have been scammed/defrauded/supplied with counterfeits (or nothing at all!) via cunning eBay fraudsters and eBay who don't seem to care and punish the complainers.  I know of one seller who was blocked for appealling an unjust outcome too many times. 

A nasty trend of sending back a counterfeit version of a genuine item purchased has emerged....proof of return enough for Paypal/eBay to refund the buyer! OUCH.

As the difficult economic conditions start to bite, the honest eBay Seller and Buyer both find themselves at the mercy of eBay's and Paypal's "Judge, Jury and Executioner" mindset on any transaction that goes wrong. This can be crippling for a business that relies on eBay.

The good news is more and more sellers are adopting selling via their own website, which is a cleaner and more transparent transaction for the buyer and seller alike. Not to mention, when scaled to a client's business model, often providing much better returns and clearer margins, when coupled with a solid web marketing strategy. Not to mention the client is then building a value in their own website, instead of adding to eBay's enormous wealth.

There are other plenty of free and low cost methods of selling on community websites out there upon which to advertise items during the transition from eBay.

If I had shares in eBay, I wouldn't keep them much longer!

about 6 years ago

Murray Ambler-Shattock

Murray Ambler-Shattock, Freelance Business IT Consultant: SEO, Web Publishing & Social Media Leveraging. at Business-IT.Net

Inevitable market saturation. Negative and detrimental user experiences. Disillusioned users. Excessively high fees. Unpoliced. Improving alternatives. How long before say Google launches their own version? 

about 6 years ago

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Jim Tang

I have sold on ebay for the past 8 years and have seen a sharp decline in my sales over the last 2 years. I feel there are many factors for this drop in sales The economical down turn and recession not just in the UK but globally has not helped, The availability of cheap imports from China now means that now anyone can be a business trader, every and anything is now available at a touch of a button from global sourcing sites like "Alibaba" that can now put you in contact with any manufacturer around the world. You no longer have to have any experiences in importing good. Ebay has not help the situation with their constant change of policies over the last two years Some changes I have welcomed and has made my life easier, the automatic re-listing on items on a 30 day listing has give me back a life. I am no longer trying to work out the best time to list to maximize the best time for buyers to view my listings What most frustrates myself and many ebay sellers I talk to,is their policy on "top-rated Sellers" I have 3 accounts all selling the same products, The one has over 16000 positive feedbacks and only 2 negative feedbacks in the last 12 months fact it is my most established account (7 years) and has overall DSR of 99.9%, yet it has never had a "top-rated seller" My other accounts, one 4 years old and the other 3 years old has a "top-rated seller " every other month and their overall DSR are much lower than my original account. I am a honest person and will never go out intentionally go out to rip buyers off My listing clear states that UK orders will be posted 2nd class and oversea order will be posted airmail, I send out emails to every buyer informing them that their order are ready for shipping and to allow the a reasonable time for delivery, Also if they have a problem with their goods when they receive it to contact me straight away before leaving any feedback so we can resolve any issue. Yet I still have buyers leaving negative/neutral feedbacks, without making a tempt to contact me, thus effectually takes my top-rated seller away the follow month. I use a PPI license ( pre-paid system) with Royal Mail as like most business sellers on ebay do I use to send out every day but now due to the slump in sales it is no longer cost effective and send out every other day I give free P+P on all order made in the UK and I also choose to use 2nd class post for the UK in order I can keep my overheads down, so the listing prices is competitive with other sellers, and so I can make reasonable margins. Yet I still get buyers asking for their orders to be sent out 1st class, I always say not a problem but I will need you to pay a little extra to cover the cost of the 1st class post ( usually no more than £1.00) Yet they still think I am ripping them off and are reluctant to pay for the extra service. I have had many negative/neutral feedback where the buyers are not happy at having to pay the extra cost Ebay takes the side of the buyer much too easy and offers sellers no protection even though it's seller that pay all the fees ( listing fees and paypal fees) I have been disillusioned with ebay for a while and have been building my own site for the past few years, and once the traffic becomes regular I will have no hesitation with leaving ebay I understand that it's ebays customers that I use for buying my goods and for the privilege I must pay a premiumm but ebay must also understand that without sellers they would not have a site I wish all sellers the best for the future,a long this sometimes rough and rocky road they call sucess

about 6 years ago

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Kim

EBay has really gone downhill in the last few months. Right now they are doing major coding changes that have resulted in a massive downturn in views for sellers across the board-- RIGHT BEFORE THE HOLIDAY SEASON! There are glitches everywhere. Policy changes up the wazoo, rewards for scamming buyers, fees always going UP, no seller protection AT ALL, customer service reps that do not understand the tangled web of policies any better than the average joe on the street. It's a mess. It used to be a nice, fun place to sell. Now it seems to be more of a punishment. I really hope they turn it around. Or that Facebook or Google takes over.

about 6 years ago

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