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Auctions on eBay: A Dying Breed

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  • Auctions on eBay: A Dying Breed

    For all of us who shop at Ebay....

    A side note...I could have posted this on the OTHER machinist site but I chose to post this information on the site that values the contributions of its members. ;<)

    TMT


    Auctions on eBay: A Dying Breed By Catherine Holahan
    Tue Jun 3, 8:08 AM ET


    Bruce Hershenson, who auctions vintage posters online, is hanging up
    his eBay gavel. For almost a decade, Hershenson's business epitomized
    the e-commerce that made eBay (NasdaqGS:EBAY - News) famous. He sold
    rare, collectible, sometimes kitschy memorabilia in online auctions
    that had a starting bid of 99%. But as the business of buying and
    selling over the Internet has matured, the thrill and novelty of
    auctions have given way to the convenience of one-click purchases.
    Hershenson will hold his last eBay auction June 3. "The auctions are
    nothing like what they once were," he says. "They won't ever come
    back."


    Auctions were once a pillar of e-commerce. People didn't simply shop
    on eBay. They hunted, they fought, they sweated, they won. These days,
    consumers are less enamored of the hassle of auctions, preferring to
    buy stuff quickly at a fixed price. Hershenson is emblematic of the
    legions of small business people who built their livelihoods on eBay
    but -- like eBay itself -- are having to rethink their whole approach
    to online sales.


    Sales at Amazon.com (NasdaqGS:AMZN - News), the leader in online sales
    of fixed-price goods, rose 37% in the first quarter of 2008. At eBay,
    where auctions make up 58% of the site's sales, revenue rose 14%. "If
    I really want something I'm not going to goof around (in auctions) for
    a small savings," says Dave Dribin, a 34-year-old Chicago resident who
    used to bid on eBay items, but now only buys retail.


    E-Commerce Continues to Evolve


    Executives at eBay have gotten the message. Since taking the helm in
    March, eBay Chief Executive John Donahoe has made it clear that fixed-
    priced items are key to future growth. EBay's "Buy It Now" business,
    where shoppers can purchase items at a set price even when the
    merchandise is also listed in an auction, makes up 42% of all goods
    sold on eBay. It's growing at an annual 22% pace, the fastest among
    eBay's shopping businesses. "As (Web) search has developed, you can
    get a great deal in a fixed-price format," Donahoe said in an Apr. 16
    interview after his first earnings call as eBay's top executive. "We
    are going to let our buyers choose." Donahoe did not comment for this
    story.


    At the current pace, this may be the first year that eBay generates
    more revenue from fixed-price sales than from auctions, analysts say.
    "The bloom is well off the rose with regard to the online-auction
    thing," says Tim Boyd, an analyst with American Technology Research.
    "Auctions are losing a ton of share, and fixed price has been gaining
    pretty steadily."


    To hasten the growth, Donahoe is spearheading changes to make eBay
    more friendly to users who favor one-click shopping. While former CEO
    Meg Whitman ended her tenure amid an ad campaign that championed
    auctions, urging consumers to "Shop Victoriously," Donahoe has taken
    steps to increase fixed-price inventory. In May, eBay announced a
    partnership with Buy.com to sell a large swath of the retailer's
    inventory for set prices. "EBay has significantly de-emphasized
    dynamic-priced items in favor of fixed-price listings in the last six
    months," says Cantor Fitzgerald analyst Derek Brown.


    EBay Fees Favor Fixed Prices


    Perhaps the biggest example of eBay's new fixed-price focus is the new
    fee structure, announced in January. The changes gave breaks to many
    large vendors who sell fixed-priced goods on the site, while hiking
    fees for many eBay users who sell using a traditional auction
    structure (BusinessWeek.com, 1/29/08).


    EBay executives say auctions will always have a place on the site. In
    the future, the company plans to alter fees so that auction sellers
    don't feel so pinched, though executives have not provided details.
    The company also intends to showcase additional features that meld
    auctions and fixed-price listings during and after the annual eBay
    Live event, to be held this year in Chicago, June 19-21. One possible
    new feature is a split screen that shows an auction on one side and
    the Buy It Now price on the other. "Auction-style listings are what
    keeps the site unique, but fixed price is growing much faster," says
    eBay spokesman Usher Lieberman.


    What happened to auctions? Not only do shoppers want convenience,
    they're also looking for value. And the proliferation of pricing
    information online has made it easier for consumers to bargain-hunt
    and lessened the need to risk overbidding in an auction. Hershenson
    recalls when a new $40 toaster could fetch $80 on eBay, thanks to a
    bidding frenzy. Now, a buyer can figure out the retail price with a
    few mouse clicks. A study earlier this year by the Pew Internet and
    American Life Project found that 81% of Internet users research
    products online before buying. "People have a lot of information at
    their disposal and that sets a reserve price of what they are willing
    to pay," says John Horrigan, an associate director at Pew. "It makes
    sense for eBay to set prices to appeal to that."


    Auctioneers Up in Arms


    But as eBay aligns its focus with the majority of buyers, sellers like
    Hershenson lose out. When he first heard of the fee hike, at a seller
    meeting in Washington with eBay management, Hershenson says he stood
    up and complained. "I said 'I am exactly the kind of seller who built
    eBay and brings people to eBay on a daily basis. And it seems to me
    your changes are hitting me hardest,'" he says, adding that his annual
    fees would have jumped from $120,000 to nearly $180,000.


    Rather than pay the fee hike, Hershenson decided to move his business
    onto his own Web site, eMoviePoster.com. He auctions 1,000 to 1,500
    items on his own site every Tuesday and Thursday. Because Hershenson's
    merchandise is popular among a specific set of collectors, he feels
    confident that his customers will follow him and says that most
    already have. He believes he can attract others with some well-placed
    ads, purchased with what he saved for not paying the higher fees on
    eBay.


    Not all eBay sellers have the luxury of branching out on their own or
    moving to a third-party site. When it comes to auctions, eBay is one
    of the few games in town. Even though growth is slowing in eBay's
    auction business, the site has nearly 90 million active users. Other
    auction sites such as Ubid.com (ubhi.ob.OB) have far fewer visitors.
    Ten-year-old Ubid had 181,000 active bidders in the first quarter,
    according to its quarterly report.


    EBay sellers organized a weeklong sales boycott in February protesting
    the changes announced in January. "Everybody is mad because they feel
    that this company got built on them, and when eBay felt that they no
    longer needed them, they tried to get rid of them," says Maggie
    Dressler, an eBay seller who has auctioned antique trains and toys on
    the site since 2001. "It is deplorable."


    Many auctioneers may have no choice but to close shop, says
    Hershenson, adding, "Their latest changes will have the result of
    ending auctions as we know it on eBay."

  • #2
    This is very interesting. Thanks for posting it.

    There are many changes to eBay since Meg Whitman left. The entire situation has changed to favor the buyers. The sellers can no longer give negative feedback to warn others about deadbeat, non-performing buyers. They can now only give positives. The buyers, on the other hand, can give negatives, positives or neutrals at will.

    Futhermore, payments on PayPal can now be held up for as long as 21 days and even reversed if the seller is a little weak on his record and if the buyer purports to be displeased with the transaction.

    With the changes to the feedback and the increases in fees, I seldom sell there anymore. I've been on eBay since 2000 abd have done more than 250 transactions with no negative feedback, primarily on sales. Given the new rules, I doubt I could maintain that record anymore.

    Comment


    • #3
      My personal purchases are a good example of agreement on how e-bays going, yesterday i just ordered my exhaust pyrometer kit/gauge and an air/fuel mixture ratio gauge and they were both "buy it now" ----- im bidding less and less - I dont have the patience to wait it out and also dont like the disapointment --- I still will on special one of a kind item/deals but most of the stuff i need is mainstream.

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      • #4
        There are now so many people (buyers), electronic sniping,etc. that there just doesn’t seem be the great deals like there used to be. I guess its great for the seller, cause there always seems to be somebody that is willing to pay just alittle bit more than me . It was fun while it lasted, and I feel fortunate to have gotten most of my high ticket items in the early days of ebay.

        Comment


        • #5
          The changes have left me in a quandry as I have some items to sell but am not as eager to do so as I once was. I do not remember when I started to use ebay, some time before they went public, but I scored some nice deals, and probably paid too much on some other stuff. Made money as well, but never enough to consider it a second job. Takes too much time with dial-up to load pictures. As I abor paypal I will most likely try Craigslist first especially for the old Idealarc. Dont even remember my paypal password it's been so long since I signed up for it.never used it after the first time. Have issues with all the tie-ins they want to your bank to make it work.

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          • #6
            Perhaps this is why........

            http://cgi.ebay.com/ws/eBayISAPI.dll...E:B:SS:US:1123

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            • #7
              I just sold a bunch of stuff on eBay (old NIB Lego sets I had inherited, oddly enough), and used the proceeds to buy my usual ****loads of books ... same routine as always. The auction part of eBay seems to be working fine. There are a number of features which eBay has never managed to get quite right. And eBay's constant fiddling with the software is annoying. But the system still basically works.

              The fixed price sales are usually useless. As more regular retailers establish good online presences, fringe stuff like eBay fixed sales will become even more marginal than they are now. In the meantime, there are still huge numbers of real auction items.

              The cited article is mainly concerned with those trying to use eBay as a substitute for a regular retail operation. And they do have some problems, because an auction simply isn't the same as a retail outlet - different goods, different customers, different time scale. They want eBay to be more like Amazon, which is silly - the only similarity between the two is that they're online.

              Auction burnout can be a problem. I have hundreds of searches for eBay items (mainly book titles), and the constant drag of reading through the searches eBay sent me started to eat a serious hole into a day's time. So I dropped eBay completely for about six months. That helped a lot.

              Comment

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